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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 31 October 2017.)

The Hon. J.W. WEATHERILL: By leave, I move:

That the timetable for consideration in committee of the Report of the Auditor-General 2016-17 be amended by interchanging the time scheduled for the examination of the Deputy Premier, Attorney-General, Minister for Justice Reform, Minister for Planning, Minister for Industrial Relations, Minister for Child Protection Reform, Minister for the Public Sector, Minister for Consumer and Business Services and Minister for the City of Adelaide with the Minister for Transport and Infrastructure and Minister for Housing and Urban Development.

Motion carried.

The CHAIR: We need to have the lines of the report we are addressing with the question, and it is necessary to stand to ask the question. The Premier has a range of advisers for his portfolios, Premier and Arts. Questions concerning the portfolio of the Premier are first.

Mr MARSHALL: I refer to Part A, pages 2 and 3, regarding the Auditor-General's comments about requests and approval for access to cabinet submission decision sets. The Auditor-General wrote to the government in June 2017 proposing an approach to gain timely access to cabinet decision sets that are necessary audit evidence, but did not receive confirmation that he would be provided with even this limited access to cabinet information until September, three months later. Can the Premier provide some comment to this committee as to why it took so long to reply to the Auditor-General's request?

The Hon. J.W. WEATHERILL: In August 2016, cabinet adopted a general policy that cabinet documents would not be released to investigative agencies. This was intended to protect the integrity of cabinet processes. The policy included the Auditor-General. No cabinet in the nation does this, and there had been a practice that had grown up where certain cabinet documents were supplied as a matter of convenience because they were a shorthand way of describing a whole bunch of documents that would otherwise be more time-consuming to access.

While it was convenient in that sense, it created a difficulty for cabinet government. The Auditor-General, when he was advised of the policy, obviously still needed on occasions to be able to verify that certain decisions had been taken; therefore, he needed access to the cabinet decision sets. He was content with that. However, the policy as it was written prevented the release of any cabinet documents, including decision sets, to the Auditor-General. The Auditor-General wrote to the Attorney-General in June to outline the difficulties caused by the policy.

The decision set provides evidence of cabinet's approval and the substance of these approvals. Without that information, he found it difficult to discharge his functions. In August 2017, we needed to approve an exception to the policy to allow the Chief Executive of the Department of the Premier and Cabinet to provide the Auditor-General with a record of cabinet decisions where this is necessary for the proper exercise of the Auditor-General's functions. The exception also allows the Auditor-General to refer in a public report to the fact of cabinet approving a matter, provided such reference is necessary for the Auditor-General's functions and does not disclose any other deliberations of cabinet.

Obviously, we want to be as helpful as possible to investigative agencies such as the Auditor-General, but we also need to preserve the integrity of cabinet. I think we had a long discussion about this during estimates, about the reasons for that, but they are self-evident and they are the same reasons that animate every cabinet around the nation, and that is that cabinet government is about collective decision-making, which is essentially not made in a public way.

The reason why that is important is so that the various perspectives and deliberations of cabinet can be made, including the differences of opinion, in a fashion which means that it is not disclosed to the public so that the decisions themselves can be represented as the decisions of the whole of the government. It would lead to the sort of chaos we are beginning to see emerging nationally if we were to have essentially every perspective aired as a consequence of every cabinet decision being made public or at least the deliberations being made public. There are sound public policy reasons for that.

It is important that cabinet members are able to speak without fear or favour in that environment and that they are able to bring their perspectives, both critical or supportive. If you were to reveal cabinet documents, you would also reveal the different perspectives, potentially, of different ministers that may emerge. Then you would have the extraordinary situation where, to actually fully understand a cabinet decision, you would be trawling through various ministers giving their evidence or perspective about cabinet decisions. It completely undermines the notion of collective solidarity, which is at the heart of cabinet government, and it could very well lead to the sort of self-censorship, which is anathema to high-quality decision-making.

Mr MARSHALL: Just to clarify, Premier, you are now agreeing to provide the decision sets to the Auditor-General for his perusal, but the only part that can be reported is either the approval or not approving of a matter; is that correct?

The Hon. J.W. WEATHERILL: Yes, that is right because there are some elements of the Auditor-General's function that depend upon knowing whether cabinet approved or did not approve of a particular matter. So that is the relevant part.

Mr Marshall: He is given the full set?

The Hon. J.W. WEATHERILL: When we say 'cabinet decision set', it really records the decision that was taken by cabinet—if you like, the conclusion of cabinet deliberations.

Mr MARSHALL: Can the Premier provide some information to the house about how many cabinet decision sets the Auditor-General has received since this new arrangement was put in place?

The Hon. J.W. WEATHERILL: I will not take that on notice, but we would only provide the cabinet decision sets that were necessary for him to discharge his function. In many cases, it is not relevant to his function. Cabinet may not be the decision-maker in very much of the work he does; it may be an agency that is the decision-maker. To the extent that cabinet is the decision-maker, and to the extent that he is carrying out an audit where that becomes relevant, he will request them. I do not have the precise details of the number of requests he has made, but we will bring back an answer.

Mr MARSHALL: When you come back to the house with that answer, can you also indicate how many times those decision set requests have been denied?

The Hon. J.W. WEATHERILL: Well, I will bring back an answer, but the policy is now that they will be supplied upon request, so I would not imagine that there would be any denials. I will certainly ask that question and find the answer.

Mr MARSHALL: When did the Auditor-General make recommendations for amendments to the Public Finance and Audit Act to improve the flexibility of his reporting to parliament and the government's accountability?

The Hon. J.W. WEATHERILL: I understand that the recommendation is contained in this report. We now have the report, and that is under consideration.

Mr MARSHALL: The recommendations are in the Auditor-General's Report? They were not received prior to the publication of this report?

The Hon. J.W. WEATHERILL: I will check that, but it seems on the face of the text that the recommendation is being made in the report. I am not aware of whether it was made prior to the release of the report, but the terms of the recommendation rather suggest that the first time the recommendation has been made is in the body of the report. I will check that and see whether it was made earlier.

Mr MARSHALL: If that is the case, can the Premier confirm that the government has not responded to this report as yet?

The Hon. J.W. WEATHERILL: No, we have not yet responded. We have only just received the report, so the matters that are contained within it are being responded to, and that is one of the matters that we will respond to.

Mr KNOLL: Is the Premier then confirming that the first time he received notice of the Auditor-General's request to have legislative change was when the Auditor-General's Report was tabled?

The Hon. J.W. WEATHERILL: No, I am not confirming that at all. I am just saying that the terms of the way in which it is expressed rather suggest that the first time the recommendation is made is in the body of this report, but whether it has been made at an earlier time I do not know that, or at least I cannot recall that, and we will take that question on notice.

Mr MARSHALL: Further on that reference on page 4, item 1.3, the Auditor-General is specifically talking about amendments that he is seeking that are critical to ensuring the Auditor-General has clear authority to report to the parliament at the earliest opportunity possible. We know from evidence provided to the estimates committee that we are still waiting on reports regarding the new Royal Adelaide Hospital, the Festival Plaza, One Community and the State Administration Centre sale. Can the Premier confirm to the committee that all the relevant documentation will be provided to the Auditor-General in a timely manner to ensure that those reports can be made available before the next election?

The Hon. J.W. WEATHERILL: Certainly, it is my expectation that all the relevant material should be provided in a timely fashion so that the Auditor-General can discharge his function and ensure that all the relevant reports are completed as soon as possible.

Mr MARSHALL: Can the Premier indicate whether there are any other hold-ups to the preparation of any of those reports? In particular, I refer to the Festival Plaza report, because during the estimates committee there was some discussion as to whether or not another investigation—in fact, an investigation from the ICAC—was stalling the finalisation of that report, which was due in October 2016.

The Hon. J.W. WEATHERILL: I do not think that was the burden of the evidence that was given before the estimates committee. I think the evidence that was given was that some clarification was being sought by the Auditor-General about the various boundary responsibilities between his function and the functions of other agencies. It took some time for him to clarify that matter, and that may have been the explanation for some of the delay. I am not aware of any other processes that would have the effect of delaying any of the matters that are the subject of your question.

Mr MARSHALL: Can the Premier perhaps offer any explanation as to why there is a delay with the finalisation of the Festival Plaza report due in October 2016 and whether he sought any explanation from the Auditor-General as to why there has been such a substantial delay?

The Hon. J.W. WEATHERILL: It is a matter for the Auditor-General. I am sure he is completing his work assiduously, making sure that he has all the relevant evidence and making sure that everybody has the opportunity to properly respond to his reports and his deliberations, and I am sure it will be available as soon as possible. We are very keen to see tabled it as soon as possible.

Mr MARSHALL: Has the Premier sought any explanation from the Auditor-General as to the delay, which is now more than 12 months?

The Hon. J.W. WEATHERILL: The Auditor-General carries out his functions diligently and I have no reason to believe that he is not discharging his functions properly in this case and that he is as keen to finalise this report as we are keen to receive it. I have no doubt at all that he is exercising all due diligence in the preparation of his report. There has been nothing brought to my attention that would suggest otherwise.

Mr MARSHALL: When the Premier says that nothing has been brought to his attention regarding this matter, is the Premier aware that there is or there is not an ICAC inquiry into the Festival Plaza?

The Hon. J.W. WEATHERILL: First you misrepresented my answer and then you asked me a question that I probably cannot even answer. The first point is that I did not use the phrase that you used in describing your question. I said that I believed there was nothing that had been brought to my attention to suggest that he was not conducting the matter with all due diligence and, just for the record, I am unaware of any investigation by any other body, other than the Auditor-General, concerning this matter.

Mr MARSHALL: Have you sought any indication from either the Independent Commissioner Against Corruption or the Auditor-General whether there is an ICAC inquiry into the Festival Plaza?

The Hon. J.W. WEATHERILL: No, I have not, and I think it would be inappropriate for me to do so. I certainly have not made those inquiries, and there has been nothing drawn to my attention to suggest that any other investigation is impeding the capacity of the Auditor-General to complete his work. I hope that his work is completed soon. I hope it is brought to this parliament soon and that the matter can be thoroughly considered.

Mr MARSHALL: Would there be anything that precluded you, as the Premier—and this is of course a matter of public interest—in making that inquiry to either the Auditor-General or the Independent Commissioner Against Corruption?

The Hon. J.W. WEATHERILL: I am not going to make inquiries about matters that have not been drawn to my attention and—

Mr Marshall interjecting:

The Hon. J.W. WEATHERILL: Well, it is spurious. There is no basis to suggest that there is any other inquiry. I have no evidence to suggest there is. All we have is essentially the Leader of the Opposition seeking to cast aspersions on the government and its processes by raising the spectre of an ICAC investigation. If there were ever a justification or an explanation for why these matters should be dealt with without the full glare of publicity, it is the mysterious way in which the Leader of the Opposition seeks to sneak around the strictures of the ICAC legislation and imply that there might be such an investigation going on in relation to this matter.

We know precisely how these investigations are used and misused in other jurisdictions. It is precisely the reason we put the model before the parliament, which, I might say, those opposite voted for and supported, which suggests that those investigations should occur in private. Once they are concluded, those investigations are then made public and the matter can be evaluated, rather than these snide suggestions that something untoward is happening and we just hedge around because we know that we are not allowed to confirm or otherwise whether such a matter is being investigated.

The CHAIR: We do need to return to matters that are the substance of the Auditor-General's Report, if we can.

Mr MARSHALL: I refer to Part B, page 330. The Auditor-General's Report states that DPC's promotion and marketing expenses increased by 100 per cent between 2015-16 and 2016-17. Can the Premier provide an explanation for this massive 100 per cent increase? What is the total estimated cost of promotion and marketing activities to be incurred by the Department of the Premier Cabinet in the 2017-18? How much of that amount is due to be spent before the election on 17 March next year?

The Hon. J.W. WEATHERILL: There have been a number of significant communication exercises undertaken by the Department of the Premier Cabinet on behalf of the whole of government. Promoting, obviously, the South Australian economy nationally and internationally is a significant part of that, so some of it is an international marketing campaign. Promoting South Australia as the best place to do business across a range of growth sectors such as defence, energy, premium food and wine, tourism, health and biomedical is another part of that.

Obviously, a significant part is investment in promoting South Australia internationally, targeted to our key markets in China and France, reflecting our international engagement strategy. I think there was also a substantial component concerning the international engagement program concerning the arrival of China Southern. There was of course the Open State festival, another key promotional activity delivered by the department, promoting innovation, collaboration, ideas and enterprise.

It is also worth noting that the department has increased in size because of essentially bringing over, through the machinery of government changes, the energy and mining part of the department. So some of the increase in expenditure is associated with the larger department, so their communications budget comes over.

Mr MARSHALL: Will the Premier table to this committee an itemised breakdown of that $3.7 million increase for the 2016-17 financial year? Can he answer the previous question, which is: what is the total estimated cost for promotion and marketing activities for 2017-18? What proportion of that budget for the current financial year will be spent before the election on 17 March?

The Hon. J.W. WEATHERILL: The documents themselves provide that breakdown. They are contained on page 333 of the Auditor-General's Report. I do not think there is any expectation they will be expended anything other than in an orderly way throughout the period of the financial year. Some of them have already been expended because things like Open State have already occurred. Others will be rolled out throughout the course of that period.

Mr MARSHALL: What proportion of this year's budget will be spent before the election, for the third time?

The Hon. J.W. WEATHERILL: The 2017-18 budget, which is of course the subject of the most recent budget deliberations, I will have to take that on notice. This is an Auditor-General's examination of the previous financial year.

Mr MARSHALL: At page 331, the Auditor-General's Report reveals that the cost of consultants for the energy market and electricity generation projects was $2.7 million in the 2016-17 year. Will the Premier provide an itemised list of these consultancies and their specific costs?

The Hon. J.W. WEATHERILL: We will take that on notice. These consultancies were, of course, a very important basis for us to establish Our Energy Plan. One only needs to consider the significance of the six items that were put in place to understand the speed, the importance and the skills and capabilities that were needed to be brought in. The consultancies cover a range of areas, whether it is the 250 megawatt gas-fired power plant, the temporary generation associated with that, the Renewable Technology Fund, the evaluation of the battery storage or indeed the evaluation of the solar thermal plant, which was the ultimate winner of the procurement.

We needed engineers, energy market economists and a substantial amount of legal and accounting services to deliver the outcomes on the energy plans. We will bring back an answer to you on those matters.

Mr MARSHALL: While the Premier is doing that, does he have an indication of the estimated cost for consultants for this current financial year for the energy market and electricity generations projects?

The Hon. J.W. WEATHERILL: Once again, this is outside the scope of the Auditor-General's Report, which is the last financial year, but we will take that on notice and bring back an answer.

Mr MARSHALL: Referring to Part A, page 124, why did the cost incurred by the Department of the Premier and Cabinet in 2016-17 for contractors and temporary staff increase by more than 40 per cent to over $20 million in a single financial year?

The Hon. J.W. WEATHERILL: The fundamental drivers of this were the machinery of government that obviously brought over a new agency. You are talking about a larger agency, so that immediately takes the money reported in one column, essentially in mining and energy, and brings it over into another column, in terms of premier and cabinet. The energy plan itself was another substantial contributor. Because the energy plan required a very intense period of effort, essentially bringing in temporary independent contractors, that obviously led to a very substantial increase in expense and that is also built into that number.

Mr MARSHALL: Referring to Part B, page 368, TVSPs, why was there such a substantial increase in TVSPs from the 2016 year to the 2017 year in the Department of the Premier and Cabinet?

The Hon. J.W. WEATHERILL: Fundamentally, it is a machinery of government issue, so it is a larger pool of TVSPs. There are always TVSPs. You are basing it on the previous year. We have a larger cohort, so by parity of reasoning there is a larger group of TVSPs.

Mr MARSHALL: Referring to Part B, page 328, the Auditor-General's Report states that the transition of agencies from CHRIS5 to CHRIS21 was completed. What was the original budget for this project and what was the actual cost?

The Hon. J.W. WEATHERILL: On 3 February 2014, the cabinet approved the commencement of phase 2 of the CHRIS project, including funding of $11.4 million. This initial figure excluded agency costs, which ultimately were estimated to be in the order of a further $10 million. So the total project cost, including the agency component, is now $21.9 million. From 2017-18, ongoing savings of $1 million per annum are factored into the budget forward estimates as a consequence.

Mr MARSHALL: I heard the Premier say that the total cost was $21.9 million. What was the original estimated cost?

The Hon. J.W. WEATHERILL: Well, there was not an original estimated cost, or something which is comparable, because the original cost did not include an agency component. So the total figure now is $21.9 million, and the initial figure did not include the agency costs, which were not initially determined at that time.

Mr MARSHALL: Are you suggesting that additional agencies were included in the final scope but not in the original scope?

The Hon. J.W. WEATHERILL: I am suggesting that there are two costs: one is the agency costs associated with transitioning to the new system, and then there is the cost of the project itself. It is the combined cost that represents $21.9 million.

Mr MARSHALL: Then can the Premier answer my original question: what was the original budget for the project, and what was the actual final budget?

The Hon. J.W. WEATHERILL: I have to bring back an answer because basically we do not have two numbers which are comparable at this stage. We will have to take that on notice.

Mr MARSHALL: Can the Premier give any indication to the house whether or not there was any change to the scope, whether any agencies originally envisaged in the scope were in fact not included in the final deliverable?

The Hon. J.W. WEATHERILL: I will take that question on notice, but I think the original project is actually larger, so it includes a larger number of agencies than was originally envisaged. I will bring back an answer to you on that matter.

Mr MARSHALL: Can the Premier then give any indication as to why there was a downgrading of the scope for that project?

The Hon. J.W. WEATHERILL: I do not think I suggested there was a downgrading of the scope. I think there was—

Mr Marshall: You said there were fewer agencies included in the final—

The Hon. J.W. WEATHERILL: No, 'new' agencies. There were new agencies, SAPOL and TAFE, so there were not fewer. If I said that, it was a slip of the tongue. I thought I had said new agencies.

Mr MARSHALL: Referring to Part B, page 329, regarding the transfer of mining and energy programs from DSD to DPC, why did the case management function of the Resources Infrastructure and Investment Task Force remain in DSD while the other function units were transferred across?

The Hon. J.W. WEATHERILL: I think the view was that its work was difficult to disentangle from the work that was otherwise being done by the more traditional Department of State Development functions, so it was not possible to disentangle it, if you like, from other investment attraction if it is taken across to the Premier and Cabinet.

Mr MARSHALL: I might be able to come back to DPC, but I have a quick question on the arts. I understand that there has been a $5 million contingency provided for the redevelopment of the Adelaide Festival Centre and plaza. Can the Premier say whether the contingency will be sufficient to cover all the likely costs there?

The Hon. J.W. WEATHERILL: I am advised that that was the original budget. There may be a small additional request for additional contingency which is associated with a larger period associated with the closure of the Festival Centre. That is not yet a government decision, but it is a request that has been made to consider a potential larger contingency, but not a substantial increase.

Mr MARSHALL: While we are on the arts, the Auditor-General's Report refers to additional unforeseen costs associated with the redevelopment of Her Majesty's Theatre. Can the Premier quantify these additional unforeseen costs and what they were for?

The Hon. J.W. WEATHERILL: I think that is a matter that was dealt with in the state budget. I will have to bring back the actual numbers, but it was associated with further work that was done to understand the nature and scope of the project—there has been a substantial additional sum of money that was voted in the budget to be applied to Her Majesty's Theatre—so all those details are contained in the state budget papers.

Mr MARSHALL: I refer to page 329. Can the Premier provide any explanation to the house as to why there has been such a massive increase in grants and subsidies from $7 million in 2016 to $42 million in 2017? Can he provide details of those increases?

The Hon. J.W. WEATHERILL: Once again, it is machinery of government. It is bringing in the mining and energy part of the agency. It is not a substantial increase: it is just bringing those items that were—

Mr Marshall: No net increase?

The Hon. J.W. WEATHERILL: I will have to take that question on notice. You said it is a massive increase. The lion's share of the increase is associated with shifting simply the items across from the Department of State Development.

The CHAIR: I thank the Premier and his advisers and ask the Minister for Transport and Infrastructure to move into place as quickly as possible with his advisers.

Mr PISONI: I refer to Volume B, page 321. Under the heading Revenues from (Payments to) SA Government, the report states that 'net revenues from the SA Government increased by $673 million' and refers to the reason for the increase, which was a transfer of $688 million from the Motor Accident Commission. Is the minister able to advise the committee whether that $668 million was made up of two components? Was it a capital injection from the proceeds of the consequences of the sale plus a dividend, or was it all dividend?

The Hon. S.C. MULLIGHAN: I am advised that it is all dividend and that it is paid straight into the Highways Fund account. Once expenditure authorities subsequently receive it, then it is available for expenditure on capital purposes.

Mr PISONI: That is up substantially from the figure of 449 from the previous year. Can you confirm that the 449 figure in brackets is for the previous year?

The Hon. S.C. MULLIGHAN: That is my understanding, yes.

Mr PISONI: There is a figure of $259 million from the Department of Treasury and Finance, representing the initial fee paid by private insurers to participate in the compulsory third-party insurance scheme. Can you confirm that that is a result of the outsourcing or what is commonly known as the privatisation of the MAC?

The Hon. S.C. MULLIGHAN: My understanding is, as it is described on that page, that it is part of the transaction or transactions that involved the arrangements around the Motor Accident Commission and the future private sector provision of the compulsory third-party insurance scheme, but if you are after any further details I would have to consult with the Department of Treasury and Finance because they managed that transaction. It comes up here merely because we are the recipient of those revenues. Other than the description there, we are a bit bereft of detail, but I can follow up for you.

Mr PISONI: Are you able to confirm whether that is the result of the sale?

The Hon. S.C. MULLIGHAN: From the description by the Auditor-General in his report, it appears that it is, but I think, given my lack of familiarity with the details of the transaction, I would be best served ensuring that I have the right information for the committee and bringing back an answer.

Mr PISONI: Can you advise if you have received any additional funding through that same process since the reporting period?

The Hon. S.C. MULLIGHAN: I would have to take that on notice. It is possible, given that the Auditor-General is examining transactions within the parentheses of the 2016-17 year. Whether any revenues, for example, have been received after 30 June, I would have to take that on notice.

Mr PISONI: Is there a budget or expectation of revenues to be received in that same manner?

The Hon. S.C. MULLIGHAN: I am sorry, member for Unley, I will have to check on that.

Mr PISONI: There is a reference here to payments to the government of $56 million returned of the surplus cash. Are you able to advise what generated the surplus? For example, was it a postponement of something or, was it a job or a series of capital projects that came under budget? Was it because of staff changes that were higher than expected, for example?

The Hon. S.C. MULLIGHAN: My understanding is that the money was paid back to the Consolidated Account under the cash alignment policy, which applies across the general government sector and, very generally speaking, requires unspent funds within agencies or within agency accounts to be returned at the conclusion of the financial year to the government's Consolidated Account.

I am advised that these funds in particular are for projects, which are ongoing projects, and so to the extent that those projects then need that funding back in order to complete the projects, or in order to meet the expenditure requirements in the subsequent financial year, there is a carryover process the department participates in where it requests of the Department of Treasury and Finance the carryover of those funds back to the department to make it available for expenditure on the projects.

At the end of each financial year, unspent funds go back to the Treasury department, but then those unspent funds can come back if they are for ongoing commitments like the delivery of a capital project that has not yet been completed.

Mr PISONI: Just to clarify, minister, the $56 million was not related to unexpected additional savings for staff, only for capital projects?

The Hon. S.C. MULLIGHAN: No, I cannot conclusively say it was only for capital projects. Given all the different expenditure lines within the agency, I am assuming that there is a whole range of unders and perhaps a whole range of overs that at the end of the financial year are consolidated into this figure and then able to be returned back. Perhaps what I could do to assist is try to find a list of what has comprised this $61 million and make it available to you.

Mr PISONI: Thank you, minister. If you could turn to page 322, there is a reference to DPTI liabilities and lease incentives of $50 million, down from $56 million last year. Are you able to advise the committee what those lease incentives were for?

The Hon. S.C. MULLIGHAN: Similar to the previous question, there is a slightly complex answer, and I will do my best to report it accurately. The Department of Planning, Transport and Infrastructure is responsible for across-government office accommodation management. Certainly in the last financial year, but more generally in recent times, there have been a number of new lease agreements that have been entered into by the department on behalf of either itself or other agencies.

In doing so, lease incentives, as they are described there, usually relate to either the discount that a landlord has given on the rent, which has been put by the landlord to DPTI to take out that office space, or it may be a contribution by the landlord to whatever fit-out costs or other related costs might be needed before the agency starts occupying that office accommodation. That $50 million relates to the value of those two types of lease incentives. The reason it comes up as a liability, I am advised, is that DPTI is a manager but is required to pass that on to the agency that is occupying that space.

While there is an asset that gets recorded through the transaction, there is also a value that needs to be put to the liability, and that $50 million represents the liability that the department has to those other agencies for whom it is organising office accommodation.

Mr PISONI: Would that include fit-outs paid for by landlords as an incentive to move into their particular building.

The Hon. S.C. MULLIGHAN: Yes, it could include that. Most commonly, I think we would experience it as being either a contribution by the landlord to fit-out costs or similar costs to enable an agency to occupy, or it might be the value of a rental discount which is provided over the course of the lease.

Mr PISONI: But not a fit-out done by a landlord?

The Hon. S.C. MULLIGHAN: I might have to seek some further information so that I can clarify my remarks. My understanding is, yes, it could be either the landlord who has the responsibility for doing the fit-out or it might be that the landlord recognises that the agency needs to do a fit-out and makes a financial contribution towards that fit-out, which is recognised in that figure. I think your question goes to who does the fit-out; is that correct?

Mr PISONI: Who pays for the fit-out?

The Hon. S.C. MULLIGHAN: My understanding is that this $50 million includes the landlord's contribution for the fit-out. Does that answer your question, or are you asking about who is actually paying the tradespeople to do the fit-out?

Mr PISONI: Basically, what I am trying to establish is whether the fit-out is the responsibility of the landlord, as part of the lease arrangements, or whether the fit-out is paid for by the landlord and done by the state government or your department.

The Hon. S.C. MULLIGHAN: My understanding is that it can be either. It depends on the arrangement that is struck for that particular premises and the landlord who owns that premises. If it would help, I can ask if we can perhaps populate some examples of office accommodation leases and who did what, who paid for it and what the value was.

Mr PISONI: Is it a requirement that those fit-outs funded by a landlord, if they are held as a liability within a department and they are more than $4 million, should be presented to the Public Works Committee?

The Hon. S.C. MULLIGHAN: I have to take that on notice, but my recollection is that some of these matters have been brought before the Public Works Committee. I will have to get some better particulars on it because we do not have that information with us.

Mr PISONI: I take you to page 323:

The Statement of Financial Position separately discloses non-current assets held for sale of $13 million—

down from $140 million the previous year—

The decrease in assets held for sale is due mainly to the reclassification of the State Administration Centre to the land, buildings and facilities asset classes. The financial report details that the assets no longer meet the requirements for classification as held for sale.

Are you able to confirm that, because of that accounting adjustment, the government no longer has plans to sell the State Administration Centre?

The Hon. S.C. MULLIGHAN: I do not think you can necessarily draw the conclusion that the State Administration Centre is no longer for sale. This merely represents the accounting treatment within the financial year. As to the status of the sale, whether it is on foot or not, I would have to come back to you. My recollection is that that has been managed by the Department of Treasury and Finance, but I am happy to seek some further information about that.

Mr PISONI: I am a little bit confused. You might be able to help me, minister. The way I read it is that the reclassification has meant that the rental income is no longer an asset you can sell as part of a sale; is that correct? Is that what has been taken out of the value? Is that why we are now talking about just land and buildings, rather than a tenanted arrangement for any investor?

The Hon. S.C. MULLIGHAN: I am not sure that it is necessarily that. It may be that, in the previous year, what was recognised was the assumed sale and a value was attributed to that, and now that that transaction has not been completed it is more appropriate by accounting standards just to account for that asset in the way it is accounted for here. That means that the value changes from $140 million to $13 million. I am perhaps on the edge or even slightly beyond my full comprehension of that matter, so I am happy to seek further information or take further questions on it.

Mr PISONI: Perhaps you are able to clarify what has been taken out of the equation to reduce the value?

The Hon. S.C. MULLIGHAN: I have just been provided with some further particulars about that. My understanding is that the $13 million in the current year that the report refers to is for other assets and the $140 million is for assets that had included the State Administration Centre. When you said that you get the impression from your reading of the report that it is no longer for sale—I think you described a particular manner in which it might be put to sale—I can understand how you get it from that description, but to be sure of my answer I would have to seek some further information, particularly from the Department of Treasury and Finance.

Mr PISONI: So what you are saying is that the $140 million in the brackets is not the total value for that asset. There are other assets in that $140 million figure.

The Hon. S.C. MULLIGHAN: My understanding is that it is likely that there are other assets included in it, but can I just urge a note of caution to the chamber. We are contending with a combination of my relative unfamiliarity with the subject content of what we are discussing as well as what can usually be utterly confounding accounting standards and treatments, so I think I am best placed to give some further advice to the chamber once I get better information.

Mr PISONI: Minister, if I could take you to page 320, under the heading Income, rental income is $214 million, including $178 million for office accommodation and $27 million for residential accommodation. Are you able to provide a breakdown of how much of that $214 million of rental income is paid by government departments and statutory authorities, and how much is paid by the private sector?

The Hon. S.C. MULLIGHAN: We should be able to. It might take a bit of work to comprise it accurately, but we should be able to do that.

Mr PISONI: Can you give me some idea what the residential component of accommodation of $27 million refers to?

The Hon. S.C. MULLIGHAN: Sure. There is a South Australian Government Employee Residential Properties program or initiative, or SAGERP as it is called. It is basically an initiative where agencies that have public servants who are required to work in regions—and perhaps the best two examples are teachers and police officers—are provided with accommodation. I was going to say that it is free of rent, but I am not sure that it is free of rent. It is a heavily discounted rent or certainly discounted rent from what the prevailing market rent would be.

Similar to the office accommodation scenario that I mentioned earlier, this is another area of the department's management. The income from that is either just from the agencies that are providing that rental subsidy or it may be a combination of the rental subsidy that comes from the agencies and the employees. That is my understanding as to what it relates to.

Mr PISONI: Have any of those properties been sold in the last 12 months or transferred to Housing SA for management?

The Hon. S.C. MULLIGHAN: Certainly sold, I believe so. Whether they have been transferred to Housing SA for management, I am not sure. I would have to take that on notice.

Mr PISONI: At the bottom of page 323, compulsory third-party insurance and related fees collected with motor vehicle registrations amounted to $509 million, up from $482 million, which is about a 10 per cent increase. Are you able to advise whether that represents an increase in the number of vehicles registered, or whether that is simply an increase in the fees that have occurred between each of those years?

The Hon. S.C. MULLIGHAN: I cannot remember off the top of my head what the year-on-year price difference was for compulsory third-party insurance premiums. Albeit from an increasingly hazy memory, I do remember in a former life having a better understanding of this as the Treasurer made a decision on whether the premium would go up or down based on advice from the Third Party Premiums Committee.

That process is obviously changing with the appointment of the Compulsory Third Party Insurance Regulator, but I would be reasonably confident in saying that it is a combination of whatever the change of premium was, up or down, but certainly growth in fleet in South Australia. I remember responding to a media inquiry about the year-on-year growth of the fleet and it continues to grow to the point now where I think we have more vehicles than residents in South Australia.

Mr PISONI: There are 1.7 million vehicles?

The Hon. S.C. MULLIGHAN: Registered vehicles, so that includes trailers, caravans and so on.

Mr PISONI: Boats, I suppose, as well.

The Hon. S.C. MULLIGHAN: It probably would include boats, yes.

Mr PISONI: I have some questions on Part A, page 91, the awarding of the contract manager for the contract for the Festival Plaza. The Auditor found significant shortcomings in controls as these processes did not meet accepted standards of procurement and contract management practice behaviour. When were you made aware of that issue in the awarding of that contract?

The Hon. S.C. MULLIGHAN: I do not have a particular date in front of me. I was certainly aware that Mott MacDonald was going to be the appointee to do this particular work because I think the department felt, given their experience in the precinct and with the Adelaide Oval project and the complexity of dealing with differing stakeholders, sometimes with competing objectives, that they were well positioned to do this work.

I am advised that the Auditor-General has made a series of findings about documentation and contract management from an administrative process, but in terms of a justification basis, the advice I have from the department is that, notwithstanding some of the administrative-related criticisms made by the Auditor-General, they believe it to be an appropriate appointment.

Mr PISONI: Has this situation occurred previously? Have you been made aware of the shortcomings that were exposed by the Auditor-General in this process occurring in other projects?

The Hon. S.C. MULLIGHAN: In response to the question about whether there have previously been shortcomings in procurement practices, I certainly recall, on becoming transport minister, reviewing a lot of the recent documentation that was either provided to me by the department or, for example, examining the six-monthly reports that the Auditor-General undertakes into the Adelaide Oval and the Adelaide Oval redevelopment, that the Auditor-General had identified shortcomings in procurement practices relating to the Adelaide Oval redevelopment itself. The Auditor-General has laid that bare in a series of reports, I think, in 2013 and 2014. So there have been instances where there have been shortcomings in procurement; I do not think I can deny that.

Mr PISONI: On page 94, the Auditor-General says that work commenced before the full contract value was approved. Can you explain why that happened?

The Hon. S.C. MULLIGHAN: I am advised that Mott MacDonald was initially engaged to conduct some work, but the scope of its entire engagement increased in stages. In fact, I think on page 94 the Auditor-General's Report alludes to the different stages or tranches of work that were undertaken by Mott MacDonald. In the first instance, I think part 1, which occurred in December 2015, was followed by subsequent parts 2 and 3, which occurred from April 2016.

I assume that, while conducting the services to which they had been appointed under part 1, further services or work had been identified by the department which they desired Mott MacDonald to undertake. What seems to have occurred is that the scope of those additional works was already being commenced before the appropriate approvals were given for those subsequent stages of work.

Mr PISONI: Did you have any role in those approvals, minister?

The Hon. S.C. MULLIGHAN: I would have to check. On page 94, the Minister for Transport and Infrastructure approved the full contract sum of $2.952 million on 20 April 2016, so the answer is yes.

Mr PISONI: Before you approved it, were you aware of Mott MacDonald's engagement by the Walker Corporation?

The Hon. S.C. MULLIGHAN: I would have to check what advice I was provided with at the time of making that approval.

Mr PISONI: Are you able to advise whether there has been any private sector money spent on the Festival Plaza project as of date?

The Hon. S.C. MULLIGHAN: As of today?

Mr PISONI: As of the work beginning.

The Hon. S.C. MULLIGHAN: The advice I am given is that the discussion in the Auditor-General's Report is constrained to the engagement of Mott MacDonald for the project-related services on Festival Plaza. I gather from your question that you are talking more generally about expenditure of the project more broadly. I would have to check that and the quantum, if any, involved.

I certainly know that the stages of work to date have been around the northern promenade, the works externally and internally within the Festival Plaza and some of the grade separation works on Festival Drive. However, the allocation of those funds I would have to be clear on because, of course, part of the arrangement for Festival Plaza was a $40 million contribution, I recollect—I will double-check that, but I am pretty confident that it is a $40 million contribution—by the developer into what is loosely described as public realm works.

Whether the scope of works that has occurred to date or even occurred within the financial year that the Auditor-General is reporting, or whether those works are yet to commence, because the car park demolition and reconstruction has to occur first before the expenditure happens, I will take that on notice and bring back an answer to the member.

The CHAIR: The time for examination has expired. I am sorry, we are running late, so we need to try to keep to 30 minutes, if we can. We thank the minister and his advisers and the member for Unley and ask the Minister for Communities and Social Inclusion and all the other things to come in with her advisers. If you can tell us what page you are on, we will find that while everyone is moving around.

Mr SPEIRS: Around about page 77.

The CHAIR: In which book?

Mr SPEIRS: Book B.

The CHAIR: The Agency Audit Reports, Part B, page 7, refer to which bit, member for Bright? No formal review?

Mr SPEIRS: What do you mean by which bit? My tranche of questions is on pages 77 to 87.

The CHAIR: But we are on page 77 to start?

Mr SPEIRS: Yes.

The CHAIR: It is a bit like estimates: we have to know the page and we do need you to stand for your questions and answers.

Mr SPEIRS: I am more than happy to do that. As I said, all references for the first lot of questions are from Part B of the agency reports and fall into pages 77 to 87. By way of background, I want to look firstly at the role of the Department for Communities and Social Inclusion in relation to the provision of concessions to South Australians. Previous Auditor-General reports have identified that there have been problems with the department's concessions program through a lack of verification of eligibility of concessions, and that has led to the Auditor-General highlighting that from 2009 to 2015 the department did not validate data for energy or for water. The problems included data quality, missing details, potential duplicate clients and more than one form of concession type being provided.

New issues, which are then reported in the 2016-17 report, which we are on today, show that concession payments are obviously a large part of the department's budget—$152.8 million. We can identify from the report that there are 37 FTEs allocated to managing the concessions program. Given that this is such a large component of your department's budget, there is a relatively small number of FTEs associated with its administration. Are you able to explain if this is likely to increase in the future and if there are plans to develop this workforce, given the problems that have been experienced with the provision of concessions?

The Hon. Z.L. BETTISON: Thank you member for Bright. Concessions are an incredibly important way that we support vulnerable South Australians, whether it be energy, water or sewerage or our cost of living concessions. Of course, then we go on to our GlassesSA and our PARS scheme as well.

I am advised that we currently have 113 full-time equivalents. We have 28 phone lines—very active phone lines. While we enable people to apply online, and we have consolidated that form, if I am correct, we find that people like to call us and like to talk to us about their application or the additional information they would provide. I was down there probably two weeks ago—best on ground for their morning tea. It is a very active group. Some have been there for many years and there are quite a few new people coming in at the ASO1 and ASO2 levels.

One of the key things that we like to do with those FTEs is provide them with quite significant training, so that when they ask a question of our staff they can answer a question about energy concession, about water concession and about the Cost of Living Concession and so that when they make that inquiry about one concession we are able to respond to them across the board. If they are eligible, we can check that and make sure that they are getting their full complement.

If you own your own home, correct me if I am wrong, I think it is up to $877 a year for concessions for South Australians. We think this goes towards some way to supporting those people who are doing it on a restricted income, the vast majority of whom are receiving a Centrelink payment. We support them with those concessions.

Mr SPEIRS: You mentioned an FTE count. Could you repeat that?

The Hon. Z.L. BETTISON: As I am advised, it is 113 FTEs.

Mr SPEIRS: Is that a figure that has been increased in recent years or in the past year?

The Hon. Z.L. BETTISON: As I am advised the FTE that you used was 37. They are our ongoing staff, the remainder of whom are on contracts.

Mr SPEIRS: So, as you say, you have your 37 ongoing staff; the additional 70 or so you have in the system, do they come and go at certain times of the year? Are there particular times of the year when you have, I suppose, an increased workload that results from that?

The Hon. Z.L. BETTISON: As you have made mention of in your opening statement, member for Bright, we have had considerable focus on reconciliation and validations, which the Auditor-General had a supplementary report on last year and has paid attention to, looking at how we have remediated this situation. So we had some additional staff come on then.

Of course, I was very proud to roll out the Cost of Living Concession in 2015. You may recall we were quite disturbed when our national partnership on certain concessions was ripped up, and that concession went through for people paying their council rates. We thought that they needed to continue to have that support, but we extended that concession to include tenants as well, the first time that tenants were able to access that. The Cost of Living Concession came on; that and the ESL mean that between June and October is a particularly busy time in the concessions unit, so having that flexible workforce enables us to increase the numbers at those times.

Mr SPEIRS: I want to look at page 79, the heading 'Cost savings from updated energy concession reconciliation processes'. The second paragraph under that heading is a statement from the Auditor-General's Report, which says:

We were advised that between December 2015 and August 2017 DCSI saved at least $6.2 million on reimbursement claims from energy retailers. This represents the difference between the amount that energy retailers were claiming for reimbursement and the amount actually paid by DCSI. This is because DCSI applied greater scrutiny to the reconciliation data and identified invalid or incomplete records.

As the minister said, you have had a focus on this validation in recent years to try to improve the process that has clearly, according to the report, resulted in savings to the department because those validations have identified issues which needed to be followed up. Do you believe that there is an opportunity to save even more money if more effort and focus were put on more thorough validation going forward?

The Hon. Z.L. BETTISON: Can I just confirm that you are talking about page 79?

Mr SPEIRS: Yes, page 79, under 'Cost savings from updated energy concession reconciliation processes', and I quoted from that paragraph.

The Hon. Z.L. BETTISON: Obviously this has required considerable discussions with our retailers, of which 28 provide energy here in South Australia. I think we have reached a plateau with that money, so we would not be expecting to have any more savings, but of course it is about a rigorous application. When we are talking to these retailers, it is to say that you cannot apply a concession until it has been approved by ConcessionsSA. What we found before was that they would knock on someone's door and say, 'Have I got a deal for you!' and that person would say, 'But I'm a concession holder,' and they will say, 'No worries; we'll apply the concession.' What we found was that they often applied the concession without checking.

So we have cleaned that up, and it must have 100 per cent verification before we will pay out that concession. We pay that concession to the retailer; we do not pay it to the householder because the retailer takes it off that household bill.

Mr SPEIRS: So you have reached a situation where you have been able to—as you say, and it is probably good language—clean up the system to result in those $6.2 million in savings. Clearly, they had accumulated over time. Do you believe that you now have the mechanisms in place and the validation side of things to a level where that level of problems will not accumulate again to result in a similar figure needing to be revalidated in the coming year?

The Hon. Z.L. BETTISON: I thank you for your interest in this area. As you might imagine, I shared a great interest in cleaning this up when it was raised by the Auditor-General. We now have 22 full-time equivalents who look at reconciliation and validation. We have very strong relationships with the 28 energy retailers and we are very clear about the expectations around when concessions will be approved and when they can apply to the bill. Yes, it has been an area of focus. Also our e-confirmation service, a monthly Centrelink response, has assisted us with that efficient reconciliation and validations.

Mr SPEIRS: Minister, with 28 providers, obviously some will be larger than others. Have you picked up any situation where providers do not have the sophistication or the maturity or the capacity to do this well? Are there particular providers you have considered not working with?

The Hon. Z.L. BETTISON: I think you can think of this as a partnership. The Department for Communities and Social Inclusion wants to support vulnerable South Australians and one of the ways we do that is with our energy concession. This year, the energy concession was indexed. We increased it after the last election but we are going to index it every year. This is something we think is very important but we have a partnership with retailers, so we work with them quite closely.

Some of them are rather large retailers. Some of them have been very active in the market for decades. Others are new arrivals into our South Australian market. People are very clear: I have made it clear as minister, as have our directors of the concessions, that this is how it is going to be if you are going to provide concessions, if you are going to operate in this environment, this is the standard we will adhere to now and in the future.

Mr SPEIRS: Minister, as you alluded to, there are newer providers, and providers would enter the energy retail space on a reasonably frequent basis. Is there a process in place whereby a provider is assessed to deem them eligible to receive those concessions?

The Hon. Z.L. BETTISON: Can you just repeat the last part of that question?

Mr SPEIRS: Is there a process in place to assess the quality or the sophistication of an energy provider to make sure that they are the sort of organisation or business that should be working with the government?

The Hon. Z.L. BETTISON: While the first part of that question is probably best answered by the Minister for Energy, my understanding is that any energy providers would have to be registered I believe with ESCOSA. They would be registered to be a provider in the South Australian market. Obviously we would have quite stringent controls over what they would have to be able to do, but what we have, from a Communities and Social Inclusion viewpoint, is a deed of agreement with these individual retailers and we set out quite clearly what our expectations are.

Mr SPEIRS: With those deeds of agreement, have there been any examples where an energy retailer has failed to meet the requirements of the deed?

The Hon. Z.L. BETTISON: I am advised that that has not been the situation. Of course, we have a partnership here and we continue to talk with them. You know that we have focused on this in probably the last three years, so we have been very clear on our shared relationship and how we do that, but the deed of agreement is quite clear. It is obviously a document that is quite clear about the arrangement.

Mr SPEIRS: I would like to move back from page 79 to page 78. I quote from the second sentence of the first paragraph of that page, where the Auditor-General discusses the situation when it comes to validation:

Due to the system changes and additional staffing that would be required, full reconciliation is not something that DCSI can currently undertake. DCSI did, however, advise that the positive impact on the CARTS data achieved by implementing the energy concession reconciliation process will also provide positive outcomes for water and sewerage concession records.

Minister, the statement by the Auditor-General there says that DCSI does not believe that it can currently undertake full reconciliation. Do you believe that is something that the department will be able to do in the future or is it something you are planning or aspiring towards?

The Hon. Z.L. BETTISON: Obviously, as you know, we have spent significant time focusing on energy and that is on our CART system. When an anomaly comes to us that it is not a 100 per cent match in energy, we also check water and sewerage. We do a line by line reconciliation and check that validation. While those 22 FTEs have been focusing on energy, when that householder comes to us (the person who receives concessions) we check all the other concessions that they are receiving and make sure that that data is accurate.

We only have one partner for our water concession, which is SA Water. We have a very strong relationship with them. We work quite strongly about making sure that data is accurate. To do 100 per cent would require a significant increase in full-time equivalents. I believe we have come some way to cleaning up that data. We continue, as mentioned in here, to pick out 25 at a time to do an audit process and we will continue to do that work.

Mr SPEIRS: I suppose these questions are somewhat related to earlier questions that I had. If that work were carried out in the future, do you think further savings could be attained, or do you stick by your earlier statement that you believe you have reached a plateau with that and achieved the savings that are possible?

The Hon. Z.L. BETTISON: Thank you for your interest in water, and of course that extends to our concession that we give in sewerage. We have just had a considerable focus on CWMS, our Community Wastewater Management System, which we now pay direct to the household, and we know that that is 100 per cent verified. It would be remiss of me to say whether there would be additional savings in water. We would have to look at that line by line.

I think what you see is our ability to focus on energy and then look at individual households and make sure that that is accurate. I will just go back and say that, with this monthly verification that we have with Centrelink, we get very solid, clean data. Obviously, any time there is a change within that, that triggers us to look at that household and that concession holder and what they do.

Mr SPEIRS: In the same vein, if we go back one page to page 77, under the heading 'Limited validation of water and sewerage concession payments for pensioners prior to payment', that was the area of the report we were in already. The Auditor-General states:

A file of all concession amounts provided to pensioners is given to DCSI after each billing period, and a sample of 25 water concession recipients is reviewed by DCSI to ensure amounts were calculated correctly and paid to eligible pensioners, based on information recorded in CARTS.

The Auditor-General has recommended that you validate all water and sewerage concessions. In fact, the sample size of 25 is very small when you look at the table on page 88, which says that there are 129,000 recipients of the water concession and 182,000 recipients of the sewerage concessions. To do only 25 seems like a very small number indeed. Are there any plans for your department to increase that in line with the Auditor-General's recommendation?

The Hon. Z.L. BETTISON: Thank you, member for Bright. I recognise the Auditor-General's remarks. I guess one of the things is that water is quite different from energy. In energy, as we have talked about, there are 28 different providers. We do see some churn and people move between the providers. As I said before, we have had some issues where there has been a knock on the door and the provider says, 'I've got a great deal for you. I will give you that concession,' without actually checking with us. So that has been an issue.

There is a lot more stability with water. As you have pointed out, 129,000 households receive the concession, but SA Water is the only provider, as I am advised. When it is drawn to our attention that there is an issue with the Centrelink validation, that is our trigger for looking at that. I recognise his remarks and I will take them on board, but at this stage we will continue to do it as we do it.

Mr SPEIRS: Thank you, minister. Sorry for jumping around a bit, but I want to move back to page 78, which we have discussed before, where we have the heading 'DCSI and energy retailers operating outside of the established energy concession scheme'. The Auditor-General states:

[Your department] advised that it believes it adheres to the intent of the scheme however it does not follow specific process arrangements under the scheme as it considers them impractical…

The Auditor-General also says:

Operating outside of the established scheme may expose the State to contractual risks. We recommended that DCSI update the scheme to reflect current energy concession payment processes.

[Your department] responded that it agrees that the scheme should be updated after the upcoming external review of concession processes is completed.

Given that you are working outside the scheme, do you agree with the Auditor-General that that exposes the state to unnecessary contractual risks?

The Hon. Z.L. BETTISON: I welcome the Auditor-General's remarks in this area. As I said before, we have a partnership with these providers and we do a considerable amount of work. When we look at the South Australian Government Customer Concession Scheme for Energy, the Auditor-General has made commentary that it should be updated. Work has begun on that update so that the scheme better reflects the current processes implemented by all parties.

We have a regular exchange of letters and related data. The retailers and the department are operating under an agreed methodology that is consistent with the intent of the scheme. That is, the department determines who is eligible and advises retailers. Retailers only apply concessions to eligible customers and can only be reimbursed for eligible customers

While he has made these remarks—and I certainly take heed of his concerns—we have had several reports on this issue and focused extensively on concessions to improve our reconciliation and validation, but at all times when we provide concessions, we want to have that balance. I want to have that balance of being accurate and at the same time supporting those vulnerable South Australians to receive that discount they are entitled to.

Through the great work of my department—and it has been a significant focus—I believe that we have reached that balance, but I take his remarks. As you have pointed out, it is our intention after the review that will happen this financial year to move forward in regard to that and be very clear about each of the parties' responsibilities. I am satisfied at this point that our relationship and our agreed methodology are consistent with the intent of the scheme.

Mr SPEIRS: Have you sought Crown law advice on this matter regarding the potential breach that may be caused by operating outside the scheme? If so, did that advice match what has been recorded in the Auditor-General's Report?

The Hon. Z.L. BETTISON: I will not be making a comment on that.

Mr SPEIRS: I will move on and go back to page 77 to the discussion of the two IT systems used, CARTS and COLIN. The Auditor-General has raised concerns about the long-term viability of the CART system. I note that in the past there have been efforts to transition from this system, but that has not yet occurred. Are you able to provide an update on where your department is with regard to the transition out of the CART system?

The Hon. Z.L. BETTISON: I thought you would never ask. COLIN is something we are very proud of. It is being delivered in three stages and comprises three main elements. This is the cost of living information system. It has an eligibility determination and a payment administration system. It will also have a web-based customer applications part and, thirdly, a data mart for flexible analysis and reporting. We have a holistic acquisition plan approved by the department and agreed to in October 2015, with an updated version approved in March 2017. Each component of COLIN is being procured separately in line with this acquisition plan.

We have had some interesting experiences with the information system. We know that technology has changed in leaps and bounds. As the minister for this area, I am very focused on making sure that we have each of the phases working as they are expected and as they should before we move to the next stage. COLIN is being designed to allow for the creation and maintenance of customer records with a focus on the audit process.

Obviously, we want to determine the eligibility of customers and calculate payments based on eligibility. What is really important within this is our connection to other databases available at external agencies such as Location SA; Land Services group; the Department of Human Services, which delivers Centrelink payments; and of course our own financial data mart as well. We are also working on COLIN to have decision automation software by a vendor who is an expert in insurance and health industries.

Phase 1 is complete, version 1 of the COLIN decision and rules processing engine for the first-year payments, the data mart and a set of core reporting for first-year payments. Phase 2 is the COLC administration, and it is almost complete. This delivers the central decision and rules engine, looking at the processing and handling of COLC payments. In fact, this financial year, the 2017-18 Cost of Living Concession payments were done through COLIN. It worked fantastically.

We also now have online customer applications, and we are doing that planning and research for phase 3. The service went live to the public and 30 June 2017, and the online application is for all household utility concessions, including COLC, energy, water and sewerage. We want to make sure that the cleansing activities are underway to make sure that customer details are correct for going onto COLIN. When that is working 100 per cent, we will then extend to providers, such as GlassesSA and the Personal Alert Systems Rebate Scheme, and eventually we will progress to all of our concessions being in this new technology.

The CHAIR: You said cost of living information system, which isn't COLIN. Is it 'network'?

The Hon. Z.L. BETTISON: Yes. Madam Chair, you are correct.

Progress reported; committee to sit again.

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