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House of Assembly - Fifty-Third Parliament, Second Session (53-2)
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Auditor-General's Report

Auditor-General's Report

In committee.

(Continued from 27 October 2015.)

The CHAIR: Today, we have the Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy, and Minister for Small Business for 30 minutes from 4 o'clock, to be followed at 4.30 by the Minister for Disabilities, Minister for Police, and Minister for Correctional Services.

I remind members that the committee is in its normal session, so any questions have to be asked by members on their feet and all questions must be directly referenced to the Auditor-General's Report. We ask that you make those references at the beginning of your question. Member for Stuart, what book would you like to start with?

Mr VAN HOLST PELLEKAAN: Part B: Agency audit reports, page 506. We are looking at the issue that deals with purchase cards and the comment which is an identification of 'numerous purchase card transactions for the purchase of mobile telephones or accessories, computer software and staff gifts'. Treasurer, the question for you is: why was the department purchasing gifts for staff members?

The Hon. A. KOUTSANTONIS: I am advised—I will give you a high-level reply—the Auditor has raised a number of control findings related to payroll, expenditure and purchase cards. These are largely due to the machinery of government changes and represent transitional issues. The issues, I am advised, are minor in nature and do not have an impact on the accuracy of the financial reports. This is supported by the unmodified audit opinion provided over the department's financial statements.

I understand, and I am advised, that all issues have been addressed and the department will continue to review and harmonise policies and procedures during the course of the year. On your specific question about gifts being purchased for staff by government purchase cards, I understand that there has been a directive sent out on the appropriateness of the way cards should be used to stop that practice.

Mr MARSHALL: I refer to Part B, page 570. Treasurer, the URA has commissioned an independent report on the land economics of its entire asset holdings which, according to the URA's response to the Auditor-General, has been used to develop a long-range or 'long-term', I think the term is, financial plan which has or is being presented to Treasury. Have you seen this long-term financial plan?

The Hon. A. KOUTSANTONIS: The advice I have received is, no, it has not come before me as yet. It is part of the work that the URA is doing and I would refer you to the URA minister.

Mr MARSHALL: As the Treasurer, do you make sure that if the Auditor-General has raised an issue with one of the agencies and that agency is required to show it to Treasury that you will keep abreast of that issue and monitor it, and when would you expect that that long-term financial plan will be available for Treasury to inspect?

The Hon. A. KOUTSANTONIS: When it is finished.

Mr MARSHALL: Will that specific financial plan make reference to potential revenues or indeed liabilities attributed to the Gillman deal?

The Hon. A. KOUTSANTONIS: We will have to wait until it is finished.

Mr MARSHALL: Thank you very much. Not many answers there. Also on page 570, the Auditor-General makes reference to the unsolicited bids proposal. Has the Treasurer had any involvement in the development or approval of the new guidelines?

The Hon. A. KOUTSANTONIS: Yes, the cabinet process.

Mr MARSHALL: Does the Treasurer think it was appropriate that he be involved in the development of these guidelines, given that it was largely his failings which led to the introduction of the new guidelines?

The Hon. A. KOUTSANTONIS: That is like asking: is it appropriate that the Leader of the Opposition remain Leader of the Opposition after his conduct led to the loss of the last state election? How long is a piece of string? The truth is there was no adverse finding against me in the report. I was not found guilty of maladministration, but the Leader of the Opposition did cause the loss of the last state election. So, make your own conclusions.

Mr MARSHALL: Nevertheless, Treasurer, it is quite clear that there were significant failings identified with the unsolicited bid arrangements that were in place, some of those arrangements which you, indeed, oversaw. The government has seen fit to put new unsolicited bid guidelines in place. You have now told the parliament today that you were intimately involved in their development, as a member of cabinet, and I am asking whether you think this is appropriate?

The Hon. A. KOUTSANTONIS: This has almost nothing to do with the Auditor-General's examination, it is simply another desperate attempt by the Leader of the Opposition to remain relevant. As sad as it is to watch him in this process, I think the parliament would be better served with him asking me questions about the Auditor-General's Report rather than attempting to try to go further than the ICAC's findings.

Mr MARSHALL: Part B, page 577. As a member of the cabinet, can the Treasurer explain his involvement in the more recent case where the sale of land owned by the people of South Australia occurred in the absence of an independent valuation to understand the land's true value. In particular, I refer to page 577, where the Auditor-General looks at the issue of the Tonsley Park land sales to the Flinders University and DSD.

The Hon. A. KOUTSANTONIS: I am advised it is a matter for the board of the Urban Renewal Authority and the relevant minister. He was here yesterday and I assume that, rather than be neglectful and forget to ask the minister that question, I am sure you did.

Mr MARSHALL: Nevertheless, my question, following on from page 577, is: was Treasury asked to provide advice or did, indeed, Treasury provide advice regarding the land sale of Tonsley to the Flinders University and DSD?

The Hon. A. KOUTSANTONIS: I am not sure what relevance that has to the Auditor-General's Report, other than, again, another desperate attempt by the Leader of the Opposition to remain relevant. This is a matter for the URA and I refer him to them. Rather than wasting the valuable time of the parliament with his desperate attempt to remain relevant, why don't we actually get some questions on the Auditor-General's Report?

Mr MARSHALL: The reason why it is relevant is because it is contained in the Auditor-General's Report. I have given the reference to the committee chairperson. It is page 577. It is very clear from what was laid out by the Auditor-General there that:

Our review identified Tonsley Park land sales to the Flinders University of South Australia (Flinders University) and DSD where an independent valuation was not obtained prior to sale. These sales arrangements had, however, been approved by Cabinet.

My question is: what involvement did Treasury have in the approval of these land sales, without valuation?

The Hon. A. KOUTSANTONIS: There is nothing further I can add.

Mr MARSHALL: Does the Treasurer think it is fair to the public to draw the conclusion that this deal alongside the Gillman deal paints to a pattern of behaviour by you, the Treasurer of South Australia?

The Hon. A. KOUTSANTONIS: Well, no, and I think the Leader of the Opposition is abusing the processes of the parliament now to use parliamentary privilege to make accusations against me, and I invite him to make his accusations outside.

Mr MARSHALL: I am just trying to ascertain for the parliament whether you were aware as part of your responsibilities as the Treasurer of this state that no valuation was obtained for the sale of the Tonsley Park site to the Flinders University. For some reason, you do not want to give a straight answer to the parliament this afternoon.

The Hon. A. KOUTSANTONIS: I always give straight answers to the parliament. Unless the member has an example and moves a substantive motion, he cannot make accusations like that. It is another abuse of the privileges of this house which he has undertaken and goes again to show the core values of the man.

Mr MARSHALL: No answer again. Part B, page 587: can the Treasurer explain whether his decision to raise the URA's debt ceiling on its core debt facility by $80 million impacted the cost of borrowing for the state?

The Hon. A. KOUTSANTONIS: I am advised it did not increase the cost of borrowing.

Mr MARSHALL: In fact, you approved the raising of the debt ceiling so that if the deal with Gillman did not go ahead that there was some movement but for some reason it was not required. Is that correct?

The Hon. A. KOUTSANTONIS: I am advised that it is unrelated to the Gillman transaction.

Mr MARSHALL: Well, why does it state on page 587 of the Auditor-General's Report:

This forecast was based on the assumption that sales proceeds from the Gillman land sale transaction of $45 million would be received prior to 30 June 2015.

That was not received, unless you would perhaps like to tell the parliament today that it was received, contrary to everything that has been stated in this parliament previously on this matter. How could it not affect that debt borrowing if it was factored in originally?

The Hon. A. KOUTSANTONIS: I am advised that the decision-making process was about the overall ability of Renewal SA to conduct its business.

Mr MARSHALL: Sorry, could the Treasurer repeat that explanation to the house?

The Hon. A. KOUTSANTONIS: I am advised the decision was taken and the process was to consider the ability of Renewal SA to conduct its operations.

Mr MARSHALL: That seems to be completely in contrast to what the Auditor-General has found. Would you like to reconsider your answer, Treasurer? So, the Treasurer is basically saying that even though the original debt ceiling was put in place and it was increased and that it was quite clear that the $45 million was the original number pulled out of the second number that that was completely unrelated. Is that correct?

The Hon. A. KOUTSANTONIS: The question makes no sense.

Mr MARSHALL: Well, no. I think it is pretty—

The Hon. A. KOUTSANTONIS: Well, that is my answer.

Mr MARSHALL: Well, give us the answer on the record.

The Hon. A. KOUTSANTONIS: Your question makes no sense.

Mr MARSHALL: What part of it do you not understand, Treasurer?

The Hon. A. KOUTSANTONIS: It is not for me to explain your questions. You ask the questions and I will do the answers.

Mr MARSHALL: But you didn't give the answer.

The Hon. A. KOUTSANTONIS: It was a nonsensical question. Ask a question.

Mr MARSHALL: Let's be quite serious about this. I have asked a question, the Treasurer says he does not understand the question, so I am asking what part of it do you not understand and I will explain it to you, and I have given a very clear reference.

The CHAIR: Order! Ask the question again, just as he has repeated his answer. Let's have you ask the question again and then his answer, if it is the same answer.

Mr MARSHALL: Let's move on because we are running out of time.

The CHAIR: Okay, up to you.

Mr MARSHALL: Over to Dan van Holst Pellekaan.

Mr VAN HOLST PELLEKAAN: Back to Part B, page 506 and back to the issue of identified numerous purchase card transactions for the purchase of mobile phones and accessories, computer software and gifts. Treasurer, you said that a new directive has been set out. Can you tell us please what the policy was before and what the policy is now under the new directive and what the difference is?

The Hon. A. KOUTSANTONIS: I am advised that the Department of State Development has reissued, on the intranet, guidelines and transactions that are not permitted, and this was done on 31 May 2015, in addition to reminders to be provided to all cardholders and supervisors regarding their responsibilities. As to the other part of your question, I will take that on notice and get back to you.

Mr VAN HOLST PELLEKAAN: Given that the new directive was laid out at the end of May 2015, 11 months into the financial year, clearly the previous existing set of guidelines had been breached. Can you provide some information about those breaches?

The Hon. A. KOUTSANTONIS: We do not have that information here with us. We are happy to take it on notice and give it to you.

Mr VAN HOLST PELLEKAAN: On how many occasions did this occur?

The Hon. A. KOUTSANTONIS: I will take that on notice as well.

Mr VAN HOLST PELLEKAAN: Has the Treasurer sought an explanation for why the guidelines were breached?

The Hon. A. KOUTSANTONIS: I have complete faith in the operations of the department, and its chief executive, and in the financial controls that have been put in place. I am satisfied that there has been adequate transparency. Indeed, the opposition are asking questions about it due to an Auditor-General's Report. There have been remedies put in place, and I am satisfied with those processes.

Mr MARSHALL: Part A, page 7. I understand from what the Auditor-General is saying that this valuation process going on is underway across various departments, including the URA, and that there are going to be independent valuations for all inventories on a rolling basis over the next two years. Does the Treasurer know whether the land slated for sale as part of the Gillman deal under any of the three stages has been independently valued since the deal was struck?

The Hon. A. KOUTSANTONIS: That matter is for the Minister for Urban Renewal, the Deputy Premier. He was here available yesterday for half an hour, and I understand that these questions should have been put to him.

Mr MARSHALL: My question is really: what oversight does Treasury have? Was it a Treasury instruction to in fact obtain independent rolling valuations for inventories as part of the overall balance sheet clarification for the government?

The Hon. A. KOUTSANTONIS: They are required to value their assets using accounting standards, like all agencies are, and report that to Treasury.

Mr MARSHALL: It is my understanding, though, of course, that that will appear on your balance sheet. Because the instruction is for these entities to have this rolling (I think it is referred to) two-year inventory valuation, under this methodology my question is whether or not Gillman has had an updated valuation since the deal was struck.

The Hon. A. KOUTSANTONIS: Again I refer the member to the Urban Renewal Authority and the examination done by the Deputy Premier.

Mr MARSHALL: Have the projections of revenues from the sale of parcels of land owned by that actual authority been made on independent valuations of the land parcels?

The Hon. A. KOUTSANTONIS: Again, I have to refer the member to the agency that was examined yesterday.

Mr MARSHALL: My question to the Treasurer is, in fact: what oversight is the Treasurer and Treasury providing in terms of the verification of the asset value that is sitting on your own balance sheet?

The Hon. A. KOUTSANTONIS: We use contemporary accounting standards.

Mr MARSHALL: You say that, but it is your balance sheet and every question I ask you say, 'Well, go and ask somebody else.' Are you taking responsibility for the veracity of the balance sheet that you present to the parliament?

The Hon. A. KOUTSANTONIS: It is the Urban Renewal Authority's balance sheet. It is not my fault that the member of parliament asking the questions did not bother to turn up yesterday.

Mr MARSHALL: Volume 5, page 654, land sale option—Dry Creek/Gillman. Given the transaction number under option 1 was not settled in the 2014-15 year as budgeted for, has this sale, and subsequent $45 million in sales revenue, been budgeted in for this year in total revenue for the government?

The Hon. A. KOUTSANTONIS: This is again not relevant to me. It is a matter for the agency, and again the member was probably derelict in his duty by not being here yesterday.

Mr MARSHALL: Well, I am not sure that you are permitted to reflect on a member being in the parliament. I was actually at a funeral for a very high-ranking civic official, and I take umbrage at your—

The CHAIR: Order!

Mr MARSHALL: —your various reflections on my presence in the chamber. Nevertheless, my question is very simple. You seem to take responsibility for revenue into the government. My question is: when is the $45 million from Gillman budgeted? It was originally budgeted for last year. Is the $45 million from option 1—the first part, the first tranche of this deal—in the revenue figures you have presented to this parliament for this current financial year?

The Hon. A. KOUTSANTONIS: All questions for the URA.

Mr MARSHALL: But they are not.

The Hon. A. KOUTSANTONIS: I sit quietly and do not interrupt the simple questions the Leader of the Opposition asks—

The CHAIR: Point of order, okay, so—

The Hon. A. KOUTSANTONIS: —and I think, again, these are all question that should have been asked of the relevant agency.

The CHAIR: Okay, right. Leader.

Mr MARSHALL: How will the government be treating revenue from the sale of an asset? As the Treasurer of the state, can you just explain whether or not it will be coming in as general government revenue or whether there will be some other treatment?

The Hon. A. KOUTSANTONIS: The URA will account for this through their processes, and then they pay dividends to the government, which is the standard process we have had with the URA since their inception, I am advised.

Mr MARSHALL: Is there something in the general government revenue forecast for this year which is reflective of a transfer from the URA because of the proposed sale of Gillman?

The Hon. A. KOUTSANTONIS: We will take that on notice.

Mr MARSHALL: Can the Treasurer just outline to the committee the general treatment of the sale of this asset?

The Hon. A. KOUTSANTONIS: I have answered these questions: these are matters for the Urban Renewal Authority.

Mr MARSHALL: I am sorry, you are the Treasurer of this state; you are ultimately responsible for the financial statements and the presentation of the financial statements. It is a very simple question. You either know the answer or you do not know the answer. What we would really like to understand is: how is this transaction going to be reflected in the books for South Australia?

Is it going to only be a transaction for the Urban Renewal Authority, as for some reason the Treasurer seems to be suggesting to the parliament today, or are there ramifications for the consolidated revenue for South Australia? If that is the case, we would like to know how that is going to be treated and when that money is going to be received, and, in fact, whether it was budgeted to be received last year, and therefore was essentially taken up as an adverse transaction last financial year, or whether it is going to be in this year's.

The Hon. A. KOUTSANTONIS: As I have said now I think five times, when Renewal SA make a profit they pay a dividend.

Mr VAN HOLST PELLEKAAN: Back to the misuse of purchase cards—

Members interjecting:

The CHAIR: Order!

Mr VAN HOLST PELLEKAAN: —Part B, Agency audit reports, page 506 again. Treasurer, is there a policy—

The Hon. A. KOUTSANTONIS: Is this State Development?

The CHAIR: We are back on purchase cards.

Mr VAN HOLST PELLEKAAN: No, we are back to purchase cards. Treasurer, is there a policy in place totally separate from the use of purchase cards or otherwise, for the purchase of staff gifts?

The Hon. A. KOUTSANTONIS: To be clear, there is a policy in place for the use of purchase cards in terms of gifts for staff. The department's view and mine on that is that it is inappropriate. There is a policy in place for purchase cards, and those purchase cards have a policy of not allowing the purchase of gifts for staff using purchase cards. If you are asking whether there is a general policy of not purchasing gifts for staff, then, no, because the main transactional point is through a purchase card.

Mr VAN HOLST PELLEKAAN: How are gifts for staff to be purchased if not with purchase cards?

The Hon. A. KOUTSANTONIS: They are generally not appropriate.

Mr van Holst Pellekaan: So it just shouldn't happen.

The Hon. A. KOUTSANTONIS: Well, it depends. I suppose chief executives can perhaps make a delegated decision, but my view on it is that, by and large, gifts should be purchased for dignitaries who are visiting South Australia on trade missions. There may be some sporting clubs or other types of transactions but, by and large, public servants should not be buying each other gifts with purchase cards or taxpayers' money, and I do not think there is anyone who thinks that they should. The policy has been made clear and I have taken your earlier questions on notice and I will get you a detailed answer.

Mr VAN HOLST PELLEKAAN: Purchase of mobile phones was another thing that was picked up by the Auditor-General. What is the policy for the purchase of mobile phones, then, and other accessories?

The Hon. A. KOUTSANTONIS: The policy about mobile phones and the concern that the agencies have about that is the overall procurement policies we have in place, and contracts that we have in place with procuring IT equipment and mobile phones make part of that. By and large, there is nothing inappropriate with mobile phones that are owned by the government being purchased by purchase cards, because the reason we have purchase cards is so the Auditor-General can track purchases and we can log transactions. By and large, the concern is not about abuse. It is a concern that we have procurement policies in place to try to maximise the benefit to the taxpayer by using those procurement policies.

Mr MARSHALL: My question is from the supplementary report, page 50, the final paragraph. Chart 7.5 specifically deals with gambling taxes. In particular, I would like to draw the Treasurer's attention to the 2014-15 year and the lower than expected Adelaide Casino gambling revenue. Can the Treasurer offer some advice as to why he thinks these gambling revenues from the Adelaide Casino are down? Was it through lower volume transactions or indeed changes to the taxation arrangements regarding the Adelaide Casino?

The Hon. A. KOUTSANTONIS: I refer the member to the Budget Statement 2015-16, Budget Paper 3, page 42:

In 2014–15, total gambling tax revenue is expected to be $16 million lower than the 2014-15 Budget estimate. Growth in net gaming revenue has been lower than expected so far in 2014-15 and this has impacted tax revenue from gaming machines and the Adelaide Casino.

Mr MARSHALL: Yes, I understand that. I referenced that myself. The point is: can you offer some advice as to the reason for that? The government did negotiate a new arrangement regarding gambling taxation rates with the Adelaide Casino in recent years and subsequently we now have lower than expected gambling revenue going into state coffers. Can you offer some advice? Can the Treasurer also advise whether in fact the redevelopment of the Casino is being stalled simply because there are lower volumes going through the Adelaide Casino?

The Hon. A. KOUTSANTONIS: Could you repeat the last part of that, sorry?

Mr MARSHALL: I am just wondering whether you could provide some advice to the parliament regarding your thoughts on the likelihood of the redevelopment of the Adelaide Casino. If the revenue coming into the state is down, we would be interested in your thoughts as to why that would be occurring, but more importantly whether or not that will be something which is holding up the transaction which the government is currently considering.

The Hon. A. KOUTSANTONIS: First off, I will point out the irony in the question where the Leader of the Opposition, who claims he wants to lower taxes, is bemoaning a lower tax revenue. It puts paid to the hypocrisy that he spreads.

Mr Marshall interjecting:

The CHAIR: Order! The minister will answer the question.

The Hon. A. KOUTSANTONIS: Yes, madam.

Mr Marshall interjecting:

The CHAIR: Order! If we can hear the minister in silence, that would be helpful.

The Hon. A. KOUTSANTONIS: Thank you. Revenue from the Adelaide Casino in 2014-15 has been revised down since the 2014-15 budget mainly due to lower than expected growth in net gambling revenue.

Mr Marshall: We know all that.

The CHAIR: Order!

The Hon. A. KOUTSANTONIS: Well, you're the one asking the questions. Adelaide Casino revenue estimates also reflect the key taxation and regulatory conditions that commenced in 2013-14.

Mr Marshall: You don't know the answer, so you're just reading out this document.

The CHAIR: Could the leader understand that I can't ask you to ask a question a certain way and I can't ask the minister to answer in a certain way and that the rules of the house do ask us to listen to each other in silence. Would the minister conclude the answer and then we can move to the next question.

The Hon. A. KOUTSANTONIS: Yes, madam. The Leader of the Opposition asked what my view is on whether the Casino will proceed with its redevelopment. I think they will. I think that Adelaide offers a very good destination for investment and I think that the positive investments in the Riverbank, the Convention Centre, Adelaide Oval, the footbridge, the upgrades that we are conducting around the CBD, the vibrancy with our small bar legislation—all those things I have mentioned the opposition leader opposed, and the reason the opposition opposed those is that they bring prosperity to the people of this state.

Mr Marshall interjecting:

The Hon. A. KOUTSANTONIS: I also heard the Leader of the Opposition talking about start-ups. Perhaps he should speak to the members of his own party on the Adelaide City Council and their attitude towards start-ups who run food vans and those young entrepreneurs and how the Liberal Party is attempting to stifle them from going out and engaging in enterprise. There is a reason the Leader of the Opposition is the exiting man. It is because he offers no vision for South Australia.

Ms Chapman: That's pathetic, Tom, absolutely pathetic.

The CHAIR: Order! I am really disappointed in the attitude of members in the chamber today. It is not a matter for me to direct how you ask a question or answer a question. If the leader has a problem, he needs to say something about it and bring it to the house's attention. His mutterings as he leaves every time are not going to achieve anything for him.

The time for the examination having passed, we move to the next section. I thank the minister and his officers. We have the Minister for Disabilities in place and his officers are coming down. Perhaps, member for Morphett, if we just get the page number ready to roll, as the advisers appear, we will be ready to go.

Dr McFETRIDGE: Thank you, Chair. I have just spoken to the minister and we have agreed that we will deal with disabilities first, then we will move on to emergency services, and my colleagues will finish with road safety and police. I have to leave the committee just before five to go to Government House for a function. I apologise to the committee for that, but I am sure my colleagues will hold the fort.

The CHAIR: What page are we looking at?

Dr McFETRIDGE: I am referring to the Auditor-General's Report, Part B, page 78—Supplies and services. The report states: 'During 2014-15 supplies and services expenses increased by $32 million to $273 million.' Under the second dot point, it is noted that there was an increase in expenses related to the implementation of the National Disability Insurance Scheme arrangements from $3 million to $7 million. Can the minister explain to the house why that happened? Is it because there are issues associated with an increased number of participants in the NDIS?

The Hon. A. PICCOLO: I thank the honourable member for his question. That increase just represents the contribution the state is making in a progressive way to pay for the transition across.

Dr McFETRIDGE: With respect to the same reference, the latest report from the NDIA states that 4,688 people were expected to participate, there are 5,521 already in the scheme and the actuary says that there are 9,733 people eligible and expected to come into the trial. Does the minister expect that number to continue to increase and, if so, to what figure?

The Hon. A. PICCOLO: In terms of the cash contribution to the National Disability Insurance Scheme, the member would be aware that there is both a cash and an in-kind contribution for services provided by the state in other areas. We anticipate that in 2015-16 our contribution to the scheme in cash payments across will be $20.2 million.

Dr McFETRIDGE: On the same reference, minister, is the NDIA actuary's report accurate, that there are 9,733 people currently eligible in the trial? Can you give the committee some indication of the estimated number of people who are eligible for the full rollout beyond the trial?

The Hon. A. PICCOLO: My understanding, and the latest advice I have received, is that, in terms of the final figure to go to the national scheme, it is still around the 32,000 persons, and that has not changed from the original estimate. While the composition may change, that total number is not expected to change.

Dr McFETRIDGE: Given the time, we might move on to emergency services, and I welcome, Mr Jackman to his first Auditor-General's Report committee. Referring again to Part B, page 390, under Expenses the report states:

Employee benefits expenses of $16 million account for only 22 per cent of the total expenses of the SACFS due to the extensive use of volunteers…

I think that is significant, and we should all note the value of the volunteers there. Minister, in 2013-14 the Bangor, Eden Valley and Riverland fires obviously came at significant cost. Can you tell the committee what that cost was and where that extra funding came from now that we have seen increases in the ESL with the Sampson Flat fire?

The Hon. A. PICCOLO: I thought we were looking at the 2014-15 Auditor-General's Report?

Dr McFETRIDGE: Under Expenses, the Auditor-General notes the 'lower than the level of expenditure incurred for the 2013-14'. So, there is a lower level of expenditure this year than there was last year. We had the Sampson Flat bushfire in 2013-14, and the Bangor, Eden Valley and Riverland fires (and the Auditor-General talks about this), but there is no mention of the actual cost of managing those fires.

The Hon. A. PICCOLO: We will take that question on notice for you because we had only prepared for this financial year under audit.

Dr McFETRIDGE: Thank you. On page 392, under Statement of Financial Position, the Auditor-General notes that the South Australian Country Fire Service invested $16.6 million in additional property, plant and equipment in 2014-15. There was $4.3 million for communication equipment. Is any of that communication equipment centred around automatic vehicle location for the upcoming fire season; if not, why not?

The Hon. A. PICCOLO: I can advise the committee that it is basically GRN and also tactical communications, no AVL.

Dr McFETRIDGE: Can the minister tell the committee whether there any plans in place for automatic vehicle location for this upcoming fire season, I am sure the 14,004 volunteers, as you mentioned on page 388, would like to know.

The Hon. A. PICCOLO: I will correct the record if it is not right, but my understanding is that, with the improvements in the GRN and some other communications, there may be some alternative ways to achieve the same outcome.

Dr McFETRIDGE: Is that outcome reliant on what is called the Intergraph system that is being used by the Metropolitan Fire Service using mobile phone technology? Is that going to be extended to the Country Fire Service? There are a number of areas where mobile phones just do not work?

The Hon. A. PICCOLO: I am advised that we are looking at three different technologies for the three services because their needs are different because of geography.

Dr McFETRIDGE: Can we tell volunteers when we can expect to have that in place? The AFAC Sampson Flat inquiry talked about, in recommendation 3, having that vehicle location in place.

The Hon. A. PICCOLO: The advice I have received is that we are still trying to evaluate a range of different options, and we do not have time frames because we are not sure we can actually find an appropriate one which would meet service needs at this point in time.

Dr McFETRIDGE: On that same reference, can you release to the committee the report that was done by the consultants on the automatic vehicle location system? At the moment, it has not been released under FOI and we are in the dark, so to speak, as to what the extent of the considerations has been, and the consultant's report would obviously have those answers.

The Hon. A. PICCOLO: I thank the honourable member for his question. The fact that an independent officer has determined not to release it would suggest that there is something wrong with that, and I do not have the power, that I am aware of, to overturn the decision of an independent FOI officer. As I said, we are looking at alternatives, so I am not sure how relevant that information may be, but I am happy to say that that matter is under regular evaluation by the agency.

Dr McFETRIDGE: On the same Auditor-General's reference, page 392, under Statement of Financial Position it says that the value of the assets includes approximately 800 fire appliances. The capital works in progress is about $20 million, which represents uncompleted assets at the end of the year which are made up of appliances and other equipment. Can you tell the committee how many new appliances we are getting, where they are being manufactured and how many new CFS fire stations are being built or if others are being upgraded?

The Hon. A. PICCOLO: To get the precise numbers for each of those categories we need to take that on notice for you.

Dr McFETRIDGE: Thank you, minister. The next reference is over on page 393, Financial controls opinion. This is an opinion, a qualified opinion or, in these terms, a modified opinion on some of the things that the South Australian Fire and Emergency Services Commission is undertaking. Under 'Key issues', it states, 'Some policies and procedures are not finalised.' Can you give the committee an outline of what policies and what procedures have not been finalised? Were they covered under the Ernst & Young review 2014 or the Ernst & Young review 2015, and will you release the Ernst & Young review 2015?

The Hon. A. PICCOLO: I can advise the committee that the policies and procedures which are referred to are general operational matters which were not raised in either the EY14 or EY15 reports. In relation to the second part of your question, as to the EY15, that will be going to the board shortly and they will make a recommendation to me. I have not read the report yet because it is going through the board first.

Dr McFETRIDGE: On that same reference, the fifth item states, 'No independent oversight of annual asset stocktake.' What is being done to make sure that we actually know how many firetrucks we have and lengths of hose?

The Hon. A. PICCOLO: That comment in the report is because, I am advised, the Auditor-General requires two officers at any one time to verify any asset in the 425 brigades we have across the state. That is not undertaken in some cases because of the remoteness of location, etc. Only one officer actually goes there and does that, so we do know what is around, but the comment relates to the fact there is not an additional person when that audit is undertaken.

Dr McFETRIDGE: To help the minister and SAFECOM, I know from personal experience that CFS brigade equipment officers keep a very good idea of what their stocktake is, and perhaps they could be asked to assist. I am sure it would not be too onerous to ask them to do that.

The other key issue that I am interested to see there is that there is a legal obligation to produce a charter. It says, 'SAFECOM charter not yet made available to the public.' Sections 8(3) and (4) of the Fire and Emergency Services Act 2005 provide:

(3) The Commission must prepare a charter relating to its functions and operations.

(4) The Commission must provide a copy of the charter to the Minister and ensure that it is publicly available.

When will the charter be available, minister? Is it being held up because of the current alignment, harmonisation and modernisation?

The Hon. A. PICCOLO: Just in terms of the comments made by the member previously, unfortunately, volunteer officers in brigades are not deemed by the Auditor-General to be independent. Even though they could do the job—I accept that—they are not, for the purposes of the act, considered to be independent, and that is why they are not used. We will probably have that comment from time to time in our report. In terms of the charter, no, it is not being held up by the existing review processes. I am advised by SAFECOM that they are working on a draft at the moment, and I should have a recommendation to me within the month.

Dr McFETRIDGE: When was there last a charter in existence?

The Hon. A. PICCOLO: I will have to get back to you on that one.

Dr McFETRIDGE: Let's just hope that the board has not been in breach of the act and the minister has not been able to do his job then by releasing that charter. Under the charter functions, the charter is about functions and operations. Can the minister tell us what a 'virtual organisation' is where there is a matrix management model to deliver the service levels rather than moving people from within emergency services? It sounds like this is a move to a one-service organisation by stealth.

The Hon. A. PICCOLO: You threw in a comment which I think needs correcting. The charter exists; what we have not done is actually update the charter. So, it is not the case that the charter does not exist at all: it requires ongoing review. Having said that, in relation to the virtual organisation, it is basically that you keep people within the existing agencies, in other words, they keep the same uniform but they work across the sector. So, for example, the person who may be an assistant chief officer in one area, and who is actually there, may provide advice and assistance right across the sector. It is making good use of the resources, skills and abilities across the sector, which I think we would all welcome.

Dr McFETRIDGE: Is that really seconding people from one emergency service? I will let you explain that in a minute. If those people are being given roles other than their prescribed roles, say as assistant chief officer in the MFS, and they are doing something else, who is backfilling their role and where does that come from?

The Hon. A. PICCOLO: There will be a range of opportunities which may also include secondment. Having said that though, what has been said is that to use people's skills—for example, if I am an assistant chief and I specialise in, for argument's sake, HR then my skills in HR could be used right across the sector. The decision as to backfilling and how the resources are used will be up to the chief officer and SAFECOM to negotiate what are the priorities at any one time.

Dr McFETRIDGE: That same reference, is there a consideration to outsource emergency services functions or SAFECOM functions at all, and, if so, what are they?

The Hon. A. PICCOLO: The only things which have been explored, and I say explored but discussed because it is not the extent of it at this point in time, is to see whether we can actually outsource within government itself to other agencies within government.

Dr McFETRIDGE: Just moving on to Volume 4 of the Auditor-General's Report, page 545, the South Australian Fire and Emergency Services Commission statement of comprehensive income. I am just a humble veterinarian, not an accountant. It is showing a net result here, and I assume in brackets a loss in 2015 of $3.533 million. Is the SAFECOM budget in deficit at the moment, and, if so, how are we going to make that budget up?

The Hon. A. PICCOLO: Your assessment is correct, that is in deficit. As a result, I have recently asked SAFECOM to work out a strategy on how we can actually bring that under control. We have had discussions with Treasury and the three chiefs in SAFECOM are preparing a strategy by which we can bring it under control as soon as practicable, and I hope to be in a position early in the new year to look at that.

Dr McFETRIDGE: How out of control is it, minister, if we are going to get it back under control? Is it about $2 million over budget?

The Hon. A. PICCOLO: Yes, that is correct.

Dr McFETRIDGE: My last question and then I have to depart, unfortunately. I choose to depart. I have other commitments.

Mr Gardner: He is serving the people of South Australia through the mechanisms—

The CHAIR: Order!

Dr McFETRIDGE: It is for the Barkuma awards at Government House. It is a very worthy thing. My last question is on page 395 of Part B, 'Bona fide and parade statements', and it refers to the Metropolitan Fire Service:

Our review found that there were several instances where there was no evidence of approval of bona fides and parade statements. This increases the risk that attendance information is incorrect resulting in payments to employees being inaccurate.

Were there cases where MFS firefighters were either overpaid or underpaid, and, if so, if they were overpaid, is there—like we had with the ambulance service a while ago, there was clawback of the overpayments. Is that something that the MFS fireys are going to have to face?

The Hon. A. PICCOLO: I can advise the committee that it was only two occasions. It was in one case where the cover sheet was not signed. The other one was where there was one instance with no approval over a sample parade statement for MFS. So, there was a total of two occasions.

Mr WINGARD: I refer to Part B, page 382 and the road safety camera review. What is the internal policy for road safety camera calibration testing and maintenance? Why was there not already a system of auditing to assist in identifying noncompliance with internal policies on road safety camera calibration testing and maintenance?

The Hon. A. PICCOLO: What was the reference again in the report?

Mr WINGARD: Part B, page 382, on the road safety camera review. Would you like me to repeat the question?

The Hon. A. PICCOLO: Yes, please.

Mr WINGARD: Referring to Part B, page 382, regarding the road safety camera review, what is the internal policy for road safety camera calibration testing and maintenance, and why was there not already a system of auditing to assist in identifying noncompliance with internal policies on road safety camera calibration testing and maintenance?

The Hon. A. PICCOLO: We will have to take that one on notice and get it back to the committee.

Mr WINGARD: I may have to give you other questions to take on notice. Is there any way of knowing whether motorists have been issued with traffic infringement notices unfairly as a result of collaboration issues?

The Hon. A. PICCOLO: Again, we will take that on notice.

Mr WINGARD: Again, a supplementary: how many errors have been made and what is the total value of traffic infringement notices issued in error?

The Hon. A. PICCOLO: What we have identified, or are the other two questions presupposing this question?

Mr WINGARD: They go with that. Moving on to Part B, page 379, regarding the expiation revenue from the missing traffic infringement notices: why has there been limited review and follow-up made on missing traffic infringement notices (or TINs) as outlined in the missing TINs report which is sent to local service areas, and why has this issue not been remedied to ensure that the forfeiture of valid expiation fees does not occur?

The Hon. A. PICCOLO: I can advise as follows in terms of the current status. All audit reports are now audited on a daily basis by their respective units. The new process ensures that, after auditing, the reports are collated and checked by the audit unit before being filed. The missing TIN report is now sent to the LSAs on a monthly basis and, as a result, there has been a reduction in missing TINs due to diligence by the LSA. There are still some issues to be resolved at the LSA level and LSAs are providing comment for those missing for three or six months. That is the only information available at this stage. I can say that work is continuing to reduce the number.

Mr WINGARD: How many traffic infringement notices have been lost, and what is the total value of these lost notices?

The Hon. A. PICCOLO: We will have to take that on notice.

Mr WINGARD: What is the value of the lost revenue as well, please? When the MAC is wound up will all the sponsorship partnerships with community groups such as the Lightning, the SANFL, country footy, schoolies, the rescue helicopter and Ambulance SA, as well as road safety initiatives, all be guaranteed and how will privately written policies be levied?

The Hon. A. PICCOLO: You will need to direct that question to the Treasurer who is responsible for MAC.

Mr WINGARD: Part B, page 290 of the report confirms that the commission will continue its role as nominal defendant and the provider of road safety awareness. Will the liability incurred as a result of MAC acting as the nominal defendant also be funded through the levy on privately written policies?

The Hon. A. PICCOLO: What I can say is that the Treasurer has on a number of occasions made it very clear that MAC's role in road safety will continue, and if you would like any elaboration you need to refer those questions to the Treasurer.

Mr WINGARD: In reference to the actual Auditor-General's Report, Part B, page 290: can you tell me who will be responsible for assessing the liability?

The Hon. A. PICCOLO: Which liability are you referring to?

Mr WINGARD: Through the levy on privately written policies. Who will be responsible for assessing the liability incurred as a result of the MAC acting as the nominal defendant?

The Hon. A. PICCOLO: You need to direct that to the Treasurer.

Mr WINGARD: A final question if I can, since we are running a little bit over. Volume 4, page 89, can the minister explain the reason for the prior error in the Community Road Safety Fund reporting of $8.994 million in 2013 which had to be corrected in this year's report?

The Hon. A. PICCOLO: The advice I received is that there was an internal journal error and it has been corrected in this financial year.

Mr WINGARD: And that money was not allocated to different programs that then had to be reallocated?

The Hon. A. PICCOLO: No; it was actually allocated to this program when it should have been allocated somewhere else, but we will get the details and amounts for you.

The CHAIR: I thank the minister and his advisers.

Progress reported; committee to sit again.

Mr GARDNER: Madam Deputy Speaker, I draw your attention to the state of the house.

A quorum having been formed:

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