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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

In committee.

(Continued from 29 October 2013.)

The CHAIR: We have the Minister for Transport and Infrastructure, the Minister for Mineral Resources and Energy and the Minister for Housing and Urban Development for the next 30 minutes. The Deputy Leader of the Opposition.

Ms CHAPMAN: The Department of Planning, Transport and Infrastructure is reported on in the Auditor-General's Report commencing on page 1114. I propose to start with questions, minister, in respect of page 1164 under the heading 'State Aquatic Centre (SAC) and GP Plus Health', which actually commences on the preceding page, but the findings that I am going to refer to relate to about point 6 on page 1164. In regard to the failure to supply appropriate documentation to support the decision to choose the highest risk bidder, the Auditor states:

...the documentation did not adequately explain the decision to select the bidder which [represented] the lowest cost bid but was assessed as involving the highest risk having regard to demonstrated capacity to deliver projects of the size and complexity of the contracted works.

My question, minister, is: what documentation does exist to justify the decision to choose Candetti Constructions, and will the minister release that documentation?

The Hon. A. KOUTSANTONIS: The Auditor's comments on the Aquatic Centre are fair and balanced. The department has never tried to hide that the process for the delivery of the aquatic centre and associated GP Plus facility at Marion was less than perfect. However, the department has noted that, after the collapse of the previous PPP model for the project, the procurement process was implemented in the context of tight deadlines to complete the development for planned events.

The department worked effectively to manage and mitigate risks associated with construction, namely the development of a pool to meet FINA requirements, which were at time difficult to clarify. The impact of the builder going into administration—at all times, the department acted to protect the interests of the government and to get the best outcome for the state and its taxpayers. The project was completed on time to enable it to conduct the scheduled FINA events, and has been acknowledged by users as being an outstanding facility. In terms of the documentation, this is the general cabinet submissions and processes of government and, no, I will not be releasing them.

Ms CHAPMAN: Thank you for that response, minister, which sounded more like a submission and a guilty plea. What my question was, though, is what documentation actually does exist to justify that decision that I referred to?

The Hon. A. KOUTSANTONIS: I am advised it was a cabinet decision, and those documents are held within the cabinet office and they will not be released.

Ms CHAPMAN: So, is the minister saying that when the Auditor-General says the documentation, which clearly he has viewed, that didn't adequately explain, and that documentation has been viewed and he has made this assessment that it was not adequate? So, what I am asking is, aside from that documentation, are you suggesting that there is other documentation in existence which is under the protection of cabinet confidentiality, which actually exists, that the Auditor-General has not seen, which justifies the position that you have just put?

The Hon. A. KOUTSANTONIS: No, that is not what I said. I am advised—

Ms Chapman interjecting:

The Hon. A. KOUTSANTONIS: I know, but I am advised that the submission that cabinet considered is what the Auditor-General has seen. I am not going to release cabinet documents, pure and simple.

Ms CHAPMAN: So, if that is the documentation—I understand, obviously, you say for that reason you are not going to release it. You say that that documentation still, notwithstanding that you just told us that you consider the assessment to be fair and balanced by the Auditor-General—that his assessment of this says that it did not justify it. You are saying that the same documentation, protected under the cabinet confidentiality, does justify it, because that was my question. Where is the documentation that you say does exist, or doesn't it?

The Hon. A. KOUTSANTONIS: I am saying, on advice, that the cabinet considered all these matters and made deliberations and decided, and the Auditor-General has made comments about those decisions, as he is entitled to. He is relying on that documentation, and I will not be releasing cabinet documents. No government would.

Ms CHAPMAN: Does any other documentation exist that you say the cabinet relied on for the purposes of making that decision, that actually exists, that was not provided to the Auditor-General?

The Hon. A. KOUTSANTONIS: It is not surprising, I think, given that the cabinet of the day chose the lowest price. The documentation that was submitted to the cabinet was seen by the Auditor and the Auditor's remarks are based on that he thought the cabinet could have been given more information on the risks associated with it. He details that in his report, but as far as I am advised, there are no documents that the cabinet considered that have not been made available to the Auditor. If there are documents that the cabinet considered that the Auditor has not had a change to look at and I discover them, I will immediately inform the house and I will immediately forward them to the Auditor for comment.

Ms CHAPMAN: To the best of your knowledge, minister, the documentation that was relied on has all been provided to the Auditor, so there is no other documentation that exists to justify it. The decision of cabinet, clearly, was based on only that information, as best to your knowledge.

The Hon. A. KOUTSANTONIS: I am advised that the Auditor made his assessment based on the documentation, but the Auditor cannot make an assessment on the deliberations of cabinet, because he was not there, and he does not know what is said and who argued what and, quite frankly, in our system of government, no-one should, because you want to have the free flow of ideas and debate in a good cabinet. I do not think it is surprising that the cabinet made the decision it did, and the Auditor is simply stating that the lowest price option was also the highest risk. I also remind the honourable member that the outcome is beneficial to the taxpayers.

Ms CHAPMAN: This is the second time, minister, in recent years that the Department for Transport has chosen a bidder which posed the highest risk to deliver, in this case, a very expensive contract. Transfield, of course, in the bus contracts, is another one that immediately springs to mind. Apart from the statement that you made from this report, that you are satisfied that the department acted to protect the government, my question is: have guidelines or a framework since been introduced to ensure that better weighting is given to experience and ability to deliver contractual services?

The Hon. A. KOUTSANTONIS: As I said earlier, I accept the Auditor's comment on the aquatic centre, and I accept that the comment he has made is fair and balanced. I am also advised that we follow all the protocols required by Treasury and cabinet in terms of all tenders. There are lessons to be learned from this, but it is a unique situation. I remind the honourable member that the outcome was actually quite good for the taxpayer and the state.

Ms CHAPMAN: Are you saying that, notwithstanding that you have taken heed of what the Auditor-General has said, you have not ensured that there are guidelines in place now to cover this situation in the future?

The Hon. A. KOUTSANTONIS: That is not what I said. I refer to my—

Ms CHAPMAN: What guidelines or protocols have you developed or introduced to ensure that this does not happen again?

The Hon. A. KOUTSANTONIS: Like I said, the department follows all the appropriate procurement guidelines that are in place, but cabinet is the master of its own destiny, and if cabinet decides to choose a bidder on the basis of it being the lower price, regardless of the weightings or risk advice given to it by the department or any other body outside of the cabinet, the cabinet is entitled to make that decision. I think the member is contemplating somehow muting the cabinet to the point where it can only make a decision based on recommendation from the department rather than using its own ability to decide what it thinks is the best option for procurement.

Now the department goes about its work and does it exceptionally well, and I note the procurement ability within the department and, if you look around the state, the infrastructure that the department is delivering for the people of South Australia is immense—it is generational change and it is being delivered on time and on budget, in the main. If a cabinet wishes to dictate to a department that it will take a bid based on price, then the cabinet must accept the risks. In this case it did, and what happened is that we have a developer who is now bankrupt, but the state has its aquatic centre.

Ms CHAPMAN: No-one is suggesting, minister, that cabinet does not make the decision, but the Auditor-General is critical of the fact that the documentation that was presented to the cabinet did not identify what it could rely on to take that decision, and to accept that it was going to take a cheaper price and a higher risk. No-one is denying the cabinet's lawful authority to do that, but you have just told us that you accept what the Auditor-General said, so I am asking you about his comments, which say that, 'This documentation that I have been presented with which apparently was put to cabinet does not actually disclose the basis upon which it can then be safely relied on.' So, he is giving that advice.

It may be that one of the guidelines your department could have then initiated is to say, 'Well, we will make sure that there is a full documentary trail of the information that is necessary to support that, or change the process upon which we rely.' Now, you are saying you are clearly not going to change that discretion to be able to do as you have.

The Auditor-General is simply saying, 'Let's ensure that documentation is there.' I can only assume, minister (correct me if I am wrong) that there are no new formal requirements in the department that have been prepared as a result of this finding to ensure that adequate documentation is retained when you are contracting services of the order of the $130 million of this project.

The Hon. A. KOUTSANTONIS: What the Auditor cannot do is take into account the discussions that are taken outside cabinet before cabinet deliberates, briefings from Treasury, and briefings from other departments about risks. The Auditor is unable to assess the impact of what is quite normal (that is, discussions between ministers, discussions between departments, and discussions between bureaucrats) about the associated risks.

What he is saying is the documentation that cabinet considered did not completely detail all the risks. My point is: well, that is the cabinet's prerogative. That is not to say that Treasury did not know of the risks and that Treasury was not happy just to take the lowest bid. You would be surprised to know that the good people of Her Majesty's Treasury like to take the lowest bid—not always, but generally you will find one day that they like the cheapest bid. The final outcome of this is that we have a world-class aquatic centre.

Ms Chapman: We also have legal proceedings, minister.

The Hon. A. KOUTSANTONIS: I am sure we do, and we often have legal proceedings. There are legal proceedings when procurements are done within scope that the Auditor-General has no complaints about. In the commercial world, people are entitled to exercise their rights; it is just the way of things.

Ms CHAPMAN: In respect of this aspect, he goes on to say:

...that documentation did not necessarily reflect the informal input of Ministers and other agencies who were consulted as part of the normal process of preparing proposals for Cabinet consideration and approval—

This is consistent with what you have said; there is other material that comes to influence here. My question is: what other ministers and agencies did this statement refer to?

The Hon. A. KOUTSANTONIS: I imagine it was the Premier and DPC, I imagine it was the Treasurer and Treasury, I imagine it was the Planning minister and AGD, I imagine it was the Minister for Rec and Sport and DPTI, and I imagine it was the chief executives of the relevant departments—the day-to-day running of government.

Ms CHAPMAN: Given that you are saying 'I imagine', I think you are not sure, minister. Would you agree to inquire as to who that was and what agencies they were, and confirm back to the committee if there are any in addition, or if any of those are not correct?

The Hon. A. KOUTSANTONIS: I am advised there is no further information. I am advised that the Auditor has had access to all the documentation. If you are asking me, 'Were those conversations transcribed and handed to the Auditor?' no, they were not. If you are asking if there are minutes to those meetings, anything in relation to the aquatic centre, in terms of documentation, has been given to the Auditor. He has made comments. I accept those comments; I think they are fair and balanced. I am not sure what it is you are looking for.

Ms CHAPMAN: My question was not as to whether there was any other documentation. I think, in the first 10 minutes, we established there was no other documentation, to your knowledge, that was not available to the Auditor-General and considered for deliberation. But the Auditor is saying there were other factors, and I am simply asking what other ministers and agencies are involved. You have just given us a list of who you think probably would have been involved.

The Hon. A. Koutsantonis: On advice.

Ms CHAPMAN: On advice. In any event, I am simply asking you, minister: would you be prepared to inform the committee and come back to it with information if in fact that list is not complete or is different?

The Hon. A. KOUTSANTONIS: I am not sure how that would serve the committee because the Auditor has not expressed any frustration about any lack of documentation or any lack of advice. What he has said quite clearly is that he thinks that the cabinet was not informed appropriately of the risks, and we accept that. So, I am not sure how your request, or me coming back, assists the committee in any way. I am not trying to be difficult about it. This Auditor-General has extraordinary powers to speak to people and audit books. He can speak to anyone he chooses. So, I do not know how this assists the committee at all.

Ms CHAPMAN: I will take that as a no. The Auditor-General goes on to say, at page 1165:

The impact of the scope changes for the mental health facility was not adequately documented and agreed with the builder.

My question is: is this the reason, or at least one of the reasons, the builder has taken legal action against the government?

The Hon. A. KOUTSANTONIS: Ultimately, the court will decide who is right or who is wrong in this matter. The advice I have just received is that there was a variation to the initial build in the GP to allow a mental health facility within the GP Plus clinic. I am advised that there are cost issues around whether that was factored in in terms of any delays that may have been available or otherwise, in terms of construction times.

Those arguments are being held before the court. I am not sure how much more detail I can go into while they are being considered. I do not wish to in any way impede those actions or impede the contractor's ability to seek legal remedy through the courts from the government, so I will not be making any further comment on that.

I cannot tell you why he himself has lodged action. I am guessing he feels he has been wronged and is attempting to seek remedy, but these are all matters that are before a court. I am not sure I can add to them or should add to them.

Mr HAMILTON-SMITH: Minister, I am addressing the issue of regulatory arrangements for electricity use covered by the Auditor-General: ESCOSA, its role, and changes to legislation that were passed around the end of 2012-13. The government announced, on 18 December 2012, that it had reached a deal with AGL and Origin in respect to certain matters, and that it would introduce legislation to change regulatory arrangements. There were regulations introduced to set up ESCOSA as a watchdog, if you like. My question specifically is: what powers, if any, were taken away from ESCOSA as a consequence of those new arrangements, and why?

The Hon. A. KOUTSANTONIS: Point of order: there is no remit within the Auditor-General's scope of this questioning at all. I would ask the member, if he wants to ask me these questions, to do so in question time.

The CHAIR: The member for Waite should know that he has to reference any question to the Auditor-General's Report, so if I could ask him to do that, please.

Mr HAMILTON-SMITH: The Auditor-General's Report covers the whole of the energy portfolio. It is a very large amount of money. The regulatory arrangements that govern that money are included in the scope of the Auditor-General's Report, in my opinion. The practice of this place has been that questioning on the Auditor-General's Report is fairly broad. I am questioning arrangements that the minister says the government has put in place to protect the taxpayers' financial interest in the energy portfolio. That is what I am asking about.

The CHAIR: You still need a reference to the Auditor-General's Report.

Mr HAMILTON-SMITH: Where would you like to start, Mr Chairman? Let us try Statement of Comprehensive Income at page 1015? We can talk about pages 1013 or 1012, because all of the expenses in this Auditor-General's Report, in respect of energy, are to be monitored to some extent by ESCOSA. I do not know why the minister is trying to dodge the line of questioning. I do not know why he just does not answer the questions.

The Hon. A. KOUTSANTONIS: The member just referred to page 1014, which says, 'Statement of Cash Flows. The following table summarises the net cash flows' and it lists net cash flows, investing, change in cash and cash at 30 June. I am happy to answer any questions about any auditing matter whatsoever but he is asking me questions about policy. Question time is the place for this, not the Auditor-General's Report. The Auditor-General has made no adverse finding whatsoever here so, if you want to ask me a question about auditing, go ahead: do not ask me policy questions.

Mr HAMILTON-SMITH: I would like to know, on page 1018, whether receipts from technical regulation have anything to do with ESCOSA's role in electricity—receipts from the sale of electricity. The bottom line is that if the minister wants to argue that regulatory matters are not part of the purview of the department, I do not know why he just does not want to answer the question and I wonder whether I have struck a raw chord here. I have asked a simple question. Why do you not just answer it? What are you hiding? Answer the question.

The Hon. A. KOUTSANTONIS: Someone has not done their homework. Someone has not done any research. Someone has not read the Auditor-General's Report. Someone does not know what the Auditor-General's job is. It is not policy: it is auditing finances. Quite seriously, he has come in here and is asking me question time questions. Do your job and do some research.

Members interjecting:

The CHAIR: Order!

Mr HAMILTON-SMITH: I cannot see why the minister cannot answer some questions—

The Hon. A. Koutsantonis interjecting:

The CHAIR: Order!

Mr HAMILTON-SMITH: —about arrangements within his department that are governed by this budget line during this period. This has always been pretty free. This is the first time I can recall, in 17 years, that a minister has refused to answer questions during the Auditor-General's Report about any matter within his portfolio. He seems to be hiding something, Mr Chairman. Why does he not just answer the question?

I think I know the reason why he is not answering the question, but I ask him again: will he tell us why did he change the regulatory regime? Why did he use his employees—who probably wrote those regulations and who are covered by this Auditor-General's Report? He has employees who are salaried to do certain functions in respect of ESCOSA within his department. They are all mentioned in the report. These are fair questions. I just want him to tell us what those employees are doing and, if he tasked them to remove certain powers from ESCOSA, why did he do that?

The Hon. A. KOUTSANTONIS: Last time I checked, this is not estimates. Last time I checked, this is not question time. This is the—

Ms Chapman: Last time you checked you're still the minister.

The CHAIR: Order! The minister has the call.

The Hon. A. KOUTSANTONIS: Yes, I am.

Mr HAMILTON-SMITH: Let me ask a third question—

The CHAIR: Hang on, the minister is still on his feet.

The Hon. A. KOUTSANTONIS: It is not my fault that the honourable member has come into the Auditor-General's question time to ask me questions that should have been asked in question time today, or in estimates. He has found no adverse findings within the Auditor-General's Report. I understand the Auditor-General has made unqualified reports of all the accounts within DMITRE. He does not have a single question to ask me so what he is asking me now is policy questions.

Quite frankly, it is unacceptable for a member of parliament of 17 years' experience to walk in here and start asking me policy questions and then pretending some mock outrage that I am not answering questions that are not based on the Auditor-General's Report. I have every bureaucrat here who is responsible for the financial auditing of the departments and you cannot ask me a single question on the audit of the books that the Auditor-General has conducted. What you want to ask me questions about is: why did you deregulate electricity? Who did that? What are ESCOSA's functions and powers? This information is all publicly available. Ask me questions about the Auditor-General and do your job.

Mr HAMILTON-SMITH: I think we have established that the minister does not want to answer any questions whatsoever about how effectively the resources in his department are being used to protect the electricity bill payers in this state from excessive increases; but we will move on.

The CHAIR: Does the member have a question?

Mr HAMILTON-SMITH: We will move on. We can see the minister is avoiding questions. I do not know why he is so afraid of answering the questions. Is it alright to ask a question about the PACE program, minister? Would that be alright?

The Hon. A. Koutsantonis: Go ahead.

Mr HAMILTON-SMITH: Can you tell me, then—because it is noted that you cut funding to PACE in the last budget—how much of the state, by percentage, remains unexplored and how much has been explored?

The Hon. A. KOUTSANTONIS: I do not have the exact percentages here, but I can get them to you by the end of the day, hopefully. I also know that we have just completed one of the largest gravity surveys of the Woomera Prohibited Area ever conducted in the state's history. Earlier in the year, in the budget, we announced a series of initiatives, one in PACE that was announced in the budget.

I do not have those details here today, because the Auditor made no adverse finding whatsoever about the rollout of that money, the way they were contracted, the way we employed contractors. What I will get for the member is a breakdown, exactly, of what PACE discoveries have been made in the last 12 months, exactly what percentage of that money has been spent on aerial gravity surveys and what money has been spent for PACE in terms of drilling and grants. I will get all those details for him very, very soon.

Mr HAMILTON-SMITH: I was going to ask a point of review, Mr Chair, but I see we have run out of time. The minister seems to be asserting that questions in estimates are to be restricted to any adverse findings found by the Auditor-General—

The Hon. A. Koutsantonis: I did not; no.

Mr HAMILTON-SMITH: That's what he just said. From my understanding, that would be the first time since 1857 that that has been the case. I see our time has expired, so I will leave it to you.

The CHAIR: I thank the minister and I thank the member for Waite, and also the advisers. We now move to the Minister for Finance, Minister for Police, Minister for Correctional Services, Minister for Emergency Services and Minister for Road Safety. If I could remind members asking questions to reference them to the Auditor-General's Report. The member for Davenport.

The Hon. I.F. EVANS: Part A, page 19-20, refers to the performance of Shared Services. Near the bottom of the page it notes that:

...savings were attained without any transition or reform activities occurring.

Is it correct that to 2016-17, the savings in that category amount to $175.6 million and $153.6 million, totalling $329.2 million out of the savings claimed to $473.7 million in total savings from the table?

The Hon. M.F. O'BRIEN: In the notices that I have, and we will see whether they cover the question, the report that we are referring to confirms that by 2015-16 the Shared Services initiative will have achieved the original annual $60 million indexed savings target and will exceed that target every year after that. The figures show that savings achieved to date are $229 million. In his report the Auditor-General notes that the savings target was probably overly ambitious and that the $60 million of annual savings would be achieved by 2009-10. Not achieving this has cumulatively meant that savings of $85 million were not achieved compared to the aspirational earlier target. I am trying to find out exactly within the briefing where we actually address the issue.

The Hon. I.F. EVANS: If you get out page 20 of Part A, you go to the final paragraph of that page and what the Auditor-General says is:

The savings allocated to the SSSA initiative prior to reform activities represents those savings which were included in the initiative submitted to Cabinet, however those savings were attained without any transition or reform activities occurring.

In other words, all that cabinet did was say that you have to save X dollars and they have just allocated them against certain savings programs—ICT, or whatever the program might be. Whether that program delivered that saving on that is irrelevant; that is how it was going to be charged to the agency. The Auditor-General continues:

For example, a major element of these savings is ICT. Agency expenditure budgets were reduced overall by $25 million each year in the 2007-08 Budget to achieve these savings and by a further $27.3 million by the 2011-12 mid-year budget review.

In relation to those allocated savings to the agencies for ICT, he then goes on to say:

To 2012-13 these savings attributed to [Shared Services] amounted to $175.6 million with a further $153.6 million budgeted from 2013-14 to 2016-17.

If you add those two together, it is $329 million of savings out of a possible 473, which is in the bottom right-hand corner of the chart. Is it true that $329 million out of the $473 million in savings were attained without any transition or reform activities occurring? In other words, they were just allocated savings and how the agency ended up making the savings is totally up to them?

The Hon. M.F. O'BRIEN: I think, in essence, you are correct and what the Auditor-General is saying is that the reform initiatives are now contributing, if you like, to savings of around $20 million per year rising to $24 million in 2016-17. Interestingly, I think it is fair to say, member for Davenport, that what happened with Shared Services—and it is probably a failing—is that all of the existing functions, including the methodology and the personnel, were taken from the individual agencies and put in a building, and all that changed really for the first couple of years was the view from the window.

They were doing what they had done previously in a department or an agency but we are now at the point of actually starting to drive the reform by consolidating the databases and upgrading the CHRIS software to a more recent version and I think that is when we will start to reap the real rewards. We will reduce 19 databases to two and 80 payroll runs down to 10, so this is when we will actually see the savings.

The Hon. I.F. EVANS: Page 9 of Part A refers to the asset sales the government has undertaken in Lotteries and forests. Could the minister advise how far through the process is the sale of the State Admin Centre block?

The Hon. M.F. O'BRIEN: Member for Davenport, we are in the stages of preparing the proposal to take to market, but it has not gone to market at this stage.

The Hon. I.F. EVANS: Referring to Part A, with regard to forests, how was it that the government did not include the value of the Glencoe nursery in the reserve price as part of the forestry sale? How did all the consultants in the department miss that point?

The Hon. M.F. O'BRIEN: The actual value of the Glencoe nursery in the overall scheme of things was minimal, and there was, I think, a lack of certitude, if you like, as to whether a prospective purchaser would want to take on board the Glencoe nursery. Although, one would think that if you are purchasing a forestry plantation and you are purchasing it for three rotations then you know you have to replant after the first rotation that a potential purchaser would not want to acquire that asset, but it was not known and the successful bidder did include in their bid a component, if you like, for the purchase of that particular asset.

The Hon. I.F. EVANS: Is the minister satisfied with the process that was used to sell the forests, given that the Glencoe Nursery sale was not included as part of the reserve price, the minutes of the project steering committee did not provide a transparent account of the consideration and acceptance of the sale of the Glencoe Nursery, it was not highlighted in the minute to the Treasurer regarding the sale, it was not highlighted in the cabinet submission regarding the sale, and the copy of the declaration of the project steering committee assessment of the potential conflict of interest was also not provided to the Auditor-General? As minister, are you satisfied with the probity and the process used with regard to the forest sale? There was a conflict of interest highlighted by the Auditor-General, as well.

The Hon. M.F. O'BRIEN: Member for Davenport, I think there is an acknowledgement that the process could have been handled better. That is the determination of the Auditor-General, that documentation could have been a little more comprehensive, and I think that is acknowledged by Treasury and Finance. The Auditor-General did find overall that DTF had implemented a comprehensive governance framework to manage the sale process and had implemented sale processes and controls over the management of the sales process, and that the sale proceeds received for both Forestry and Lotteries exceeded the upper limits of the estimated reserve prices, so the outcome in terms of the amount received by government was in excess of reserve. The government's framework was comprehensive and administered well, but I think there was a bit of an oversight in relation to Glencoe in relation to documentation of that asset.

The Hon. I.F. EVANS: On page 11, the Auditor-General raises concerns that there was a lack of evidence to support the project time frame. Does the minister think it was a fluke that the government announced the sale of the forests the day after the SACA vote regarding Adelaide Oval?

The Hon. M.F. O'BRIEN: Yes, there is no relationship between the two events.

The Hon. I.F. EVANS: With regard to the Lotteries sale, page 14 and 15 of the Auditor-General's Report, Part A, refers to the fact that the concerns from the IGA were not raised in the cabinet submission and that cabinet did not get advised re the Crown Solicitor's view re the legislation. I am just wondering why that occurred, and again I will ask the minister: given that there were details left out of the cabinet submission regarding the Forestry sale and there were details left out of the cabinet submission regarding the Lotteries sale, is the minister satisfied with the process in relation to the Lotteries sale?

The Hon. M.F. O'BRIEN: In essence, member for Davenport, this comes down to the two options that were made available to cabinet—and particularly the responsible ministers—do we go down the legislative path or do we go down the contractual path? We chose to go down the contractual path, and I think the Auditor-General is quite satisfied with that decision, and also the government's, and the probity surrounding the process. The Auditor-General noted that DTF had implemented a comprehensive governance framework and had implemented sound processes and controls over the management of the sale.

The Hon. I.F. EVANS: Minister, on the same page, why should cabinet have not been aware of the IGA's preference to go down the legislative path, and why should cabinet have not been aware of the Crown Solicitor's view about going down the legislative path. They wanted to go down the legislative path and cabinet decided not to. Why should cabinet have not been advised of their view?

The Hon. M.F. O'BRIEN: The two responsible ministers, the Treasurer and the Attorney-General were made aware of the IGA and Crown Solicitor's views on the legislative approach but felt that the contractual approach was more suited to this particular transaction.

The Hon. I.F. EVANS: On pages 15 and 16, the Auditor-General raises that the cost of managing the sale process was approximately $12.5 million and $13.1 million respectively. It is unclear to me whether the $12.5 million and $13.1 million includes the success fees and the consultant's fees, or whether that is simply the cost of department—the internal cost of the government machinery, if you like. Can the minister advise: is the $12.5 million and $13.1 million on page 16 of the report the total cost all inclusive of all consultant payments and success fees, or is it in addition to consultant fees and success fees?

The Hon. M.F. O'BRIEN: Those figures are all inclusive.

The Hon. I.F. EVANS: Can I have RISTEC? Mr Walker is here and I know he loves to be involved. The Auditor-General has raised RISTEC, I think, for the last seven years, and he does again in this particular Auditor-General's Report. Can the minister advise what is the latest estimate for the total cost of the completion of the RISTEC project, and can you remind the committee what was the original budget?

The Hon. M.F. O'BRIEN: Member for Davenport, the original budgeted figure was 43.3, and we are currently looking at a revised budgeted figure of 50.5. So, 43.3 to 50.5—not a massive blowout. That 50.5 may be altered, in that we are in ongoing discussions with Fujitsu in relation to their performance and the timeline. I think they probably overpromised, and we have had ongoing discussions to compel them to commit the necessary resources to complete the project. But, there has been a little difficulty, I think in part because there has been a turnover of personnel within Fujitsu.

The Hon. I.F. EVANS: The last question from me—and the minister can take it on notice—relates to the Motor Accident Commission. Could you advise how much money is invested through South Australian firms? So, in other words, the Motor Accident Commission have an investment wing; I suspect they are using interstate or international firms. I want to know the breakdown of how much money is invested via South Australian firms.

The Hon. M.F. O'BRIEN: Yes, member for Davenport, I will definitely take that on notice. I apologise for the time taken on that first question; I just didn't quite get the grip.

The CHAIR: We now turn to the Police portfolio.

Mr VAN HOLST PELLEKAAN: Minister, I refer to part B, volume 4, pages 1392 and 1393. This is to do with vehicle licensing and the daily updates of DPTI information. Can the minister confirm if a process to ensure the accurate and complete update—

The Hon. M.F. O'BRIEN: Sorry, member for Stuart, if you could just bear with us for an instant.

Mr VAN HOLST PELLEKAAN: Could the minister please confirm if a process to ensure the accurate and complete update of the vehicle licensing system with the information provided by DPTI has been introduced by SAPOL as recommended?

The Hon. M.F. O'BRIEN: That work has been completed, member for Stuart.

Mr VAN HOLST PELLEKAAN: Thank you, minister. Please advise when it was completed, and also how long this information had been transferred onto the vehicle licensing system without accuracy. So, when did you get on the good path, and how long were you off it?

The Hon. M.F. O'BRIEN: Member for Stuart, if I could come back to you on that? I have been advised that we were never off the system, if you like, but the Auditor-General found that the daily confirmation—the daily signing off of the data transfer—was not done as it should have been. I think what the Auditor-General has indicated is that that has to be done, for quality assurance reasons, on a subsequent audit, so that we know that every day the data has been transferred and has been updated, and that an individual has signed off that that work has occurred.

Mr VAN HOLST PELLEKAAN: You are quite right; that is what the Auditor-General recommended. I understood from your first answer that doing it that way has actually been put in place, so the question was: can you tell me when that happened, please? I understand you will get back to me about that.

The Hon. M.F. O'BRIEN: I will get back to you.

Mr VAN HOLST PELLEKAAN: This is a really important area for many people who receive expiation notices for driving unregistered vehicles and, occasionally, incorrectly. So, when you get back to me with that, could you also give me information about how many people received incorrect expiation notices because of this fall-down in the system, up until the point when the daily signing and sighting was actually put into place as recommended?

The Hon. M.F. O'BRIEN: Member for Stuart, I will take that question on notice, but I think the issue is not that the daily update was not occurring: it was that it was not being documented. The advice that I have received is that it was occurring on a daily basis, but the necessary documentation to have the responsible officer signing off that the data transfer had occurred was not being done on a daily basis. There were days on which the data transfer had occurred, but no-one had actually filled out the documentation to that effect. I will come back to you with an answer.

Mr VAN HOLST PELLEKAAN: Thank you. I am sure that the Auditor-General's recommendation that the system be changed was based on a view that, if it was not changed, or was operating the way it was, mistakes could have been happening. In the same area, but this time with regard to access levels and expiation reviews, given that the Auditor-General has made numerous references to having appropriate staff access to the expiation notice system, minister, please advise if any staff have inappropriately accessed the expiation notice system.

The Hon. M.F. O'BRIEN: Again, I will take that on notice; we do not have that information here.

Mr VAN HOLST PELLEKAAN: In the same area, but this time at the very bottom of the page under Expiation revenue, in reference to the responsibility for the follow-up of outstanding infringement notices, please advise what follow-up has now been done by police.

The Hon. M.F. O'BRIEN: I believe that the Auditor-General detected that the number of outstanding TINs was on the high side, which indicated that regional commanders were not following up. As a result of the findings of the Auditor-General, there has been a tightening, and my understanding is that the level is now within acceptable boundaries but, again, I will return with a more definitive answer.

The CHAIR: I thank the minister, and I thank the member for Davenport and the member for Stuart. That concludes the examination of the Minister for Finance, Minister for Police, Minister for Correctional Services, Minister for Emergency Services and Minister for Road Safety. We now have the Minister for Education and Child Development and the Minister for Multicultural Affairs. I remind members they must reference the Auditor-General's Report when they ask questions. The member for Unley.

Mr PISONI: Minister, I would like to take you to page 458 of the report that refers to FTEs and a comparison between 2012 and 2013. In doing so, I want to ask whether you are confident that Mr DeGennaro was giving correct information to the Budget and Finance Committee on 6 May regarding his figures on FTE numbers and savings targets.

The Hon. J.M. RANKINE: FTEs?

Mr PISONI: The Auditor-General's Report is all about full-time numbers. I am trying to get some comparisons with what was claimed in the Budget and Finance Committee in May of this year and what the Auditor-General has discovered.

The Hon. J.M. RANKINE: I do not have a copy of what Mr DeGennaro gave the Budget and Finance Committee so I cannot comment.

Mr PISONI: The question is: are you confident that Mr DeGennaro was giving correct information to the Budget and Finance Committee?

The CHAIR: I do not think that has anything to do with the Auditor-General's Report.

The Hon. J.M. RANKINE: If the member wants to give me some figures, I am happy to have them checked.

Mr PISONI: Can the minister advise why the FTE numbers have increased by 235 from 2012 to 2013?

The Hon. J.M. RANKINE: I do not have information about why they have gone up by 235, but the breakdown provided by the Auditor-General shows that they were people employed under the Education Act (so I am assuming that is teachers), or were school service officers (again, I am assuming that is people in our schools), and there were some Children's Services Act employees. I do know that we have been opening our new children's centres, so I am assuming that is staff in some of those facilities.

Mr PISONI: Can you advise how many staff—

The CHAIR: Can you refer to a page number so that the minister—

Mr PISONI: Same page, sir.

The CHAIR: Well, just quote it when you ask your question.

Mr PISONI: Same page. Minister, can you advise the committee how many employed under the Education Act are not employed in schools?

The Hon. J.M. RANKINE: I will take that question on notice.

Mr PISONI: Can you advise why there are 14 additional staff employed under the Public Service Act from 2012 to 2013?

The Hon. J.M. RANKINE: Again, I am happy to take that on notice. We have, as I have said, improved the services that we provide to families, with the expansion of our children's centres. I think we now have about 34 of those that are operational. I have opened three of the four Aboriginal-specific children's centres. I am speculating, but I am assuming that when you are talking about such a small number as 14 there are going to be admin staff located throughout all of our facilities, some in excess of 500 of them.

Mr PISONI: Same page. Can the minister advise, then, whether the increase in staff of 235 is in line with this year's budget—this is a table 12.2—where there is expected an efficiency dividend by 30 June 2017 of 53.4 fewer FTE staff?

The Hon. J.M. RANKINE: I am advised that as of June we were within our FTE cap, and the department is working towards delivering on its efficiency savings.

Mr PISONI: Were the figures provided to the Budget and Finance Committee, of an FTE reduction requirement associated with the expenditure reductions of 287.2 FTEs in 2012-13, met?

The Hon. J.M. RANKINE: Again, I do not have the detail around what was provided to the Budget and Finance Committee. I thought I was answering questions on the Auditor-General's Report, which is looking at whether we have proper accounting procedures in our department.

Mr PISONI: With all due respect, minister, you have made the claim that the savings targets were met. Can you please, then, advise the house how many FTEs were offered redundancy packages in the 2012-13 year?

The Hon. J.M. RANKINE: With all due respect, I did not say that at all; I said we are working towards our savings targets.

Mr PISONI: Can you please advise how many FTEs you dispensed with last year?

The Hon. J.M. RANKINE: I am advised that the number of employees who received a TVSP this year (2012-13) was 98.

Mr PISONI: Are you able to explain, then, why the—

The CHAIR: Same page number?

Mr PISONI: —same page—Budget and Finance Committee was told on 6 May that the FTE requirement with expenditure reductions amounted to 287.2 FTEs for 2012-13? Was that a correct figure?

The Hon. J.M. RANKINE: I am advised that not all FTE reductions are related to TVSPs, but we will take that on notice being that the member is quoting from Budget & Finance and I don't have those documents in front of me.

Mr PISONI: What was the target for 2012-13 reductions in staff, regardless of how they were reduced?

The Hon. J.M. RANKINE: Again, I don't have that information because it is not the subject of the Auditor-General's Report.

Mr PISONI: I'm sorry, minister, it is. The Auditor-General's Report talks about the number of staff in 2012 at 22,676. I am simply asking how many staff were surplus and no longer in the department, whether you have met your targets and what the targets were. You have just said there were 90, so what were the targets that were set for 2012-13?

The Hon. J.M. RANKINE: You are referring to a budget target as opposed to what is reported in the Auditor-General's Report. I am happy to take it on notice.

Mr PISONI: Same page, but referring to your earlier comment where you said that there were more teachers employed under the Education Act. You were not able to clarify whether they were in the department or in schools, but there actually are 26 fewer students in 2013 compared to the previous year. Are you able to advise where the extra teachers were placed? Was it because of requirements in the enterprise bargaining agreement or were there other considerations for the additional staff being employed under the Education Act?

The Hon. J.M. RANKINE: I am happy to advise the house that the Auditor-General uses data from term 1 in relation to student enrolments. As of the commencement of term 3, we have had a substantial increase in enrolments—1,121 FTE students.

Mr PISONI: What was the total enrolment then as of that date?

The Hon. J.M. RANKINE: As of term 3, I am told there are 167,614 FTE students enrolled.

Mr PISONI: And the employee numbers are taken on what date?

The Hon. J.M. RANKINE: I am advised 30 June.

Mr PISONI: Referring to page 440 and the Valeo payroll system, the Auditor-General comments that pay clerks are continuing to process payroll input forms without authenticating the identity of the officer approving changes to employee payroll and leave files. Pay clerks continue to process claims, allowances and leave applications without checking approvals. Can you advise whether this is the reason for the increase in salary overpayments referred to on page 442 of the Auditor-General's Report?

The Hon. J.M. RANKINE: My understanding is that these forms continue to be processed manually and a whole lot of processes have devolved over a period of time. We are progressively implementing electronic and online solutions so that the authorisation of payroll related transactions by systems users with appropriate human resources delegations will be in place.

The implementation of the vacancy selection and placement system in 2008-09 has partly addressed the concerns over the validity of new appointments, higher duties and increases in time workload because appropriate approvals are required and checked. We have successfully implemented an online temporary relief teacher claims system with in excess of 99 per cent of TRT claims submitted by the schools and preschools being processed in this way. It is a much better process and a process that we are hoping to continue to roll out.

Mr PISONI: What are the qualifications of the pay clerks, minister?

The Hon. J.M. RANKINE: I will have to take that one on notice.

Mr PISONI: I do not think it is funny, because we had a head of legal services who was not a lawyer, so I think it is a very legitimate question. You have not answered part of my earlier question as to whether the increase of $1.2 million in overpayments referred to on page 442 was a result of the poor processes being conducted by the pay clerks as referred to on page 440 of the Auditor-General's Report.

The Hon. J.M. RANKINE: I will have to check that out, but I think it is fair to say that, over a period of time, the overpayments have reduced and our recoveries team is working very closely with Shared Services to address all these issues.

Mr PISONI: Minister, you just said that the overpayments have reduced, but they are up by 93 per cent this year compared to last year. Can you explain why overpayments have increased by nearly double from 2012 to 2013?

The Hon. J.M. RANKINE: I am happy to clarify that: the value of the debts being managed by Shared Services and the DECD has reduced by $129,000 over the period June 2013 to October 2013, so they are working together very closely to bring that down.

Mr PISONI: I am sorry; you have not explained why there was an increase in overpayments of $1.2 million as of March 2013.

The Hon. J.M. RANKINE: As the vast majority of those overpayments involve Shared Services, I will take that question on notice.

Mr PISONI: Referring again to page 442, the Auditor-General says that the recovery of overpayments is a shared responsibility between the Department for Education and Shared Services, so could you advise what your responsibility is as the Minister for Education?

The Hon. J.M. RANKINE: As I said, we have been working with Shared Services, and the recovery process is, as I understand it, in two stages. Shared Services initiates the first stage of debt recovery actions, which involves initial communications with the debtor. If the debt is not recovered through the first stage response, the debt is to be referred to DECD for second stage recovery actions, which involve detailed assessments of the circumstances and consideration of legal avenues for debt collection where that is appropriate. Shared Services has acknowledged, I understand, that the increase in salary overpayments relates to the first level of recovery, and they have engaged additional resources to address the backlog.

Mr PISONI: What is the cost of the debt recovery program on overpayments to staff?

The Hon. J.M. RANKINE: I will take that on notice.

Mr PISONI: Can the minister advise the number of overpayments—the physical number of staff who have been overpaid—that represents that $2.5 million figure?

The Hon. J.M. RANKINE: No, I am sorry, I do not have that detail. I understand that the quantum of the overpayments is reported in the Auditor-General's Report; is that right? No. I do not have that level of detail for the member, I am sorry. I will have to again take that on notice.

Mr PISONI: Perhaps you might like to bring back to the house, minister, the breakdown of the act under which those employees are employed, whether it is the Education Act or PSA. If you are happy to do that, I would much appreciate it. Was that a yes?

The Hon. J.M. RANKINE: Yes, that's fine.

Mr PISONI: Thank you.

The Hon. J.M. RANKINE: If we can get that detail without too much expense in getting it.

Mr PISONI: I would want to know if I was the minister. This is referring to page 482 of the Auditor-General's Report. We are looking at the federal money that was granted for the Empowering Local Schools program. It received $1 million of commonwealth revenue in 2012, of which $800,000 was unspent as of 30 June. Are you able to advise why that was unspent? Did it not meet the criteria for it to be spent, and has there been reporting back to the federal government as to how the $200,000 was spent?

The Hon. J.M. RANKINE: I'm sorry, I don't have the detail of that with me, but I am happy to take that one on notice.

Mr PISONI: Well, this is an examination of the Auditor-General's Report. It is straight out of the Auditor-General's Report. You have got your advisers there. It is extraordinary that you are not able to answer that question. This was specifically set up for local school management, and the lay reader of this would come to the conclusion that we have not delivered on local school management and that is why you have not allocated 80 per cent of federal funds that were given to you to deliver that commitment that you made at the COAG.

The Hon. J.M. RANKINE: The member for Unley is very good at making assertions, and what we know is that he will take every opportunity he possibly can to denigrate the public education system. There may be many reasons—

Mr PISONI: Point of order, sir.

The CHAIR: Point of order.

Mr PISONI: The minister is imputing improper motives on a member of parliament.

The CHAIR: I don't think there is a point of order. Minister, continue.

The Hon. J.M. RANKINE: I'm just describing what you do. We know what you do every day. There may be many reasons why—

Mr Pisoni: To hold you to account, because you're so hopeless.

The CHAIR: Order!

The Hon. J.M. RANKINE: —it is reported in this way, many reasons why as at 30 June it was considered to be unspent. That does not mean for a minute that we have not been supporting our schools, that we have not been supporting our teachers, that we have not been, importantly, supporting the principals out in our schools; principals who, along with Victoria, have the greatest autonomy over the finances in their schools of any education system in Australia.

Mr PISONI: I take you to page 437 now, minister. The Auditor-General says that:

Since January 2012 the Department's human resources management delegations manual for PSA employees has stated that only level 2 and 3 delegates have authority to engage non-executive employees on an ongoing, term or casual basis. For Families SA the level 2 delegate is the Head, Families SA and level 3 delegates are Families SA directors.

Are you able to confirm whether Melissa Green was appointed using that process, as she was appointed to a full-time position within the families and communities section within your Department for Education in mid-2012 while still on remand for the 16 charges she pleaded guilty to relating to embezzlement, and Green won the position in Families SA as a financial counsellor in the financial control, counselling and support program within your department?

The Hon. J.M. RANKINE: I do have briefings in relation to Melissa Green, but I do not have them with me here in the chamber, obviously, because that is not the subject of this particular questioning on the Auditor-General's Report. Ms Green has been dismissed and there is an inquiry underway in relation to some of the actions of the people in the department in relation to Ms Green.

Mr PISONI: The Auditor goes on to say that an audit review in 2012-13 identified instances where non-executive employee appointments were authorised by Families SA office managers. Was Melissa Green one of those appointments and are you able to tell the house how many appointments were made in this manner?

The Hon. J.M. RANKINE: No, I cannot tell the house that and I will take that on notice.

Mr PISONI: This refers to page 446 of the Auditor-General's report. Can the minister explain why Families SA has not completed its required regular review of registered caregivers as it is required to by law, and a review of the 207 registered caregivers was overdue by the end of May, as reported by the Auditor-General?

The Hon. J.M. RANKINE: Naturally I would like to see all the care reviews completed on time but my primary concern is that children in our care are safe, and as soon as I became aware of the Auditor-General's findings I sought to understand the purpose of the carer review in relation to child safety. The reviews are performed by the carer's employer in the first instance and then submitted to Families SA for final review. Generally a contracted non-government organisation undertakes those reviews and then forwards them on to Families SA.

Whilst most carers are re-registered, it is possible that a carer's registration may be suspended or terminated for whatever reason. However, this is not the primary mechanism for advising of any care concerns in relation to a child or a carer. If anyone in the community formally reports a concern of a serious nature, we respond appropriately and those people are investigated. There are over 1,000 registered foster carers in the connected client and case management system. The 207 outstanding reviews have only recently become due, and I understand that the overdue carer reviews reported in the Auditor-General's Report have now been completed.

Mr PISONI: Does the carer review include matters to do with child protection, that is, whether the person is suitable to be caring for children?

The CHAIR: What is the page number?

Mr PISONI: The same page; the same topic, sir.

The Hon. J.M. RANKINE: He is taking great licence, sir, of course, as he always does. Of course the carer reviews look at a whole range of things.

Mr PISONI: Very effective it is too.

The Hon. J.M. RANKINE: What is?

Mr PISONI: The way I pursue the government on their poor handling of child protection.

The Hon. J.M. RANKINE: The way you pursue your headlines.

Mr PISONI: The way I pursue the poor handling of child protection.

The Hon. J.M. RANKINE: Always aggressive and offensive; a big bully.

The CHAIR: Order! The minister has the call.

The Hon. J.M. RANKINE: As I said, we have non-government organisations and they are the ones that engage our foster carers. We have many people in our community who are incredibly generous and open up their homes and their hearts to these children who cannot remain with their families. Obviously, we have to be very careful about the assessment, and it is a very rigorous assessment in the first place that foster carers will go through before they are able to take children into their care.

We go through a process not only of assessing the carers continuously but also there are case management reviews undertaken of children. This is a big demand on the system but one that we think is really important. They do not always come in on time; and we are dealing with non-government organisations undertaking this work and then passing it on to Families SA.

As I said, the annual reviews referred to have been completed, I understand, by all of the non-government organisations, and we are close to finalising the reviews within Families SA. So, families have been looked at and spoken to. There are a range of things that are looked at, including their suitability, whether the accommodation is suitable, interactions within the family—there are a whole lot of things that are looked at in these reviews.

The CHAIR: We will now take questions on Multicultural Affairs.

Mr PISONI: This refers to page 298 of the Auditor-General's Report—Multicultural SA accommodation. In 2002, there was no allocation for accommodation for Multicultural SA; however, in 2013, there was an allocation of $403,000. Are you able to confirm if that was for the Chesser Street building that you have since moved out of?

The Hon. J.M. RANKINE: I will take that on notice, but yes, the Chesser Street accommodation is still being used by the Multicultural and Ethnic Affairs Commission, and there are other people of the agency, as I understand, that are in that accommodation. But, yes, we have made some other arrangements in relation to the staff of Multicultural SA; we have taken them into the Riverside building so that we have more resources around that agency to actually support our multicultural community.

Mr PISONI: How many staff are still at the Chesser Street building, at the $403,000 rental payment?

The Hon. J.M. RANKINE: They are staff, as I understand it, from DCSI, so I do not have that information. But, I am assured that the department is using that accommodation for its staff—not Multicultural SA, but departmental staff.

The CHAIR: I would like to thank the minister and thank the member for Unley. That concludes the Minister for Education and Child Development and Minister for Multicultural Affairs.

Progress reported; committee to sit again.

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