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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

The Hon. S.C. MULLIGHAN (Lee—Minister for Transport and Infrastructure, Minister for Housing and Urban Development) (15:56): I move:

That standing orders be and remain so far suspended as to enable the report of the Auditor-General for the year ended 2015-16 to be referred to a committee of the whole house and for ministers to be examined on matters contained in the report in accordance with the timetable as distributed.

Motion carried.

In committee.

Mr SPEIRS: Premier, turning to the report of the Auditor-General Part A: Executive Summary, pages 1 and 2, what is the rationale for preventing the Auditor-General and other investigative agencies, including the ICAC commissioner, from accessing cabinet documents to assist with their investigations?

The Hon. J.W. WEATHERILL: There is no essential change in policy, as we discussed in question time today when a number of these questions were asked. The rationale is the same rationale that affects Westminster systems across the whole of the nation, indeed, the whole of the commonwealth, which is essentially that cabinet deliberations and documents are to be maintained as confidential. So there is no fundamental change in the policy position, and the rationale for that is the same rationale that is governed by every Westminster parliament.

I think what had occurred is there had been some degree of laxness that had developed in the way in which documents were being handed over to various agencies without the knowledge or approval of executive government simply through a process of practice which had grown up. I am not entirely sure how or when it emerged, but certainly over a period of time it has occurred.

These investigative agencies find it convenient because it provides a shorthand summary of decision-making processes. Of course, there are other ways of achieving those summaries, and so it is a better way of dealing with it because otherwise it tends to intrude on this cabinet confidentiality, which has been a feature of the Westminster system.

Mr KNOLL: On the same part, Premier, has there been any suggestion that the Auditor-General, or anyone in his department, has misused cabinet documents in any way?

The Hon. J.W. WEATHERILL: No, it is not really a question of misuse. It is really a question of intruding upon a long-regarded foundational feature of the Westminster system, that is, that cabinet can deliberate in private and people can share frank views, and that those deliberations will not be presented publicly except to the extent of the final decision, which is of course represented by a decision of the whole of government.

Indeed, I think when those opposite were last in government they had a little bit of experience in the breakdown of cabinet, from where a lot of things were leaked, which tended to destroy the sense of unity which should otherwise exist in a government. There are some sound reasons why that should occur. If people come into cabinet thinking that their deliberations may be leaked or shared, whatever the final result is, then they may be less willing to be frank in that environment. I think that there is a lot of evidence of this.

During the previous Liberal government, things were not brought in to cabinet that should have been brought in because of the fear between the two warring tribes within the Liberal Party that one would then use that against the other, and we saw ample evidence of that.

Mr KNOLL: Point of order: can I ask you to bring the Premier back to the substance of the question?

The CHAIR: Just a minute. I am sure he is coming back to the substance of the question. Premier.

The Hon. J.W. WEATHERILL: I think it is germane. The point is: is there is a sense in which the Auditor-General has misused the data? No.

Mr Knoll interjecting:

The CHAIR: Order!

Mr Knoll interjecting:

The CHAIR: Member for Schubert!

The Hon. J.W. WEATHERILL: I think it has, actually. The point is that, if one is to get one element of the cabinet process, a document, it may only be able to be understood in the context of the broader deliberations that occur. If you look at just a segment, if you like, of the cabinet deliberations by looking at one document, it may only be capable of being explained by looking at the broader context and, indeed, some of the deliberations that may have occurred.

For instance, what emerged, and what did occur in the context of the Gillman inquiry, was the difficult situation where people were just looking at documents and not necessarily at some of the things that were not documented but which were raised in debate in cabinet.

Of course, the difficulty there is that, once you look at some part of the cabinet process, you are then obliged to reveal the whole of the cabinet process to create that context, and then very quickly you have a breakdown in the confidentiality of the collaborative deliberation process. The idea of a collective decision which is representative of the decision of all ministers, despite what their perspective may have been in the context of the cabinet, is undermined. This is very fundamental.

I note today that in his public remarks the ICAC commissioner noted that the claim of privilege was a proper one and that there may be sound reasons why the government may claim that privilege, and we do. This really just regularises something that would no doubt be the case if those opposite were on the Treasury benches.

Mr KNOLL: I refer to the same part. Premier, you said in your answer that this is largely in step with the tradition of Westminster governments across the world. How do you accord that statement with the fact that Victoria and the commonwealth give their Auditor-General broad access to cabinet documents?

The Hon. J.W. WEATHERILL: That is not our understanding from the advice we have received from our Auditor-General. Of course, we still reserve the right to provide the Auditor-General access to our cabinet documents upon request in a proper case. We are not denying them access; we are just saying that the unregulated and unsupervised sharing of those documents is something which is going to be dealt with. That is all it is. Frankly, the Auditor-General expressed surprise to the Attorney-General that he had such broad access. He also noted in that context that the approach taken here was not consistent with the approach taken in other states.

We are simply regularising something that should be the case. In a proper case, if the Auditor-General or indeed the ICAC commissioner requests access to cabinet documents, and it would otherwise impede their capacity to investigate, then of course we will cooperate to the fullest extent that we think is appropriate; and, indeed, we did in the Gillman case.

Mr KNOLL: The Victorian Audit Act 1994 states that sections 11 and 12 of the Audit Act give the Auditor-General the power to access documents held in departments that are relevant to matters under consideration by the Victorian Auditor-General's office, including cabinet documents. How does the Premier continue to stand up here and say that this is consistent with access in other states when the Victorian government's own legislation gives clear access to cabinet documents to their Auditor-General?

The Hon. J.W. WEATHERILL: The Auditor-General still will have the capacity to access cabinet documents in a proper case; it is just that it will not be in an unregulated sense. It will be done in a proper and regulated way.

Mr SPEIRS: When attending a hearing of the Economic and Finance Committee on Monday 24 October 2016, the Auditor-General outlined his view that his job would be made more difficult by the decision not to give access to cabinet documents. Does the Premier agree with the Auditor-General's view?

The Hon. J.W. WEATHERILL: I think the Auditor-General also said to us, 'Of course, it provides a neat short cut to be able to look at cabinet documents, rather than assemble the history of the matter using departmental documents in the ordinary way.' That slight degree of inconvenience needs to be weighed against the public interest immunity associated with protecting the confidentiality of cabinet. They are the two interests that have to be balanced, and we have made a judgment about that. But in a proper case, I do not think he is asserting that he has been impeded or impaired in any way, and if he runs into difficulties I am sure he can make it known to us.

Mr SPEIRS: Moving on to page 27 of the Executive Summary and the fourth bullet point, had the ICT Services division previously been located in DTF before it was transferred into DPC and then back into DTF? Did it start off in DTF?

The Hon. J.W. WEATHERILL: I think what happened was that ICT Services was with DTF, and it was transferred to DPC in preparation for tranche 4 of the Shared Services reform. When the tranche 4 ICT Services element was abandoned, it has now been transferred back to DTF.

Mr SPEIRS: Were there any costs associated with transferring the division between the departments in either instance?

The Hon. J.W. WEATHERILL: I understand that there were very little or no costs because it was merely a machinery of government change.

Mr SPEIRS: Moving on to Part B of the Auditor-General's Report, page 312, the section on the Department of the Premier and Cabinet, is the Premier concerned that the Auditor-General described his department's processes for procuring services from 57 Films as 'inadequate'?

The Hon. J.W. WEATHERILL: Yes, and we have taken steps to remedy that, but it might be an appropriate point for those opposite to apologise for the false allegation of conflict of interest against the head of the Department of the Premier and Cabinet. They were running around spreading that piece of misinformation and, of course, the Auditor-General has found that there is no evidence of conflict of interest.

There are some issues associated with the procurement process, and they have been remedied. 57 Films provide excellent service. The particular procurement for the Shandong inbound delegation in September and the 2015 Paris trip were undertaken at short notice due to the urgency of work requirements for which 57 Films were ultimately engaged.

It is worth noting that 57 Films have now gone on to win some substantial contracts with the Qingdao region, where they are now essentially performing work and creating jobs and opportunities here in South Australia and also taking South Australia's story to millions and millions of Chinese people. They have provided excellent service. There were some issues around the procurement which have since been resolved.

Mr SPEIRS: Was the dismissal of executive director, Paul Flanagan, related to his involvement in the mishandling of the procurement process of 57 Films?

The Hon. J.W. WEATHERILL: No.

Mr KNOLL: On that same line, why was Paul Flanagan dismissed?

The CHAIR: Why was?

Mr KNOLL: Executive director Paul Flanagan dismissed.

The Hon. J.W. WEATHERILL: The chief executive—I will bring back an answer.

Mr SPEIRS: On page 314 of Part B, paragraph 3 states 'declaration of potential conflicts of interest'. Can the Premier identify the potential conflicts of interest described in this section?

The Hon. J.W. WEATHERILL: We are on page 314?

The CHAIR: The third dot point, which starts with, 'We also found that risk assessment.'

The Hon. J.W. WEATHERILL: I think that is best understood as a reference to the process associated with the procurement. I do not think he is talking about any particular conflicts of interest; it was the absence of a process of the declaration of potential conflicts of interest that was the subject of some criticism and should have been the subject of improved process.

Mr KNOLL: Following on from that point, Premier, you are suggesting that there were no conflicts of interest, yet you are also suggesting that the process for declaring conflicts of interest was not up to scratch. Surely, if the Auditor-General put it in the report there is a reason behind why it has been stated in there and what is being done to improve the situation.

The Hon. J.W. WEATHERILL: I think we are talking about two different things. It is not our suggestion that there is no conflict of interest. There is a finding by the Auditor-General that there is no evidence of a conflict of interest. What he is referring to further on is the process and the weaknesses in the procurement process, which include particular documentation about:

…risk assessment, declaration of potential conflicts of interest, identifying evaluation criteria and documenting the evaluation for the procurement process for Shandong out-bound and in-bound delegations…could have been improved.

Mr SPEIRS: Moving back to page 313, the second-last paragraph of that page states:

The total of procurements to 57 Films from May 2015 to March 2016 exceeded $446,000 (including GST).

What was the total cost of procurements awarded to 57 Films between May 2015 and March 2016 in excess of the $446,000 identified here?

The Hon. J.W. WEATHERILL: I think we had best take that on notice. We will bring back an answer.

Mr SPEIRS: You may have to do the same with this one, Premier. Does the $446,000 figure include or exclude the more than $45,000 in travel and accommodation costs paid for by DPC on behalf of 57 Films?

The Hon. J.W. WEATHERILL: I will take that on notice.

Mr SPEIRS: Again, in the same vein: what was the total value of travel accommodation and other disbursement costs met by DPC on behalf of 57 Films?

The Hon. J.W. WEATHERILL: I will take that question on notice.

Mr SPEIRS: Did any of these costs relate to expenses incurred by members of the family of the Premier's chief executive?

The Hon. J.W. WEATHERILL: I will take that question on notice.

Mr SPEIRS: Moving back to page 314, we have a statement that, in response to the concerns around the procurement process for 57 Films, DPC acknowledged our findings and advised that they would conduct procurement training workshops to be completed by December 2016. Can the Premier confirm whether or not these procurement training workshops have occurred?

The Hon. J.W. WEATHERILL: I will bring back an answer. We do not know what the progress is on those, noting that they are to be completed by the end of this year.

Mr SPEIRS: Again, in the same subject area, and the Premier may have to take this on notice as well, can the Premier confirm whether staff from his ministerial office have or are planned to attend those workshops?

The Hon. J.W. WEATHERILL: I understand this is for public servant staff of DPC, so I would think not, but I will make some inquiries and bring back an answer.

Mr SPEIRS: Premier, can you confirm whether your chief executive, or either of your deputy chief executives, is planned to attend these workshops?

The Hon. J.W. WEATHERILL: I will bring back an answer to that question.

Mr SPEIRS: Moving to page 315 of Part B of the report, in the fifth paragraph under Shared Services SA, is the Premier able to identify which main Shared Services SA payroll system controls were considered not to be effective as described in the fifth paragraph of this section?

The Hon. J.W. WEATHERILL: A number of concerns have been raised by the Auditor-General about the process for managing changes to the tools developed for the migration of data to CHRIS 21 which need improvement. CHRIS is the payroll system, so that is the system we are talking about. They include things like logging all changes in a change register, risks being identified and assessed prior to the change being implemented, independent testing of all changes being undertaken before they are implemented, and formal authorisation of all changes into production. There have been no material pay issues experienced by employees as a result of the migration, and the Auditor-General's advice is that these are all things that are readily resolvable.

Mr SPEIRS: Can the Premier advise what the implications are of these controls not being effective?

The Hon. J.W. WEATHERILL: In terms of the consequences, it does not threaten the savings targets or the overall efficacy of the system. We process over 100,000 employee pays each fortnight. Of these, about 99.76 were processed without error in 2015-16. That demonstrates that it is a robust system. In terms of benchmarking, when compared with other jurisdictions, Shared Services had the lowest process cost per invoice and the lowest process cost per payslip.

Some of these issues that have been raised have not been experienced as essentially a diminution in service. They are really just best practice around making sure that the controls are in place. They are a best practice audit recommendation. They are readily resolvable and we will act on them.

Mr SPEIRS: Moving to page 320, under Highlights of the financial report—controlled items, can the Premier list the names of the recipients of the $7 million in grants and subsidies paid in 2015-16?

The Hon. J.W. WEATHERILL: Yes. We can take that on notice.

Mr KNOLL: In Part A, Executive Summary, on page 30 the Auditor-General makes this comment:

Modified controls opinions in Part B of this Report reflect our view that aspects of agency controls are of an insufficient standard to provide reasonable assurance.

If I go back to page 27, he talks about the fact that 41 of 62 agencies received modified controls opinions. Also, on page 28, he says that the number and nature of matters raised with agencies have not reduced.

He speaks very clearly on page 30 about the fact that the controls are of an insufficient standard to provide reasonable assurance. Does the Premier share the concerns of the Auditor-General about the fact that things do not seem to be getting better when it comes to compliance in risk management? If so, does he have confidence in the improvements that are being sent down?

The Hon. J.W. WEATHERILL: I think it is worth noting that the remarks that are made are, obviously, across all agencies and need to be considered in the context of his overall findings, which are on page 3:

Of the three opinions required, it is the financial control matters that are concerning, as there are some fundamental areas of governance and financial control and accountability. Notably, not many matters occur widely throughout agencies. There are some themes, like payroll monitoring and maintaining policies and procedures. Mostly, our findings are specific to agencies. Overall, I believe most of the matters we identified in our audits are quite readily resolvable. This is discussed in further detail later in section 3.

Obviously, it is of concern, but the audit has been provided. The agencies, by and large, have unqualified audits that have been presented in relation to each of their agencies. These accounts are of perfection, which is what we expect from our Auditor-General, and we work away to get as close to that objective as we possibly can.

Mr KNOLL: To follow up on that, in Part B, page 312 lists the fact that your own department, DPC, has one of the longest lists of modified financial control opinions. Premier, are you embarrassed by the fact that your department is one of the worst performing agencies in this regard?

The Hon. J.W. WEATHERILL: I do not accept that. I think these are minor matters that do not—obviously, each of them needs to be taken seriously. Each of them has been addressed and will be resolved. I do not accept that our agency is performing in the way in which you described.

Mr SPEIRS: Moving back to Part B, at the top of page 316 is a series of dot points about payroll functions, one of which relates to terminating employees and calculating termination payments. Premier, can you advise what the total value of employee termination payments was in the 2015-16 financial year?

The Hon. J.W. WEATHERILL: Yes, I will take that question on notice and bring back an answer.

Mr SPEIRS: Premier, can you also advise how many employees received termination payments?

The Hon. J.W. WEATHERILL: Once again, I will take that question on notice and bring back an answer.

Mr SPEIRS: Again, what do these payments comprise?

The Hon. J.W. WEATHERILL: Once again, I will take that question on notice and bring back an answer.

Mr KNOLL: I will go back to Part B, page 312. In your previous answer, you suggested that each of these matters was minor and insignificant. Would you consider, though, that the process in relation to 57 Films is minor and insignificant?

The Hon. J.W. WEATHERILL: I do not think I used those words. I used the language that the Auditor-General used and I have not supplemented my own remarks. The very serious charge was made in relation to 57 Films about a conflict of interest about the chief executive of the agency. What was found was that there was no evidence of a conflict of interest. Those opposite published a media statement, which was reported widely, where that allegation was made. I am fine about false allegations being made, but just have the good grace to actually correct the record when something comes out and demonstrates that you are wrong. I am waiting for the apology, and I am sure it will be issued in due course.

The CHAIR: The time for examination has expired. I thank the Premier and his advisers for their appearance before us this afternoon and call on the Deputy Premier and his advisers to find their spots as quickly as possible so that we can continue for the next 30 minutes. Deputy leader, you are going to be forensically looking after us this afternoon. Perhaps you can ask the first question while everyone is assembling. I am sure that the Attorney is up to it.

Ms CHAPMAN: I will be referring to Part B, Agency audit reports—

The CHAIR: What page are you on?

Ms CHAPMAN: I am about to indicate that the Attorney-General's Department review by the Auditor-General commences on page 30.

The CHAIR: Are you going to be on page 30?

Ms CHAPMAN: I will commence at page 49—

The CHAIR: Lucky we started early, wasn't it?

Ms CHAPMAN: —in respect of the Public Trustee, which is administered by AGD. At about point 5 on that page, it refers to a matter that the Auditor-General has been compelled to report on, namely, the trust operations, in particular the estates expenditure sample testing for appropriate authorisation not being performed. If I paraphrase the Auditor-General's assessment, he considered, firstly, that he had previously identified that payments of invoices at a certain level were not being reviewed to ensure appropriate authorisation was given during processing.

He makes the point further on that there had been an implementation of a sampling approach. He then confirms that he found that it was not operating as intended and generally explains why it is necessary to make sure that this occurs. Finally, on page 50, he records:

Public Trustee acknowledged that the sampling process was not effectively in place throughout 2015-16 and has reminded staff of their responsibilities for this review. Public Trustee has also accepted our recommendations to improve the information on the signature register and reminded responsible authorisers not to exceed their delegation limit.

I have read the rest of the reference to the Public Trustee and I have also read a part of the Attorney's Public Trustee Annual Report. Page 31 of that report tabled today in parliament refers to an alleged fraud that Public Trustee became aware of in May 2016 against deceased estates.

The offences were alleged to have been committed between July 2015 and May 2016, which of course is the period of the audit. 'Whilst the matter is before the courts, PT [Public Trustee] commenced an independent forensic file review of historic files managed by a former staff member.' Firstly, I want to know whether the Public Trustee at any time, but particularly before 30 June 2016, told the Auditor-General that there had been an identified alleged fraud case.

The Hon. J.R. RAU: I would have to take that on notice. I am not sure what communications may or may not have passed between the Public Trustee and the Auditor-General. I do have some further information about that matter if that is of any assistance.

Ms CHAPMAN: Alright.

The Hon. J.R. RAU: The background to this matter, I am advised, is as follows. A former employee of the deceased estates section of Public Trustee has been charged with dishonesty offences. The employee has appeared in court and has been charged with five counts of aggravated theft and five counts of abuse of public office. It is alleged that the offending occurred from 7 July 2015 and continued until a joint investigation by ICAC and the anti-corruption branch of SAPOL led to this individual's arrest on 17 May this year.

It is not mentioned in the 2015-16 financial statement that is published with the Auditor-General's Report to parliament or in the Auditor-General's commentary. The annual report of the Public Trustee makes mention of charges within the Public Trustee's The Year in Review section. As I said, the individual was in the deceased estates section. I understand that the allegations do not relate to Public Trustee's will writing, tax, trusts, personal estates or regulatory branches. The individual has resigned from the public sector. I understand that the individual has been cooperative with the investigation and the matter is currently before the courts. I do not think it is appropriate to go into any further detail on that.

Ms CHAPMAN: I am not asking for any further information about the particulars of the progress in the case, but I appreciate the Attorney's disclosure to this two-person committee to explain where it is at. I totally respect that it is a pending action, but it has to be concerning, Attorney, that there is no reference to this in the Auditor-General's Report. This is clearly identified as a fraud against deceased estates, and it is the area of concern of state expenditure sample testing to make sure that there is not any misappropriation of these funds in people's estates, and there is no mention, not just by the Auditor-General.

Auditors-general missed the State Bank, so I know they miss some things, but I also accept that, when the Auditor-General reports that the Public Trustee has, according to this statement on page 50, acknowledged certain events and told him what they are doing about it, there appears to have been either no disclosure that an alleged fraud had occurred over a sustained period—in fact, almost the entire period that is under consideration—or no mention by the Public Trustee or their officers to the Auditor-General when they have clearly had communication about the action they are taking or should be taking to protect against fraud against the estates of deceased persons.

Alternatively, the Auditor-General has received that information, fully and frankly disclosed by the Public Trustee, and has chosen for some reason not to report it. I accept that there are two options there, but I want to be absolutely clear about what action the agency under your responsibility, which of course is the Public Trustee, has taken. Quite frankly, the Public Trustee has had a pretty chequered history just in the time I have been in the parliament. There have been inquiries against it and there have been questions about its conduct or lack of appropriate protection mechanisms, not to mention issues in relation to staff and others.

I want to be reassured that there has been frank disclosure and, if it was not disclosed in May 2016, when, as you have confirmed again, it was identified and reported for prosecution, when was it disclosed? If it has not been disclosed, what is the explanation the Public Trustee gives to this parliament as to why it has not fully disclosed that information to the Auditor-General?

The Hon. J.R. RAU: Obviously I will have to take that on notice because I will have to speak to the Public Trustee. Can I say that the current Public Trustee, who has been there for a few years now, by and large has been doing a very good job of putting that organisation, which I agree with the deputy leader had its fair share of complaints and shortcomings, into much better order. I think she has by and large done a very good job of that.

I will obviously attempt to get an answer to that question. I know, for example, that at some point obviously during this year—I think it must have been around that time, presumably—she did get in touch with me and say, 'I just want you to know that there's this thing happening,' which I presume would have been the arrest and charging of this individual, so I assume it was in May. Whether she also informed the Auditor, I do not know, but I will ask that question of her.

Ms CHAPMAN: That was going to be my next question, that is, when you had been informed, but it appears that, fairly contemporaneous with the charging, you were given some notice. I am assuming you meet regularly with the head of the Public Trustee?

The Hon. J.R. RAU: Our meetings are more or less on an as needed basis, but I do recall—and I cannot tell you the date off the top of my head, but my guess would be it would have been around that point in time, in May of this year—she wished to speak with me. I cannot now recall whether we spoke on the telephone or whether we met personally, but she certainly communicated to me that there was an issue with a member of staff whose conduct she was concerned about. I do not know what the detail of that was.

The only other point I might make—and I do not know the answer to this either—is that if there was then a current investigation that was being run by ICAC, it may have been the case that only specifically authorised disclosure under that legislation was lawful from the point of view of the Public Trustee, but I do not know and I will make inquiries.

Ms CHAPMAN: So that I am clear about this, I thought this was a joint investigation not just by ICAC but by another agency.

The Hon. J.R. RAU: Yes, but I do not know whether the fact of ICAC being involved created some additional issue for conversations. I am guessing here, so the simple answer is: I will ask her and I will find out.

Ms CHAPMAN: To your knowledge, did ICAC or any other agency, police or otherwise, put out a public statement confirming the prosecution and the charges that were being placed against this former employee?

The Hon. J.R. RAU: Again, I do not recall. I remember that when I was informed of the matter, it was in the context of me wishing to be sufficiently across the facts to be able to respond if I was called upon to do so in any media inquiry, but I cannot presently recall whether there was any media that arose out of this matter.

Ms CHAPMAN: I assume that you had not made any public statement or provided any press release on it?

The Hon. J.R. RAU: I do not believe I did, no. I do not believe I did.

Ms CHAPMAN: The report confirms that the Public Trustee had commenced an independent forensic file review of historic files. In respect of the five counts of aggravated theft, what is the value of the alleged theft?

The Hon. J.R. RAU: Again, I will have to take that on notice. I do not think we are talking massive numbers. In fact, without in any way diminishing the significance of a person in a position of trust, such as this individual doing what is alleged to have been done, I do not believe we are talking significant value in terms of dollars. But that is not really the point, is it? We are talking about the property of a deceased estate, essentially, and, whatever its pecuniary value may or may not be, its value to the people who should have received it might be significant. I will ask the question.

Ms CHAPMAN: Having commenced an independent forensic file review of the historic files managed by this former staff member, have there been any further identified discrepancies—if I can put them as general as that?

The Hon. J.R. RAU: I do not recall having been informed of any further issues of this type, but I think I had better take that one on notice as well.

Ms CHAPMAN: Have there been any other alleged frauds reported to you in that period, that is, July 2015 to June 2016?

The Hon. J.R. RAU: If my memory serves me correctly, no, but I will again check. To the best of my recollection, the only issue with the Public Trustee that has arisen in the last 12 months is this issue. Obviously, it is very unsatisfactory that that has occurred. I do not recall there being any others, but I will check.

Ms CHAPMAN: Leaving aside for the moment whether the Public Trustee even told the Auditor-General about this alleged fraud, it is claimed here in the Auditor-General's Report at page 50:

Public Trustee has also accepted our recommendations to improve the information on the signature register and reminded responsible authorisers not to exceed their delegation limit.

Are you satisfied that there has been a full compliance with the recommendations of the Auditor-General that, according to him or his office, had already previously been identified and clearly not acted on and then had been repeated again this year for the purpose of this financial year?

The Hon. J.R. RAU: That is something I will obviously have to ask the Public Trustee to find out exactly what she has done by way of giving effect to the matters in that sentence. I will just have to ask her.

Ms CHAPMAN: In the sentence before that, it states:

Public Trustee acknowledged that the sampling process was not effectively in place throughout 2015-16 and has reminded staff of their responsibilities for this review.

Has that happened, and is it now in place as per the recommendations?

The Hon. J.R. RAU: Again, I will have to take that on notice.

Ms CHAPMAN: If we return to the Auditor-General's division, page 35, there is reference to the now infamous Crown Solicitor's Office matters, in particular the Victims of Crime Fund. Attorney, we have already had a major fraud that has occurred by an employee. He is now serving a very long term in prison for another offence. I think that from last year there was quite a substantial recovery, ultimately, of the money that had been taken out fraudulently from this fund.

The consequence of that nothing short of a debacle was that a program was implemented to ensure that the person who approved compensation claims under the Victims of Crime Fund and the person who paid out were separate entities or departments so that it avoided the problem, which they got away with in the last major fraud circumstance, of issuing an application, approving it, and then paying themselves one way or another to get a large sum of money and that, accumulated, was a very serious offence.

We have had a whole lot of assurances that the situation is in order, yet today we have before us the Auditor-General's Report, which again describes the deficiencies of the payments and claims of the internal review process, and there is a scolding from the Auditor-General about how that should be improved. In respect of the way that the Crown Solicitor's Office is conducting its review of this, what action have you taken to ensure that they are properly managed and that these funds are secure? Whilst this fund is flush with money, at $240 million or so, it is probably even more important, given that it will be attractive to those who might want to steal from it.

I would like you to give some assurances to this committee because this has happened before. We have been given assurances before, and this year we find that there has been a continued failing. It appears at this point, with no identified further fraud, that that may be more by good luck than good management.

The Hon. J.R. RAU: I thank the deputy leader for her question. In relation to this very unfortunate matter, the passage that has been referred to on page 35 does indeed make some criticism of procedure in AGD, but it is important to note that it does not indicate that there has been any further fraud perpetrated. It identifies a process issue. That is the first thing. The second thing is that obviously, in terms of the way in which this is managed, it is a matter for the Crown to respond to these things and to deal with them.

I have been advised as follows. A document which outlines the process to review VOC claims for compliance, which is enchantingly entitled 'Procedure for assessment and payment of claims under the Criminal Injuries Compensation Act 1978 and Victims of Crime Act 2001', has been drafted. I am advised that this document will be finalised and approved by midway through this month. The new control framework was in fact implemented in April 2014 and has involved a large number of changes to processes and procedures within the unit.

I am also advised that the Crown Solicitor's Office is not in a position to be able to disclose the specific nature of the new controls, as the Crown Solicitor believes that they set out checks and balances that are there to reduce the risk of fraud, and for them to be made public might actually serve to undermine their effectiveness. That said, I would be more than happy to discuss those, not in public, with the deputy leader, if that would be of any assistance.

Ms CHAPMAN: But, Attorney, that is all there in the report. What you just read out has already been told to us in the Auditor-General's Report. Frankly, if that is all the information the Crown Solicitor's division of your department has given you, which is just a repeat of what the Auditor-General has told us, it is grossly inadequate, especially given the form of failings in respect of this area.

The Hon. J.R. Rau interjecting:

Ms CHAPMAN: Yes, he tells us that there is a new process, review compliance model, or whatever is going to be implemented—it is all there. What he says, though, is that even after promises that that occur, and with a scheduled update apparently for March 2015, it still had not happened, and now you tell us today that you have a draft on its way. Surely, that is grossly inadequate, given the history of this failure to properly supervise the money that goes through this particular fund.

When the AGD, according to the Auditor-General, responded that the process for quarterly internal review of VOC claim files would be documented, it does not fill me with confidence that the only information you bring back to the parliament on this failing of this area is that they have a draft set of guidelines ready on how they might manage that. That is frankly unacceptable to this parliament, in my view, and ought to be unacceptable to you, as the Attorney-General who is in charge of this.

Let's look at the next issue. Has it actually implemented a quarterly internal review of the VOC claim files since 30 June 2016; if it did, when did that occur and who did it?

The Hon. J.R. RAU: First of all, I do agree with the deputy leader that the matter of having appropriate procedures in place, particularly in light of the fraud that occurred in the past, is an important matter, and it is entirely appropriate that the Auditor-General should have given consideration to that matter and obviously pass comment on any inadequacies. I will seek advice to be able to provide a complete answer or a more full answer, a copy of the questions obviously to Hansard, is something I will provide to the department and to the Crown Solicitor, and I will endeavour to get a more responsive answer to the deputy leader's questions.

Ms CHAPMAN: Will you meet with the Crown Solicitor or whoever is the head of administration of that division that manages the Victims of Crime Fund?

The Hon. J.R. RAU: I meet fairly regularly with the Crown Solicitor. The nature of those meetings is generally that we discuss matters of significance that are currently being litigated by the Crown Solicitor on behalf of the state. This particular matter has not been the subject of one of those conversations.

Ms CHAPMAN: Who is in charge of it?

The Hon. J.R. RAU: The Crown Solicitor, Mr Evans, is the head of the Crown Solicitor's Office.

Ms CHAPMAN: Is Mr Evans personally responsible for the management of the finances and the reviewing of processes surrounding security of this fund?

The Hon. J.R. RAU: I would be very surprised if Mr Evans had time to do that amongst all the other things he is doing. I will find out. I am advised by the Acting Deputy Chief Executive of the Attorney-General's Department that the Auditor-General was apparently advised about the PT issue before 30 June.

Ms CHAPMAN: A date?

The Hon. J.R. RAU: I do not have a date, but I will seek that out. I am just giving you further updates as they come to hand.

Ms CHAPMAN: Can we go back to the Victims of Crime Fund. You will ascertain who is responsible for the supervision of the security of these funds, and I agree with you—I can hardly imagine Mr Evans would be, but I am sure you will find somebody in there is responsible. I would ask you to ascertain whether, in fact, the quarterly internal review of the VOC claim files has occurred, hopefully as at 30 June and again sometime at the end of September.

I look forward to receiving that—hopefully, before the end of the year—so that we can have some reassurance that somebody is keeping an eye on this fund and that we are not going to be the subject of what could occur as a result of failings without this process. At the moment, I can say that the assurances given in previous years have evaporated any confidence I had, and I think it is incumbent upon the Attorney to reassure the parliament in that regard.

Next we come to the Fines Enforcement and Recovery Unit—a continued disaster it seems, with, I would have to say, multiple breaches—at the bottom of page 35, across to page 36 and keeps going to page 37. I think there are about 10 different areas of failing in respect of this unit which was going to be the panacea of recovery from recalcitrant members of the community who had not paid their fines. Now we find that there are multiple breaches in respect of the operation of this unit.

Could you ascertain, firstly, who is responsible for the management of this unit, as I assume that the acting chief executive of the department also has other important duties to undertake and would not be dealing with the daily management of this, and give some explanation? I will ask some questions and you can take them on notice if you feel that there is information that you do not have. First, on page 36, it states, 'AGD advised the FERU would continue to work on policies and procedures in 2016-17.' My question is: has it completed any and are they in place?

The Hon. J.R. RAU: I will take those all on notice and I will assume that Mr Evans is not running all of this all by himself. I will find out who the responsible people are and I will attempt to get an answer to that question.

Ms CHAPMAN: On the daily close-off processes, also on that page, which was brought to the attention of the Auditor-General to report, he states:

AGD responded that the FERU would review current processes and implement a quality assurance program to monitor compliance.

What has happened since 30 June?

The Hon. J.R. RAU: I will take that on notice.

Ms CHAPMAN: Has anybody told you anything about the compliance commitments that this unit has made to the Auditor-General?

The Hon. J.R. RAU: No, I have not had a discussion with the unit head about that. No, I do not know; I have not had any such discussion.

Ms CHAPMAN: This report has now been out for some time and presumably whoever is in charge of the unit has read it. It must have been a dismal report for them to receive and they would have sent off a reassuring letter to you that all of these things were in hand and that certain things have been done so that, as in every other area of report here, you have an aide-memoire to tell us about what is happening. Are you really saying to the parliament that you have had no information from your department about what this unit has done to comply with the multiple breaches of either protocol or failing to prepare adequate policies and supervisory regimes?

The Hon. J.R. RAU: I do not believe that I have received any response of the sort that you are talking about, although whether one has been sent to the department or to somewhere else I am not sure. However, obviously I do agree that if these matters are raised by the Auditor we are all entitled to know what is being done about them, so I will pursue that.

Ms CHAPMAN: Finally, have you made any inquiry about the areas of concern that have been raised specifically in the Auditor-General's Report about your Attorney-General's Department failings in this area?

The Hon. J.R. RAU: I have not been through with the department in an itemised sort of way each and every observation made by the Auditor-General. What has happened in the past is that the chief executive of the department, having had an opportunity to absorb the report and consider the responses, normally would then say to me whether or not they thought there were matters of outstanding concern. I do not think we have reached the point yet where that has occurred but in the normal course I expect it will.

Progress reported; committee to sit again.

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