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House of Assembly - Fifty-Second Parliament, Second Session (52-2)
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

The Hon. J.R. RAU (Enfield—Deputy Premier, Attorney-General, Minister for Planning, Minister for Industrial Relations, Minister for Business Services and Consumers) (15:57): I move:

That standing orders be and remain so far suspended as to enable the report of the Auditor-General for the year ended 30 June 2013 to be referred to a committee of the whole house and for ministers to be examined on matters contained in the report in accordance with the timetable as distributed.

The DEPUTY SPEAKER: An absolute majority not being present, ring the bells.

An absolute majority of the whole number of members being present:

Motion carried.

In committee.

The CHAIR: I am sure the shadow treasurer will quote from appropriate pages when he asks his questions.

The Hon. I.F. EVANS: Absolutely. In Volume 6, page 1949, the Auditor-General raises the issue that there was a $408 million gain in the ETSA sale lease proceeds account arising from the brought-forward dividends received from the state's electricity corporations. Can the Treasurer advise how that money is treated? Does it impact, for instance, on the net operating balance, and what is the break-up of the years that it has been brought forward from?

The Hon. J.W. WEATHERILL: I am advised that this is essentially an accounting treatment change; it does not affect any of the government's fiscal aggregates. The administered financial statements include a once-off non-cash dividend of $408 million representing an impact of a change in the accounting standard treatment of the 200-year electricity lease arrangements. Under the accounting standards enforced at the time of the transaction, the rental incomes from the land were deferred to be recognised over the term of the lease.

This accounting standard approach is required to be adopted for the audited financial statement, so under the ABS reported principles adopted for budget reporting, the proceeds were recognised at the time the cash was received. Recent changes to the accounting standards for leases have meant that this amortisation treatment can be discontinued for the property lease component of the electricity sale. This means the dividend revenue non-cash can be recognised in one year and this has been done for financial reporting purposes in 2012-13 but, in essence, it does not affect any of the fiscal aggregates that you would rely upon for any of the decision-making of government.

The Hon. I.F. EVANS: So that is a non-cash dividend? Is that what I heard you say?

The Hon. J.W. WEATHERILL: That is correct.

The Hon. I.F. EVANS: I think I know the answer to this, but just so I am crystal clear, I am assuming we receive no cash dividend from any electricity asset?

The Hon. J.W. WEATHERILL: Yes.

The Hon. I.F. EVANS: Same volume, page 1993, the Auditor-General reports that there was a $62.7 million error. Can the Treasurer advise us of the nature of the error and what impact that had, if any, on the government's reporting as in net operating balance, etc.?

The Hon. J.W. WEATHERILL: Once again, it is an error that does not have any consequence for the fiscal aggregates that are relied upon for decision-making. What happened was, in accordance with the accounting standards, the error was corrected in 2012-13 by adjusting the opening balance of current payables in equity to remove $62.7 million in payable from the statement of administered financial position.

Shared Services SA prepared a response to the Auditor-General, having raised that issue, and committed to reconciling all clearing and suspense accounts for DTF on a regular basis, so the prior period area does not impact on the department's administered budget; only the reported balances in the statement of administered financial position. So, it was identified as part of the 2012-13 DTF administered financial accounts preparation, and the balance of the current payables as at 30 June 2012, including accruals, totalling $62.7 million that should have been reversed as the payments had been made in a prior period. That is the nature of the error; it has not carried through in affecting any of the fiscal aggregates.

The Hon. I.F. EVANS: Just on that, I assume that Treasury does monthly reconciliations, so how did the Department of Treasury, of all departments, miss a $63 million accrual balance? Essentially what you are saying is that they were doing an accrual balance and they have missed it, so it has got to be done the next year. How does the Department of Treasury, which is supposedly the financial oversight body of every other agency, manage to miss this? Have we actually gone behind the reasons as to why they missed it?

The Hon. J.W. WEATHERILL: Yes; the reason is that the Auditor-General's report to parliament noted that this error had not been identified in prior periods because Shared Services SA financial accounting had not been regularly reconciling a number of DTF clearing and suspense accounts, and one of those clearing accounts contained the $62.7 million in payables as an unreconciled balance. So, that is the reason.

The Hon. I.F. EVANS: On the same page number: I might be missing something here, but we had the Department for Health, which had a separate report done into them because of their lack of reconciliation process. This is a $63 million error, admittedly picked up, due to a lack of reconciliation process. I am just wondering who in government sits across all the agencies and checks that the basic reconciliation processes are actually occurring? I would have thought that if one department got done over for lack of reconciliation process, there would be some oversighting process that says, 'What are all the other agencies doing?'

The Hon. J.W. WEATHERILL: It is obviously a matter for each agency, but all of those particular functions are now in Shared Services, so it becomes the responsibility of Shared Services. I suppose the next check is the Auditor-General, to identify that those processes have been properly handled. Here, an error was detected and then remedied. Obviously, this is a relatively early period in the life of Shared Services. This area has now been remedied, and obviously steps will be taken to make sure that it is not repeated.

The Hon. I.F. EVANS: When the Treasury department decided to set up Shared Services, before it was transferred over to Department of the Premier and Cabinet, and when they handed over this particular function, did they set in place a set of financial performance standards that Shared Services had to meet (in other words, 'We require you to reconcile our accounts on a monthly basis or quarterly basis') or did all of the financial standards that Treasury had just get set aside and let Shared Services set up their new standards? Who was actually responsible for setting in place the financial reporting standards of Shared Services, if not the Department of Treasury?

The Hon. J.W. WEATHERILL: The Treasurer's Instructions set up the financial management framework. That applied when these functions were within Treasury, and the same Treasurer's Instructions and the same framework apply to the task now that it is being handled by Shared Services. All that has changed is that the function is now being performed by somebody different rather than the way in which that function is to be performed. That is the mechanism used for accountability purposes.

The Hon. I.F. EVANS: If the reconciliations now do not balance, that is a Shared Services problem not a Department of Treasury problem, even though it is the Department of Treasury account?

The Hon. J.W. WEATHERILL: As I said, there are the Treasurer's Instructions, the financial management framework and the internal audit processes with Shared Services and within the various departments for which Shared Services acts in transactions of this sort. Of course, sitting over the top of that is the Auditor-General. They are the various mechanisms which check these matters. In this instance, obviously, they failed but they were captured by the Auditor-General and they were capable of being remedied because of that.

The Hon. I.F. EVANS: Volume 1, page 103, in relation to the Art Gallery, refers to $3.7 million worth of new working capital. Can the Premier give some background as to why this new working capital was required?

The Hon. J.W. WEATHERILL: Sorry, what was the page number again?

The Hon. I.F. EVANS: I had it as page 113. Premier, there is a series of dot points under the heading Income, and there is a 4.7 increase in revenues from the South Australian government. It mentions the financial sustainability to the Art Gallery and additional capital funding and also receipt of new working capital. What is the new working capital for?

The Hon. J.W. WEATHERILL: In the last budget, all of the major cultural institutions on North Terrace received additional funding because, on the basis of a report, they demonstrated that their costs had exceeded the funding that was provided to them. The Art Gallery was one of those that received additional funding, and there were some other capital works, or at least security upgrades, which are comprised in that figure.

The Hon. I.F. EVANS: I am aware of the security upgrade but, on the same line, in relation to the new working capital, was the $3.7 million, or part of it at least, of new working capital paid in relation to a run-down of bequests and donations to the Art Gallery?

The Hon. J.W. WEATHERILL: I think our commitment was to ensure that the Art Gallery was in sufficient funds to meet the obligations that they had for working capital, and so that is what this funding is for. It is to ensure that they have the appropriate amount of funds on hand so that, as the various calls upon those funds are available or required, they are in a position to meet those calls.

The Hon. I.F. EVANS: Is the reason that you had to provide that because the Art Gallery had made commitments beyond the capacity of its existing working capital, because it had run down its bequests and donations program, so the only way it could meet its commitments was to get a top up of new working capital by the government?

The Hon. J.W. WEATHERILL: It really goes to that first point I made about the overall viability of the organisation. The organisation was not in a position to meet its obligations without this additional funding from government, which we provided to it. Obviously, the costs associated with doing the things that the Art Gallery needed to do were not capable of being funded through its existing income sources, so we had to supplement the revenues of the Art Gallery in this way.

The Hon. I.F. EVANS: Are you or the Minister for Finance taking questions on RISTEC?

The Hon. J.W. WEATHERILL: The Minister for Finance.

The Hon. I.F. EVANS: Alright; wise decision. Premier, in Part A, page 1 of the Auditor-General's Report, the Auditor-General makes this quote:

In general [terms it has] not seen a noticeable improvement across agencies in governance, financial control and accountability practices.

He then goes on to say on page 2:

...Audit follow-up of matters previously raised with agencies reveal instances where intended corrective action has not been taken by the agencies.

I just want to check how your government works in relation to the Auditor-General's Report. Does Treasury have an oversight role of all agencies in relation to the response to the Auditor-General's Report, or does each agency simply get the Auditor-General's Report and rely on the chief executives to take action in relation to whatever the Auditor-General raises?

The Hon. J.W. WEATHERILL: I think I have noted the Auditor-General's concerns regarding the prevalence of repeat issues in agencies and the nature of financial management issues continuing to rise in agency audits more generally, and I have written to all chief executives expressing my dissatisfaction with this. The chief executives have been asked to respond to Treasury with details of the processes they have in place, or plan to introduce, in relation to addressing this problem. So, essentially, the answer to your question is: I do have a supervisory role, as does Treasury, and we are implementing that advisory role through communication with chief executives.

The Hon. I.F. EVANS: Is the Premier concerned that the Auditor-General has to put not hidden away inside Volume 6 but right up in Part A that essentially there has been a reduction in the number of issues that he has raised, and repeatedly raised, and doesn't that indicate that your chief executives are essentially snubbing their noses at the Auditor-General? They get 12 months from one Auditor-General's Report to the next. It just seems extraordinary that the Auditor-General has to go to that length.

The Hon. J.W. WEATHERILL: I accept that, and that is why I have expressed my dissatisfaction that the Auditor-General has been forced to put those remarks in his report. Of course, the Auditor-General is to some extent a counsel of very high standards, but we should aim for the highest of standards in relation to financial management. I accept that that is a valid criticism. That is why I have acted to communicate my dissatisfaction with each of the chief executives and have asked the Treasury to supervise the responses coming back from chief executives.

The Hon. I.F. EVANS: So the responses coming back, is that now Treasury is oversighting every agency? Is it simply in relation to this year's Auditor-General's Report, or is that now a core role of Treasury ongoing?

The Hon. J.W. WEATHERILL: It has always been the role of Treasury to provide this oversight. It does that through Treasurer's Instructions and the general support it provides to me as Treasurer; but, in respect of this particular issue that has been raised by the Auditor-General we have put in place a particular process which requires chief executives to report directly to the Department of Treasury and Finance's financial management team, and those responses will be considered by the Under Treasurer.

The Hon. I.F. EVANS: If it has always been the role of Treasury, how has it got into this state? How is it, if it has always been the role of Treasury, as you just said in your answer, that the Under Treasurer has let it get to this point? And does the Treasurer get a report every month, or every quarter, of the outstanding issues or the progress in relation to the Auditor-General's Report?

The Hon. J.W. WEATHERILL: Each agency has its own audit committee that should be monitoring and checking responses to any criticisms or concerns raised by the Auditor-General on an ongoing basis. At the end of each year there is a process whereby the Department of Treasury and Finance reviews all of these matters and seeks assurances from agencies that these matters are being addressed. Obviously, the principal responsibility is with agencies and, to the extent that they have fallen down in relation to these matters, we are now taking steps to exercise a greater degree of control.

The Hon. I.F. EVANS: Part C of the Auditor-General's Report refers to the savings targets. The government has announced a roughly 5,000 reduction in the Public Service over the term of the forward estimates. Has the government resolved what programs are going to be cut to meet that particular savings target, or is that a matter that is going to be dealt with year by year across the forward estimates?

The Hon. J.W. WEATHERILL: The savings initiatives fall into a number of categories: those where specific savings measures have been identified, which cover about half of the projected savings. Nevertheless, we provide general FTE estimates next to the balance of the savings task. About half of those have been specifically identified.

The Hon. I.F. EVANS: I assume the remaining half will be identified in those financial years post election.

The Hon. J.W. WEATHERILL: The numbers have been identified and the agencies have been identified. The specific programs are identified on a yearly basis.

The Hon. I.F. EVANS: Page 21 of Part C refers to the Department of Planning, Transport and Infrastructure reporting that actual FTEs are 160 below their cap. I know that Treasury gets monthly and quarterly reports on the FTE caps as part of its reporting process. It says that they are below the cap by 160 mainly due to vacancies and ongoing positions that are being filled by contractors. How many of the 160 FTEs under cap are being filled by contractors and who, if anyone? Is Treasury monitoring that, by being 160 under cap and then backfilling with contractors, they are not actually spending more money than employing them as 160 FTEs?

The Hon. J.W. WEATHERILL: We will bring back an answer on that, but the way in which capital programs tend to be managed in DPTI is to have the engagement of contractors because of the impermanent nature of the work associated with projects that have a beginning and an end. So, it is a rational way of handling it, but I can bring you back a split between those two concepts and how that comprises the 160.

The Hon. I.F. EVANS: I refer to Part B, Volume 5, page 1,557. There is a table at the top of page 1,558 which lists the investment profile of SAFA's investments, the majority of which is to South Australian government agencies. So, why is the majority of lending to asset classes that are credit rated AA-, given that that is not the current rating of the government? It is one above that.

The Hon. J.W. WEATHERILL: If I understand your question, it is that if we are lending money to principally the state government, why is a substantial proportion of the category on that table at AA- when our credit rating is higher than that? I think that table is about where we invest our money. Where we lend our money internally it might be to, for instance, SA Water as a state government agency, so it is really about the destination of our investments, which could be AA-. So, it is not really talking about where we are investing in relation to the South Australian government securities or processes.

The CHAIR: That concludes the Premier, Treasurer, Minister for State Development, Minister for the Public Sector and Minister for the Arts. We now go to the Deputy Premier, Attorney-General, Minister for Planning, Minister for Industrial Relations and Minister for Business Services and Consumers.

Mr WILLIAMS: I refer to Part B, volume 6 at page 2,162 of the Auditor-General's Report for my first question. The average weekly earnings calculation to determine income maintenance has been criticised in the last three Auditor-General's Reports, yet the Auditor notes this year that errors are still occurring. If people are being overpaid income maintenance payments, does this have to be paid back, and are there any current estimates as to how much these overpayments may be in the current year?

The Hon. J.R. RAU: I thank the honourable member for that question. I am advised that from time to time there are overpayments. I have asked whether there is available a current number for that and I am advised that that would require some delving, so that bit I will take on notice. As to the nature of those, apparently they are reported amongst the recoveries numbers that are published and I am advised that they are actually pursued.

Mr WILLIAMS: I now refer to the next page, 2163, with regard to step-downs. Again, the Auditor-General has criticised, in a number of his reports, the step-down process, saying that it seems that step-downs in payments are not occurring on time. Is there an estimation of how much in overpayment has been made in the 2011-12 and 2012-13 financial years?

The Hon. J.R. RAU: Again, I thank the honourable member for his question. I am afraid my answer must be rather similar to the one I have just given, but I will take it on notice to get the details. If I might just say that both the calculation of average weekly earnings and the application, or indeed existence, of step-downs are an example of some of the intricacies of this current scheme which make it more complex and difficult than it should be. So, I think it is, not that I want to give the honourable member too much credit but he quite rightly points at areas of the scheme that are concerning in that any errors of these types are not desirable. I will do my best to get more detailed information.

Mr WILLIAMS: I now refer to the same volume of the Auditor-General's Report but to page 2196, under point No. 10, which refers to consultancies. What was the value of the consultancy given to SA Unions entitled, 'Return to work fund project' that appears in both the 2011-12 and the 2012-13 WorkCover annual reports and what was the purpose of that consultancy?

The Hon. J.R. RAU: Again, I could speculate, but since we are in a committee of the house I will stick to the facts entirely and say that I will take that on notice, because I do not want to just take a stab at it.

Mr WILLIAMS: This will be my last question on this particular aspect of the minister's responsibilities. I refer now to page 2190, which has a table showing the investments of WorkCover. It seems that the vast majority of WorkCover's investments held in stocks are AAA credit rated. That opens up a series of questions. The government's policy seems to be that it is of little consequence whether the government has a AAA or AA credit rating. While I am pretty sure that there would be a better return available under a AA credit rated investment as opposed to a AAA, can you give the committee any idea of the difference that we would get between a AAA and AA credit rated investment, and does WorkCover's strategy sit neatly with the government's position regarding its own credit rating?

The Hon. J.R. RAU: Again, I thank the honourable member for his question. I think it might be difficult to give an exact answer to the question, but I will do my best. It is true that as a general proposition the rate of return on a AAA-rated investment is lower than a AA which, in turn, is lower than another less secure investment. I am advised that the actual spread between different classes of investments varies from time to time.

For example, during the GFC, the spread between AAA investments and others was greater than it is at a time of greater stability in the markets, and there are times where the spread difference between AAA and AA may be negligible. In other words, it is not like you can say, 'Well, AAA always returns 2 per cent less than AA,' or whatever. Apparently it does not work like that. It is a variable thing. That is probably about as far as I can take that answer.

The second point is that the corporation has its own autonomous investment policy which is, as I understand it, aligned more or less to default superannuation schemes, which means that it is a relatively high capital secure type with a moderate risk exposure for modest growth. If I am not mistaken, from the information that I am being given about a default scheme, I gather that it means that when a person with a superannuation policy does not specifically ask for a particular type, like high growth or capital preserved or whatever it might be, it defaults to this fairly conservative investment regime, and that is the policy that they have pursued.

That said, the policy has in the last year returned quite a good outcome for the scheme, and, viewed from the investment perspective, the scheme has performed quite well, but that obviously needs to be seen in the context of a stock market that has not been doing badly in the last year, and the yield on bonds has been moving around as well. It has been a good investment environment—that is probably the best summary of the last 12 months or so.

Ms CHAPMAN: To assist you in particular, I indicate that I will be asking questions of the Attorney as outlined under the Attorney-General's Department, commencing page 137 of Volume 1 of the Agency Audit Reports. Attorney, on page 144 and 152, there is reference made to the department's responsibility for the administration of the Victims of Crime Act 2001, and there are some specific findings in respect of this generally, and of the alleged fraud against the Victims of Crime Fund that was discovered back in August 2012. I will just start with the act itself, as the department is responsible for administering the act.

I have a copy of the 2009 annual report (that is, to 30 June 2009) of the Commissioner for Victims' Rights, Mr O'Connell, which was tabled in the parliament at the end of 2009. On my search, there have been no annual reports tabled in the parliament since (that is, for 30 June 2013, 30 June 2011 and 30 June 2012), nor for 2013, although, of course, it was only due at the end of September this year. Firstly, has the Attorney received these reports?

The Hon. J.R. RAU: I thank the honourable member for her question. I honestly cannot answer that. I have no particular recollection of them, but that does not mean that I have not received them; I just have no recollection of them. All I can do is undertake to try and get an answer to that question and find out what is going on. If they have been provided, then we will do whatever we are supposed to be doing with them. I am not really able to help you on the fly.

Ms CHAPMAN: Just for the record, I indicate that section 16F of the Victims of Crime Act 2001 requires the provision of a report to you each year by 30 September, and then, of course, you have, I think, some 12 parliamentary sitting days to table them. I will ask this, because you do have some advisers there: has there been any correspondence between your office and the Auditor-General's office about the non-filing of the annual reports of the Commissioner for Victims' Rights.

The Hon. J.R. RAU: Those that advise me say they are not aware of any such correspondence.

Ms CHAPMAN: I will refer to page 152, under the subtitle 'Recoveries from offenders', where it states that under the VOC Act, 'The amounts recovered directly from offenders during the year totalled $797,000.' Is that correct?

The Hon. J.R. RAU: Insofar as I am aware, yes.

Ms CHAPMAN: How much did the courts impose on offenders in the last financial year in total?

The Hon. J.R. RAU: Just so I am clear on the question: we are starting off with the amount that we know was recovered; the honourable member is now saying to me, 'That is a fraction of a bigger number.' What was the total? We will have to take that on notice.

Ms CHAPMAN: Would it be correct to say that in the 2012-13 year, an additional $7 million was imposed on offenders, yet only $797,000 was recovered?

The Hon. J.R. RAU: Can you just repeat that? I am not sure anyone over here understood that.

The CHAIR: Is this the same page number?

Ms CHAPMAN: Correct. Would it be correct to say that in the 2012-13 year, which is the year subject to what we are talking about, an additional $7 million was imposed on offenders, yet only $790,000 was recovered?

The Hon. J.R. RAU: I think the problem is that I am not sure where the $7 million comes from, because I am missing that reference in here; that is why I am having trouble answering the question.

Ms CHAPMAN: At the bottom of that page, dot point 2 states that outstanding amounts at 30 June 2013 were $83 million, and then there is reference to monies that have been written off. What strategy is the government implementing to recover the $83 million outstanding owed by the offenders?

The Hon. J.R. RAU: Again, we are drilling down into quite a bit of detail—which is fair enough and I am not being critical—and I just do not have people sitting here who can answer in that detail but I will get it. However, can I explain: if I am understanding the honourable member's questions properly, what we are probably talking about here is a great number of people who come before the court system and who are basically without funds and against whom orders are made. Those orders include perhaps a fine, imprisonment or whatever and then a victims of crime element, and those people are not paying those amounts.

There is no doubt that some of those people will never, in a month of Sundays, pay those amounts for a whole range of reasons. It is also true that some of those amounts are potentially recoverable. What I would like to get some information on and what I will get back to the honourable member about is—as the honourable member would be aware—we have recently put in legislation that has now gone through to create a fines recovery unit. That fines recovery unit will be functional come February.

What I want to ascertain, because I do not want to mislead the member for Bragg, is the extent to which the fines recovery unit will have the capability of being in the market pursuing these funds, as well as the fines which are associated with the court orders which give rise to the victims of crime—but we will confirm that.

Ms CHAPMAN: Still on that, you will see there that since the inception of the fund $54 million has been notionally written off. In the preceding year it suggests that it was $53 million so it is possible that that could be an extra million. Could you also provide the detail of how much was written off in the subject financial year, which is to 30 June?

The Hon. J.R. RAU: We will do that, yes.

Ms CHAPMAN: Can the minister also provide a detailed breakdown of where the $49 million of income from the 2012-13 financial year came from—that is also referred to on page 152.

The Hon. J.R. RAU: I can help you with that one. At last I can answer a question; it's good; it's fantastic! I am advised that it is made up as follows: victims of crime levy, $34,896,000; appropriation, $7,650,000; interest, $3,505,000; recoveries and other income, $3,122,000—giving a total of $49,200,000.

Ms CHAPMAN: While you are on a roll, could you also provide a detailed breakdown of the $11 million of payments from the victims of crime fund and how that was spent, including administrative costs?

The Hon. J.R. RAU: I will try to answer that question because I have information about all of the outgoings, which are not just those, so I might as well put it on the record as well. I am advised that the expenses for that same period are as follows: payments to victims of crime, $10,838,000 (which is close enough to $11 million); grants, $3,445,000; employee costs, $1,145,000; and other expenses, $3,106,000—making a total of $18,534,000. Apparently it is all detailed on page 197.

Ms CHAPMAN: That may cover it, but the follow-up to that is there is a reduction in the number of payments totalling $11 million or thereabouts. It has significantly decreased from $16 million. Is there any reason for that?

The Hon. J.R. RAU: Yes, I have some remarks that might be helpful in this regard. There are a number of reasons for the decrease in the claim payments for this year of 2012-13. It is difficult to quantify which one has contributed to what extent, but I will give you a number of elements that, I am advised, have contributed. First of all, there was a decrease in the number of new claims lodged in 2012-13. There were 1,719 applications received in that year compared with 2,024 in the preceding year.

Secondly, I am advised there has been increased scrutiny on claims which has, in fact, caused a slight increase in the time frames for assessment. Fewer claims were settled, ultimately, in the year 2012-13 compared with the previous year. In 2012-13, the number was 860; in the previous year it was 1,292.

I think the honourable member would probably appreciate that, given the fact we have had that fraud issue in the area, there was obviously a period of time during which there was a suspension in effect of payments because everything was being reviewed and checked to make sure that the discovered fraud was not being perpetuated by matters that were in the pipeline, so to speak. That caused a revision of a number of matters. That process has now been fully conducted and has worked its way through the system. I am advised that it is expected that payments to victims will again increase significantly in 2013-14 because at least that factor has been removed.

Ms CHAPMAN: On page 153, the cash balance of the fund as at 30 June 2013 is recorded as $132 million. What is the current balance of the fund?

The Hon. J.R. RAU: Yes, I am advised that, as at 30 September, the balance was $139 million.

Ms CHAPMAN: Can you explain this, Attorney? Why is it that the Auditor-General's Report discloses on page 153—on information, I presume, from your department—that the fund as at 30 June is $132 million, yet the Treasury financial statements, under statement F, which is in volume 6, page 16, describes the balance of this fund at $134.26 million? Which one is right?

The Hon. J.R. RAU: We will have to check it out. Obviously, the numbers move around.

Ms CHAPMAN: It is all at 30 June.

The Hon. J.R. RAU: I understand. There is clearly, if those numbers are correct, some discrepancy between the two, and we will do our best to find out why.

Ms CHAPMAN: I would have to say that it is not the first time in 11 years that that has been different—not necessarily in your portfolio but in others. I am not sure whether the departments are at fault there or whether the Treasury office is—it is a bit worrying either way.

In any event, can we go back to the audit of the Crown Solicitor's Office reviewing the problems, of course, which needed to have changes and controls, etc., in the office as a result of the fraud. A PricewaterhouseCoopers report is referred to, which is to deal with the special review. Has the Attorney or, indeed, the Crown Solicitor's Office, received the report? If so, will that report be made public and, further, at the very least will you make the recommendations available to the public?

The Hon. J.R. RAU: I will attempt to get a fuller answer to this, but the best I can do at the present time is to say this—and I need to be a little careful about what I say, Mr Deputy Speaker—there are present criminally—

Ms Chapman: I'm talking about processes.

The Hon. J.R. RAU: Yes; that is something that is under consideration because obviously we do not want to interfere with what is going on in the criminal courts. I will get some information about that. I do want to say again, though, if I might, that I congratulate the officers of the Attorney-General's Department who actually identified this anomaly themselves and immediately alerted senior officers in the department who spoke to me, and we actually reported this to the Auditor-General ourselves.

This was not discovered by the Auditor-General picking over things and finding a problem. I do want to say how well I think that reflects on the integrity of the officers in the Attorney-General's Department, that there are people there who were sufficiently vigilant to be alerted to this. They had sufficient confidence in their senior managers to take the matter up with them, and they had sufficient confidence to bring that forward and to be entirely comfortable and, in effect, self-disclosing to the Auditor-General, which is what should happen.

Ms CHAPMAN: On the Crown Solicitor's Office, how much was spent on the contracting of private sector legal advice over the last financial year, and how did that compare with the preceding year?

The Hon. J.R. RAU: I am not sure we have got the year before in front of us, but I am advised that the amounts paid to private providers under Treasurer's Instruction 10, which I believe is the relevant one, was an amount of $9,257,000.

Ms CHAPMAN: I have one other question which relates to the Criminal Asset Confiscation Act. It is at about point 9 on page 152: $2.3 million was recovered from offenders pursuant to the Criminal Asset Confiscation Act 2005. Attorney, you tabled the Director of Public Prosecutions' annual report today in parliament, and that confirms near enough to $2.320 million as being the moneys deposited in the victim's of crime fund from criminal assets confiscation. However, on page 20 of that report it goes on to say that in the financial reporting of that agency (the DPP) 413 revenue was received from the victims of crime fund to finance the office's confiscation of proceeds of crime activities. Is it in fact the situation that the net amount received from confiscated assets is the difference between those two?

The Hon. J.R. RAU: I believe the answer to that is yes, but we will confirm.

The CHAIR: Thank you to the Deputy Premier and the Deputy Leader of the Opposition. That concludes Deputy Premier, Attorney-General, Minister for Planning, Minister for Industrial Relations, Minister for Business Services and Consumers. We now go to the Minister for Health.

Dr McFETRIDGE: The reference is Auditor-General's Report, Part B, Volume 2, page 724. This intrigued me as soon as I saw it and I want to know how I can apply. There is one person being paid in the bracket between $708,000 and $717,999. Can you provide details about that position, the person's responsibility and whether this involved any payout or recurring remuneration?

The Hon. J.J. SNELLING: Basically, when I took over the portfolio you may recall that there was a restructuring. There was an executive position abolished and so this payment is for that person. It incorporates all accrued but unpaid leave, plus whatever fees he had to be paid as part of the termination of his contract. So, it is not actually a salary. You will notice in the note that it includes all other extra payments other than salary.

Dr McFETRIDGE: On the same page, under Note 7, interstate patient transfers dropped from $39.3 million in 2012 to $8.6 million in 2013. Can you give the committee reasons for this?

The Hon. J.J. SNELLING: Last year's figure was excessively large because there was a backlog that needed to be cleared. As a result of that, it overstates the previous years. The figure that is stated there is more in keeping with what you would expect it to be.

Dr McFETRIDGE: On the same reference, Note 7, communications costs increased by 25 per cent from $10.2 million to $12.7 million. Can you tell the committee what the reason for that is?

The Hon. J.J. SNELLING: It is not a particularly large sum of money, given things, and it would be due to a raft of different issues. There would be lots of things that would make that up. Communication expenses related to the eHealth non-computing IT expenses: these are variable on the LHN's expense. It is done centrally and then recharged. The increase is due to increased activity in the LHN and is consistent with a rise in the recharged revenue.

Mr HAMILTON-SMITH: Please do not read anything into this question other than diligent curiosity from the opposition, because we are going through these issues piece by piece. I notice on page 406 of the report and in the report more completely references to the number of employees within Defence SA and their various roles. Could you just provide me with some guidance as to what those people are doing?

The reason I am asking the question is I am just wanting to be able to assure the house or for the house to be assured that the manning levels within Defence SA are up to the task and that there is no fat there either and that everyone is fully employed. So, if you could just run over for me exactly how many people we have got, how they are being deployed and whether we have been diligent about assuring that we are running a lean ship.

The Hon. J.J. SNELLING: The total number of staff is 28; 10 of those are at the Common User Facility and are employed there. The other 18 work out of Defence SA's office in Pirie Street. In terms of the executive positions, you have obviously the chief executive, Mr Andrew Fletcher; Maintenance Manager of the Common User Facility; Director of Strategic Policy and Planning; Director of Marketing and Communications; Director, Maritime; Director, Land; Director, Aerospace; General Manager, Corporate Services; General Manager, Common User Facility; General Manager, Corporate and Government Relations—so, basically, the different market segments of defence are broken up into maritime, land and aerospace. There is a director who works in each of those different areas.

They work very closely with me and my office and with the Premier's office in working with both existing companies who are currently located in South Australia, working with potential entrants to South Australia, identifying defence opportunities in the various segments, and, of course, they liaise very closely with defence officials in Canberra, both civilian and non-civilian, making sure that South Australia's interests are represented. I think, by any measure, Defence SA has been incredibly successful.

The fact is that, since the government came to office, the total domestic defence spend in South Australia, which attracts 25 per cent of that total spend, is significantly up, so I think on any measure you would say that Defence SA has been incredibly successful. They are just brief details. I would be more than happy to provide the member for Waite with a more detailed breakdown of each of the employees and exactly what they do.

Mr HAMILTON-SMITH: Thank you, minister, that will not be necessary. We just want to be sure we are running a tight ship, so to speak, to keep with the naval jargon. My next question has to do with the Maritime Skills training centre. Could the minister explain to the house how funding for the Maritime Skills training centre is deployed and, in particular, confirm who owns the building, what are the leasing or access arrangements for those who occupy it, who are the tenants in the building and, essentially, what are the government's financial plans for the Maritime Skills Centre going forward?

The Hon. J.J. SNELLING: We built the Maritime Skills Centre. We own it. We licence the Australian Submarine Corporation to run it, and they do so at nil cost. They have first right of use. If there is spare capacity then third parties can use it, but at the moment it is effectively full, 95 per cent usage. There is a board which oversees it. On that board is a representative from me (I am represented by Defence SA) and a representative from the minister for employment, training and further education (I presume it is an official from our friend DFEEST who represents her on that board). ASC is certainly very happy with it and it is seen as being a great success. ASC has those rights of usage, basically, for the life of the air warfare destroyer contract.

Mr HAMILTON-SMITH: Final question. Is it still the government's intention with respect to the infrastructure that we have built down there, referred to on page 407, for the site to accommodate a second major shipbuilder? If, for example, a company other than ASC were to bid for a future run of ships, say the frigates or, for that matter, any of the ships forthcoming in the build over the next 30 years, do we still have the land provision?

Is it still part of the growth plan for us to have a second builder there? How would the government bring that about, should it be approached, given that ASC might not welcome the idea of having a competitor co-located beside it at the ship lift? In particular, are there any impediments that might obstruct a second shipbuilder from leasing premises and facilities at the site?

The Hon. J.J. SNELLING: No, there's not. It was built as a common user facility and we welcome new activity on that site from wherever it might come. It might come from an expansion of ASC's operations or from a new entrant operating on that basis. We have reserved land on the other side of Mersey Road and we have an MOU with the commonwealth for about seven hectares on that block of land. We welcome new entrants. There is nothing that would prevent new entrants from having a presence on that site; it is something we would welcome. At the end of the day, we want to see more activity. We are not really that fussed where it comes from, whether it comes from ASC or from another shipbuilder.

Dr McFETRIDGE: I am pleased to see that the Old Gum Tree, in my electorate of Morphett, is on the cover of the Auditor-General's report this year, which is a good start—what is inside it, has some issues though. I refer to Part A, Audit overview, page 40, and I cannot remember how many times I have spoken in estimates, and to this Auditor-General's report, on the Oracle Corporate System, and we are going back to that again this year but, more particularly, the interdependence of Oracle and EPAS, the Electronic Patient Administration System. On page 40, the Auditor-General says:

Audit therefore notes that any delays in the rollout of either EPAS or OCS could have an impact on the rollout schedule of the other system.

Minister, what is the latest rollout schedule for EPAS and what is the latest expected completion date for the rollout of EPAS?

The Hon. J.J. SNELLING: My advice is that what the Auditor-General is getting at is the project management issues around the two projects. They are both significant projects and, in terms of timeframes and so on, they are both connected, but only in the sense that there are project management issues, with one having an effect on the other. With regard to EPAS and timeframes, we have had a successful rollout to Noarlunga Hospital and Noarlunga GP Plus.

A gateway review is now being undertaken by an external organisation of consultants who are looking at how the Noarlunga rollout has gone, what problems may or may not have arisen, and what we can learn from the Noarlunga rollout before we undertake further rollouts to other locations. The next location is the Repatriation General Hospital and, provided that the gateway review gives us all the ticks that we need, we will expect to proceed with the Repat by the end of the year and then we will conduct further rollouts. In total, under the current scope, we will have the rollout completed in the next two years, approximately. I do not have the precise date, but it is approximately two years.

Dr McFETRIDGE: On that same reference, minister, and referring to your answer about Noarlunga, on 15 October you told the house, and I quote from page 7242 of Hansard, 'The rollout of EPAS to Noarlunga has been incredibly successful.' Do you stand by that statement, minister, because just before coming into the chamber, I looked at the emergency department dashboards, and Noarlunga Health Service does not appear on the inpatient dashboard. Noarlunga Health Service does appear on the ambulance service dashboard but, as has been happening for as long as I can remember when looking at the dashboard, all of the statistics are not available for Noarlunga Health Service.

The Hon. J.J. SNELLING: I certainly stand by that statement; it has been incredibly successful. When I was at Noarlunga Health Service, I saw that it was broadly accepted by clinicians, both nurses and doctors. The rollout was incredibly seamless and went very well. As to Noarlunga not being on the dashboard, I will need to find out the reasons for that and whether they are connected to EPAS, and I am happy to get back to the member for Morphett with an answer.

Dr McFETRIDGE: On that same reference, my understanding of the rollout at Noarlunga is that some doctors are so frustrated that, even though they have admitting rights to Noarlunga, they are not admitting patients because the admitting process is so complicated. I heard that in one case a doctor had to go through over 40 screens on a computer to try and admit a patient there. I am also hearing that the KPIs at Noarlunga are blowing out and that is why it is not on the dashboards.

The Hon. J.J. SNELLING: Those complaints have not been made to me that I am aware of; I am more than happy to investigate. If the member for Morphett wants to provide me with the identities of who these people are, I would be more than happy to speak to them and hear from them personally about what their frustrations are. So, I would be very, very surprised.

Without doubt, EPAS is a significant cultural change in the way work is done in our hospitals. It is more than just an IT project; it is in fact a culture-change project where the entire way of looking after patients—of conducting medical records, of keeping those records, of ordering pathology tests, of ordering radiology tests, of ordering drugs for a patient—is a completely different way of operating.

I would have been very surprised if there was no-one who had had some frustrations in adapting to this new system. I went down there the week after it rolled out, and in the conversations I had with conversations with doctors and nurses I did not receive anything but praise for how it was going. As I said, if the member for Morphett wants to have whoever it is who has spoken to him contact me and my office, I would be more than happy to have a conversation with them to hear what their frustrations are, but that is certainly the first I have ever heard of it.

Dr McFETRIDGE: I don't think they will be contacting you, minister. Unfortunately, they—

The Hon. P.F. Conlon: I don't think they exist.

Dr McFETRIDGE: Oh Patrick, there are only eight days to go, mate; be nice, will you? Moving on to Part A, page 41, the Auditor-General says:

At the time of preparation of this Report Audit is unaware of whether the proposed changes to the rollout schedule will have an impact to the overall projects costs and estimated benefits.

The question is, minister: since the release of the report, has there been any indication that this further delay to the rollout schedule has had an impact on the overall project costs for the Oracle system?

The Hon. J.J. SNELLING: No.

Dr McFETRIDGE: Excellent, so we are getting value for money for our $443 million, is it?

The Hon. J.J. SNELLING: You are confusing EPAS with Oracle. EPAS is $400 million. The budget for Oracle is around $60 million.

Dr McFETRIDGE: The budget for Oracle—the whole of the Oracle system—is $60 million, is it now?

The Hon. J.J. SNELLING: Yes, $60 million; EPAS is $400 million. You are confusing your IT projects.

Dr McFETRIDGE: Well, they are interrelated, as the Auditor-General points out here. Minister, the next reference is Part B, volume 2, page 725. The royalty stream dividends dropped from $76 million to zero. Are you able to give the house an explanation for that?

The Hon. J.J. SNELLING: It is related to the sale of BioMarin; there was a one-off benefit in the previous financial year from that, and that is what that $71 million reflects.

Dr McFETRIDGE: Sorry, minister, I missed the answer; it was—

The Hon. J.J. SNELLING: BioMarin.

Dr McFETRIDGE: Page 729, Note 17—Intellectual property sale dropped from $83.2 million to $1.9 million. Can you give some information on that?

The Hon. J.J. SNELLING: It is the same thing.

Dr McFETRIDGE: Page 729, Note 18—what is the explanation for the DTF contingency funds increasing from $56.2 million to $149.8 million?

The Hon. J.J. SNELLING: In relation to the realignment of savings that was announced in last year's Mid-Year Budget Review, that is the way they are presented in the financial statement. It is called DTF contingency funds rather than appropriations. Basically it is related to the reprofiling of the savings that was done in the Mid-Year Budget Review last year.

Dr McFETRIDGE: The next question is from page 702 of that same volume. Audit found a consultant claimed and was paid—let me get that reference because I think there is a typo in the quote here. The question was: what is the extent of the payment area determined as incorrect and what action has the department taken to fix the problem of an overpayment to a consultant? I will get you that actual quote because—

The Hon. J.J. SNELLING: Just give us the reference, please.

Dr McFETRIDGE: It is page 702, the first paragraph. The review found that the work that appears to be the continuation of the consultant's regular duties have been claimed and paid as a recall. In addition it was found that the consultant's timesheets were not always prepared correctly. The question is: what was the extent of the payment area determined as incorrect and what action has been taken to recover it?

The Hon. J.J. SNELLING: Doctors are terrible at filling out their timesheets and it is an ongoing problem that we have in the department. Wonderful they are, saviours of lives, incredibly skilled and intelligent people but they are terrible at paperwork. What happens with senior consultants is that they have certain hours of work and if they have to be called in after hours then they are entitled to a recall payment which is what the Auditor-General is there referring to. We have had persistent problems in making sure that those payments are paid correctly because of the difficulty in getting consultants to put in timely and accurate timesheets.

We are developing guidelines, as the Auditor-General has pointed out, for completing medical officer timesheets and the government is interacting with Shared Services in the development of an action plan to follow up payment errors. We are doing what we can to rectify these areas when they occur but we need to work with these senior medical officers to make sure that they put in accurate and timely timesheets.

Dr McFETRIDGE: The next reference is that same volume on page 727, funding for not-for-profit organisations, and the second to last one there, the Australian Drug Treatment and Rehabilitation Program. That received $343,000 in 2012 and nothing in 2013. Can you tell the house what is going on there?

The Hon. J.J. SNELLING: I do not have any exact detail but if my memory serves me correctly—and I will double-check this and get back to the member for Morphett just in case I am wrong—it is ADTARP. There was a contract that the government or Department of Health had with ADTARP. It was providing rehabilitation services to people with narcotic addictions. The contract was not renewed and it was not extended. There was an evaluation and process around it. I do not have any information about the results of that. I was not the minister at the time but my understanding is that as a result of the evaluation that was done the government made the decision not to renew the contract.

Dr McFETRIDGE: Back to page 704—Payroll. The Auditor-General indicated that:

For a number of years the Department has not given adequate attention to remediate bona fide authentication. In the absence of a robust bona fide process, the Department has no assurance that all employees paid through the CHRIS payroll system are valid.

Minister, what steps have been taken to rectify the situation, and what has been the cost so far?

The Hon. J.J. SNELLING: Payroll processing for SA Health is undertaken by Shared Services. The following control weaknesses were identified:

timesheets are not always being reviewed and approved appropriately;

bona fide reports are not consistently managed;

Shared Services payroll reports are not being prepared, reviewed, certified and retained consistently; and

performance of reconciliations between payroll systems and general ledger not being performed in a timely manner were not being independently reviewed.

That is what is in the Auditor-General's Report. As noted by audit, corrective action has been taken to address such issues, including the reconciliation of payroll-related accounts as at 30 June 2013. SA Health will continue to work with Shared Services to improve these controls, noting the effectiveness of such remedial action will be the focus of the 2013-14 audit.

The CHAIR: I thank the Minister for Health and the member for Morphett. That concludes the examination of the Minister for Health and Ageing, the Minister for Mental Health and Substance Abuse, the Minister for Defence Industries and the Minister for Veterans' Affairs.

Progress reported; committee to sit again.

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