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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2008-11-27 Daily Xml
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Auditor-General's Report

AUDITOR-GENERAL'S REPORT

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (11:04): I move:

That standing orders be so far suspended as to enable the report of the Auditor-General for the year ended 30 June 2008 to be referred to a committee of the whole, and for ministers to be examined on matters contained in that report.

Motion carried.

In committee.

The Hon. P. HOLLOWAY: To facilitate the process, I suggest we examine them in order of the three ministers and their portfolios. I recognise that the Department for Transport, Energy and Infrastructure's annual report is not there. The Leader of the Opposition has raised that with me, and we will deal with that next year when we return and the report becomes available.

The Hon. D.W. RIDGWAY: My question is directed to the Leader of the Government and Minister for Mineral Resources Development. Page 3 of the report provides a commentary on the authorisation of the minister to request audit reports from BHP which verify quarterly royalty returns.

Last year, the Auditor-General raised concerns about the fact that such reports have not been requested since September 1998. In response to last year's questioning, the minister simply clarified the department's reliance upon historical data for accuracy. It now appears from this year's report that the minister has gone ahead and requested reports for the four quarters ending 31 March 2008. Have any of these quarterly reports been received yet? If so, did they corroborate the calculations already made by PIRSA staff?

The Hon. P. HOLLOWAY: My advice is that we have not yet received them; however, the department is working with both OneSteel and BHP, because there are two separate indentures involved in getting that information in a format which is suitable for assessment.

I would like to make some more general comments in relation to this whole issue. The audit has acknowledged the steps that PIRSA has taken over the past year to improve controls on the collection of royalties. In relation to Roxby Downs, a primary action was to improve the controls on collection of royalties from the Olympic Dam operation in order to reinstate formal requests by myself to BHP Billiton for submission of an auditor's report within six months of furnishing any royalty return under the provisions of the indenture.

To ensure compliance with royalty provisions under both the indenture and the Mining Act, PIRSA identified the necessary steps that would ensure the validation of data within the Olympic Dam royalty returns. These steps were: BHP Billiton and I sign a royalty agreement reflecting a more transparent and verifiable process; we develop a revised template return; and that I request, pursuant to clause 32(5) of the indenture, an auditor's report on the said return by BHP Billiton's external auditor, and that PIRSA is to examine the auditor's report and test for reasonableness against expectations. PIRSA, with advice from the Crown Solicitor's office and the ODX task force, is finalising negotiations with BHP Billiton on an agreement that formalises the calculation of payment of royalties, as is provided for under clause 32(3) of the indenture and in accordance with section 17(9) of the Mining Act.

In parallel with finalising the agreement, PIRSA has provided to BHP Billiton a template return designed to ensure that the required level of comprehensive detail is provided by BHP when the company furnishes, as it says in 32(4)(a) of the indenture:

...to the minister a return showing all particulars necessary to enable the calculation of the royalty payable for the quarter immediately preceding the date of the return.

If the honourable member wants specific details in relation to his question in terms of dates, BHP Billiton was requested on 1 September 2008 to provide an external audit report on royalty returns for a full year encompassing the quarterly returns for 30 June 2007, 30 September 2007, 31 December 2007 and 31 March 2008. Under the indenture, this report is to be provided to me as promptly as practicable. While audit acknowledged the steps the department has taken over the past year to improve controls on the collection of royalties, it identified at the time of their audit in late July 2008 that BHP Billiton had not yet been requested to submit an external audit report and, as I mentioned, this has now been addressed.

There is no suggestion with the previous analysis that an oversight of controls has resulted in PIRSA not capturing an appropriate royalty return from Olympic Dam. In relation to the Whyalla steelworks acts, in recognition of the expanding iron ore production at Whyalla, PIRSA has commenced a number of steps towards achieving a more transparent royalty regime for OneSteel's operations at Whyalla. PIRSA has prepared a template form for OneSteel to report on production and sales in the formally-submitted six-monthly mining return. This improved form mirrors the current reporting requirements of the Mining Act 1971, and OneSteel has now provided this more detailed information to PIRSA in its June 2008 return.

On 1 September 2008, I requested the company undertake an audit on the six-monthly royalty returns provided to PIRSA for the December 2007 and June 2008 returns. PIRSA has prepared terms of reference that will guide the audit process to be conducted by an independent auditor engaged by PIRSA, which is currently working with OneSteel to progress the audit, as I indicated earlier. A considerable body of work has been undertaken by PIRSA over the past 18 months to review and amend business processes and strengthen controls on the administration of royalties.

Finally, for many years OneSteel has operated under an indenture that set a certain level of royalty on all production but most of that, up until fairly recently, was used in the steel-making process, for which the state receives significant benefit in terms of value adding. Now that BHP is moving more into export of steel—it is something like 4 million tonnes a year and it is hoping in the near future to move to 6 million tonnes a year of export—clearly, since that ore is being exported as a bulk commodity, it is appropriate that the state get the appropriate level of royalty in relation to those exports because, as I have said, the situation has somewhat changed from when OneSteel was a steel producer rather than a steel producer and an iron ore exporter.

The Hon. D.W. RIDGWAY: My second question largely has been answered by the minister but I ask for clarification. Page 3 of the report states:

As part of the previous audit, legislation impacting on the collection of revenue was reviewed and in 2007-08 approximately $62 million in royalties were collected from BHP in accordance with the Indenture Act.

The minister stated in answer to the previous question that the Olympic Dam task force was busy discussing and negotiating on the revised act and that the department was working through a process to review the current process of royalty calculation. As yet we have not seen any draft of the new indenture. The minister largely answered my first question, but what progress has been made on the review of royalty calculations? More importantly, when are we likely to see a draft of the new Indenture act?

The Hon. P. HOLLOWAY: Obviously those indenture negotiations are continuing. BHP will be in the relatively near future—probably early next year, I understand—making a decision on whether it moves from the pre-feasibility study into feasibility study. Concurrently with that, in relation to the Olympic Dam expansion, there has been a massive environmental impact statement going on and various studies under that to examine the various parts of the operation, and there have been several major project declarations.

The project has been split into two in order to examine many of the aspects of the Olympic Dam expansion. It is not just a question of the mine and mining royalties, but a lot of other issues that have to encompass it: the township; the desalination plant; the corridor for the pipeline for the desalination plant; potential transport issues, and, so on. It is a massive exercise. Negotiations on royalties will inevitably be part of the overall detailed discussion with BHP Billiton in relation to many of these other aspects.

While I understand that significant progress has been made in relation to those negotiations, it will be a matter of tying these many issues together. At this stage, we cannot say much more than that, because there are so many different aspects to the Olympic Dam expansions. Royalties is just one of the many issues that will be part of those discussions. The level of royalties that apply and in what circumstances they apply will clearly relate to all the other negotiations the government is currently conducting through the Olympic Dam task force.

The Hon. D.W. RIDGWAY: Is the government considering a two-tiered approach to royalties being paid on the finished product and a different royalty regime for export of concentrate, which I think exists in other states?

The Hon. P. HOLLOWAY: It would be quite inappropriate to make comment on that matter at this stage. I do not really want to go further than what I have just outlined, other than to say that negotiations are continuing. Obviously, royalties are part of the overall scope. I think it would be counterproductive to the government achieving the best outcome for the taxpayers of the state if we were to conduct that negotiation in public. Perhaps at some stage in the near future, I can arrange some briefing on some of the issues for the honourable member as the shadow spokesperson. I think it would be inappropriate to make them public at this stage.

The Hon. D.W. RIDGWAY: I will move on to Planning SA, the component that is part of the minister's responsibilities. Page 1 of the report mentions the scope of the audit, including consultancy and service fees as a specific area of retention. Throughout this year's June estimates session, the then acting director of Planning SA stated the following with regard to a public relations consultancy:

I am due to have further discussions with that company over the next two or three weeks about whether there is a need to have any more involvement at this time, or whether, when we release the code, we might establish another communications strategy in dealing with that.

Mr Hammond was referring to a Western Australian-based public relations firm, with which company the government had already spent some $60,000 on developing a communications strategy for the reforms. What was the outcome of those discussions and, in particular, have any further funds been committed as payment to this Western Australian company for promoting and advertising the planning reforms?

The Hon. P. HOLLOWAY: I will have to take on notice the question relating to that particular company. However, I will make the general comment that the planning and development review has been a major exercise. As we will be debating the bill later on today and next Tuesday, there is a massive amount of detail and there has been significant consultation involved with it. Clearly, to communicate to all South Australians, who potentially will be affected by this, there is a significant requirement for public information in relation to this code.

Most of the work that has been done over the past six months has been working with local government. We have had 'road testing', as it is called, involving 11 councils, I think, and 822 applications were considered as part of that. They were assessed for how they would operate under the code as it was then proposed and how the system would work if the existing system of the code was applied.

As I have said, there was a massive amount of work involved in that. Clearly, there is going to be a significant communication strategy required when this code is finalised, which we are hopefully on the verge of doing if the bill can pass in this chamber next Tuesday. That will give us the certainty to move forward in finalising the code, although members have been circulated with what we hope will be if not the final version extremely close to it. Obviously, if we identify technical drafting errors or things like that in the next month or two, we always reserve the right to make those changes. Of course, that will ultimately come before parliament through the Legislative Review Committee.

Once the bill passes the lower house, the regulations that have been circulated in their final form can be given effect to. There will be a significant public relations issue in respect of that, but I understand that there will be a different contract in relation to that particular part of the communications strategy, because it will be a major exercise to inform people of the implications of the new code if and when it comes into effect.

The Hon. D.W. RIDGWAY: Is the same Western Australian firm being used for that next component?

The Hon. P. HOLLOWAY: I do not think so.

The Hon. D.W. RIDGWAY: It would be good if we could use a South Australian firm. On page 9, 'Further commentary on the operations of PIRSA' refers to the establishment of Planning SA as a separate administrative unit from 1 July 2008. Implementation of the planning reforms is due for completion by 2011 and $1.2 million has been allocated each year thereafter for operating expenses. Is the $1.2 million exclusively in support of the changes made under the reforms, that is, is it in addition to the projected budget as it stood without the reforms?

The Hon. P. HOLLOWAY: In the last budget, we announced some significant one-off increases that were necessary to fund all the work that has to be done to implement the code. I announced some weeks ago that we have let a consultancy involving a number of groups in terms of developing the Greater Adelaide strategy, which is part of the planning review. Also involved in that was a consultancy looking at urban growth boundaries and the potential for those within the next few years.

I have just been advised that the $1.2 million will be raised from additional fees, and this will be allocated to Planning SA to deal with these issues. There was a budgetary increase that just covered the additional work that needed to be done. That will be done largely through the consultancy on the strategy and the boundary issues to give effect to those parts of the planning review. However, there is some ongoing funding, as a result of these fees, that will assist the new department in terms of moving forward, because clearly it has to stand on its own.

It will have other cost impacts and, of course, subsequent to this announcement in the Auditor-General's Report, there has been the merger with the Office of Local Government to form the new department. That will bring some beneficial synergies, I believe, in relation to the operation of that department. It does make sense to have planning and local government together but, clearly, given the increased role that we want the new department of planning to have, it will need some ongoing money, and there is that money from fee revenue going forward.

Whether that is sufficient for the new department is something that, obviously, we will have to look at into the future, but it is important that there is at least that additional revenue to recognise the importance that the new department of planning has in the context of achieving the goals of the government's Strategic Plan.

The Hon. D.W. RIDGWAY: I have a supplementary question, which the minister may wish to take on notice: how many full-time equivalents are currently within Planning SA and what is the total value of their remuneration? The minister may have those figures.

The Hon. P. HOLLOWAY: We probably have not, given that we have the PIRSA office here. They are no longer part of PIRSA. We probably had them at the end of the financial year. The actuals at the end of the financial year were 156.11 FTEs in Planning SA, and there were 22 at the time in the Office of Local Government. So, the new department, if it had been combined at the end of the financial year, would have had those numbers. They are the actuals. Of course, we might have been down actually on the allowance.

The FTE cap, if you like, that applies to the department will be five positions greater than that. I am advised that there is the capacity, with the extra money that is coming in, for up to 15 positions that will obviously reflect the new roles that Planning SA will take, so that has already been part of that budget. Of course, there are other pressures on the department as a new department and we will address those, as we move through the budget processes, very shortly as we prepare for the 2008-09 budget.

The Hon. D.W. RIDGWAY: This is a final question, but I indicate to the minister that I think the Hon. Caroline Schaefer has a couple of questions related to PIRSA when I complete this. Again, I think the minister has largely answered this, but I will just read it and then we can take it from there. Further commentary on the operations of PIRSA found on page 9 refers to the establishment of Planning SA as a separate administrative unit from 1 July 2008.

I remind the committee that the planning and development and review steering committee report stated that implementation of the proposed reform would vest considerable responsibilities with the agency, requiring not only more staff but arguably a far greater level of expertise than that which is currently present within the department. My questions are: will the minister provide details, including titles of each new position created within Planning SA, attributable to the reforms attracting a salary of greater than $75,000; and how many of these positions have been filled thus far?

The Hon. P. HOLLOWAY: As I said, subsequent to that, of course, there has been a new Department of Planning and Local Government formed and Mr Ian Nightingale, the new chief executive, has been discussing with both my colleague the Minister for State/Local Government Relations and me the structure of that department in the hope that that will be finalised fairly soon. We will provide you with what information we can once that process is finished.

The Hon. C.V. SCHAEFER: As we all know, the decision not to proceed with allowing GM crops in South Australia was quite contentious. The government took a decision which was contrary to the decision of the advisory board. The members of each of the advisory boards and committees are listed on pages 38 to 41 of the supplementary report, and I note that all members of the GM crops advisory committee resigned or retired last year.

Can the minister advise me whether or not that committee has been replaced, whether there are new members, or who is now advising the minister on whether we proceed at some time in the future with GM grain?

The Hon. P. HOLLOWAY: It is probably best that we take that one on notice and get a response. I know, too, that the Minister for Agriculture, Food and Fisheries will be taking questions in the other place this afternoon, but that is one that we will take on notice.

The Hon. C.V. SCHAEFER: I must say that I am surprised at the number of advisory boards that are still in existence given that this government spent a lot of time saying that it would dismantle them. I can only assume that the government found that they were more useful than it had expected, but I note that the remuneration for these boards is quite low, and I happen to be one of the people who believe that they do a very valuable job. There is only one board member in 360 who is paid between $60,000 and $70,000, none is paid between $40,000 and $50,000, and two are paid between $30,000 and $40,000. Can the minister give me an idea, without naming that person, what position is filled by the person who is paid $60,000 to $70,000?

The Hon. P. HOLLOWAY: That is a person within the Brukunga technical group, which has been in existence for some time—in fact, it was set up by Rob Kerin, I think, when he was minister, when some issues arose in relation to the Brukunga mine site and contamination. He appointed, and I have continued the appointment of, Hume McDonald, who has played a very constructive and helpful role in relation to the issues associated with the Brukunga mine site. I think that committee has played a significant role in creating confidence within the community about the way that issue is handled.

So that the board could map a way forward, we established this technical group to look at some of these highly complicated issues of how to deal with the contamination at the mine. I understand that payment relates to some of the work done by one probably of those highly qualified consultants. As a result of that work, he has saved the state potentially millions of dollars. If we had gone ahead with some of the earlier planning it may not have been as effective as it could be. So I think in that case it has been money very well spent to get that technical advice.

The Hon. C.V. SCHAEFER: Further, with regard to the advisory committees, members of the FarmBis 3 State Planning Group all resigned, bar two. My understanding is that FarmBis 3 is no longer funded by the federal government and therefore no longer exists. I wonder, therefore, why there are still two people who remain on the FarmBis 3 State Planning Group.

The Hon. P. HOLLOWAY: We will take that on notice. Of course, these applied at the end of the financial year, so whether or not that has changed we will find out for the honourable member. If there are no more PIRSA questions for me, perhaps we can move to the next topic.

The CHAIRMAN: Are there any questions for the Minister for Correctional Services?

The Hon. S.G. WADE: I refer to Part B, Volume 1, page 227 of the Auditor-General's Report which relates to the valuation of land and buildings. I want to confirm my interpretation of note 20, which suggests to me that the land that the government proposes to sell as part of the new prisons project is valued at $58.904 million. I presume that is the Yatala Labour Prison, the Adelaide Women's Prison and the Adelaide Pre-Release Centre.

The Hon. CARMEL ZOLLO: My advice is that that is the total value of all our properties, not just Yatala land.

The Hon. S.G. WADE: Could I clarify that? When the minister talks about all the properties, I do not understand that in the context of the note in the second paragraph under valuation of land and buildings. That note reads:

Land at Yatala Labour Prison, Adelaide Women's Prison and Adelaide Pre-Release Centre was determined on the basis of market value as the land will not be held in the long-term for the existing use.

Considering that the land and buildings has two components—land at fair value (market value) and land at fair value (existing use)—and two other items, I interpreted the second paragraph of the valuation of land and buildings section as meaning that the only land that was valued at market value was those three portions which were part of the new prisons project. Therefore, I ask the minister to clarify what sites the $58.904 million relates to; and does it, as the note suggests, relate to Yatala Labour Prison, Adelaide Women's Prison and the Adelaide Pre-Release Centre?

The Hon. CARMEL ZOLLO: My further advice is that the $58 million, or so, is the total value of the land, as the note says, at Yatala Labour Prison, Adelaide Women's Prison and Adelaide Pre-Release Centre, which will be sold.

The Hon. S.G. WADE: Will the minister advise the committee the valuation for each of those sites—Yatala Labour Prison, Adelaide Women's Prison and the Adelaide Pre-Release Centre?

The Hon. CARMEL ZOLLO: I am advised that we do not have the split-up here today, but we can provide that to the honourable member.

The Hon. S.G. WADE: Will the minister advise whether the valuations were based on the whole portion of each of the sites being sold or, for example, on the basis that the government is retaining part of the campus as heritage or other assets?

The Hon. CARMEL ZOLLO: My advice is that it is based on the whole portion of each of the sites being sold.

The Hon. S.G. WADE: Part B, Volume 1, page 210 relates to employee benefits and expenses. What proportion of these additional expenses— which are indicated at $10.1 million—is due to the cost of paying custodial officers for recall shifts on the one hand and overtime on the other?

The Hon. CARMEL ZOLLO: We will need to take that kind of detail on notice and bring back a reply to the honourable member.

The Hon. S.G. WADE: Thank you; similarly, that may be necessary with the next one or two questions. I refer to Part B, Volume 1, page 224. Note 6 indicates that there has been an increase of 64 per cent in the number of DCS employees earning over $100,000. What proportion of these officers are custodial officers? I take it that the minister would prefer to take this question on notice?

The Hon. CARMEL ZOLLO: My advice is that, at this time, there would be 10 custodial officers.

The Hon. S.G. WADE: I will clarify that; 10 of the 41 are custodial?

The Hon. CARMEL ZOLLO: That is what I said, yes.

The Hon. S.G. WADE: I also note that, whilst there has been an FTE increase in employees of 22 earning between $100,000 and $120,000, there has been a decline in the number of employees earning over $120,000. Can the minister advise what led to that? Is that because positions have been abolished or left vacant? It just seems unusual.

The Hon. CARMEL ZOLLO: My advice is that the majority of the people in this threshold of over $100,000 is, as one would expect, due to an increase in the EB, etc. I am also advised that 13 additional employees were included in 2008 due to EB increases resulting in these employees earning over $100,000. In relation to the honourable member's latter question, there has not been an increase in the number of executives from the previous year.

The Hon. S.G. WADE: With all due respect, that was not my question. I can also read the line which says that there was no increase in the number of executives in the department in 2007-08. In fact, the minister seems to be presuming an implication which is not there. I am highlighting the fact that, in the bracket $130,000 and above, there has been a decrease in the number of officers. The minister may need to take that on notice. I would like to know why there has been a decrease. Is it because positions have been abolished or because positions have been left vacant? There must be a reason.

The Hon. CARMEL ZOLLO: My advice at this time is that there has not been a decrease. We had some executives leaving and others coming on board. I can further clarify that some of the people who left were on a higher level.

The Hon. R.P. WORTLEY: My question is to the minister in her capacity as the gaming minister. Will the minister explain to me the gaming machine numbers—

The Hon. S.G. Wade interjecting:

The Hon. R.P. WORTLEY: I beg your pardon?

The Hon. S.G. Wade interjecting:

The Hon. R.P. WORTLEY: Am I in order, Mr Chairman?

The Hon. S.G. Wade interjecting:

The Hon. R.P. WORTLEY: Well, if she cannot answer the question, she will make it quite clear. She does not need you to tell me whether she can answer the question. So, sit there and let me ask my question. Is that okay? Is that in order, Mr Chairman?

The CHAIRMAN: Yes.

The Hon. R.P. WORTLEY: Thank you. Could the minister please explain the gaming machine numbers indicated in Volume 1, Part B, page 96 of the Auditor-General's Report?

The Hon. CARMEL ZOLLO: I thank the honourable member for his important question. A table appearing on page 96 of Volume 1 of the Auditor-General's Report on individual agencies shows gaming machine numbers at 30 June 2008 at 12,682, that is, 101 over the 2007 figures. The table may give the impression that there has been an increase in the number of gaming machines permitted in South Australia. However, it is important to note that the Auditor-General is reporting on live machines (those in operation at that point in time). The total number of gaming machine entitlements as at 30 June 2008 is 12,900. There were 218 fewer machines in operation (that is live) than there were entitlements.

Since the 2004 amendments to the Gaming Machines Act 1992, 2,218 gaming machine entitlements have been surrendered. This is 782 entitlements short of the government's 3,000 reduction target. The government is committed to reaching this target and reports on progress towards achieving this in terms of entitlements, that is, the maximum number of gaming machines that are permitted in the state.

Most of the 2004 amendments to the Gaming Machines Act 1992 commenced on 1 February 2005 and, at that time, the concept of entitlements was created. A total of 12,950 entitlements were created—2,168 fewer entitlements than the total number of gaming machines approved at that time. A compulsory reduction without compensation was achieved by applying a formula to existing venues at that time. Non-profit venues were not subject to the compulsory reduction in the number of machines.

Further reductions have been achieved through three trading rounds held on 11 May 2005, 21 September 2005 and 16 April 2007. As a result of the trading rounds, 21 venues sold all their entitlements. Not only have we seen a real reduction in the number of gaming machine entitlements since 2005, as at 30 June 2008 we actually have 218 fewer gaming machines in operation than there were gaming machine entitlements.

There will always be some variation to the number of live machines as gaming venues may not use all their entitlements; for example, during renovations to premises—and certainly this has been the case with a number of venues renovating premises. In its 2004 amendments inquiry, the Independent Gambling Authority recommended the removal of the fixed purchase price of $50,000 per gaming machine entitlement and the implementation of a market trading model. This recommendation is addressed in the draft bill amending the Gaming Machines Act, which, together with a consultation paper, has been the subject of a six-week consultation period. That consultation period has now closed and submissions are being considered prior to the introduction of the bill into this place.

The removal of the cap will increase activity through the approved trading system. As the approved trading system has a one in four cancellation requirement for entitlements traded by hotels, the removal of the fixed price will accelerate the gaming machine entitlement reduction. The amendments will improve responsible gambling environments and reduce costs and risks associated with regulation. The key elements, aside from the removal of the fixed price to accelerate trading and therefore removal of entitlements, include improved responsible gambling environments—under that, we are looking at strengthening the social effect test for new venues through new powers for the IGA; extra responsibilities for late trading venues; prohibiting the location of gaming machines in smoking areas; extending responsible gambling provisions to airport gaming and strengthening the compliance and enforcement provisions; and formalising recognition of industry responsible gambling agencies.

Under reducing the costs and risks associated with regulation, there is a social effect certificate to address the social effects before costly development and other licensing applications; and reforming the regulation of financial arrangements to recognise that gaming machine entitlements are an asset and should be able to be used to secure finance. We will also be introducing proposed premises certificates to provide regulatory certainty during the construction phase where gaming machine licence applicants meet all the requirements. We will also be facilitating club sector reform through clarifying the transfer of gaming machine entitlements between clubs or Club One—and a club can be for a limited period or absolute—as well as eliminating unnecessary regulation of commissioning gaming machines.

I look forward to introducing these reforms into the parliament early in the new year. I do thank the honourable member for his important question. We believe that there are no other questions in relation to gambling, so again I do thank the honourable member for allowing me to place that information on the record.

The Hon. S.G. WADE: I would like to ask further questions of the minister, if the government is going to start observing the convention again of government members not stealing opposition time in this period. I refer to Part B, Volume I, page 224, 'Supplies and Services'. The fifth line shows that travel expenses of the department have increased by 50 per cent. What justifies such a large increase?

The Hon. CARMEL ZOLLO: We do not have that level of detail with us, so we will have to take that question on notice.

The Hon. S.G. WADE: On the same page (about six lines further down) it mentions that the department is spending $2.557 million on consultants. Then a footnote says that that includes $2.743 million in relation to the new prison and secure facilities project. This question may need to be taken on notice, but could the minister explain the split between consultants related to the new prison and secure facilities projects and other consultancies? I am happy to take that question on notice. However, I would be interested to know whether the minister would tell me why the figure inclusive of 2.743 is less than 2.743.

The Hon. CARMEL ZOLLO: My advice is that it is a typo: it should have been 2.473. They have reversed the figures.

The Hon. S.G. Wade: Unless the Hon. Russell Wortley wants to ask another question, I can find some more in the meantime.

The CHAIRMAN: Order!

The Hon. CARMEL ZOLLO: Mr Chairman, the Hon. Russell Wortley asked an important question on gambling and I understood that there were no other questions on gambling, so you should not be complaining.

The CHAIRMAN: Order! Any honourable member is entitled to ask a question.

The Hon. S.G. Wade: It's not the convention in this chamber. It hasn't been the practice.

The CHAIRMAN: I do not think that you have been in this chamber long enough to know what the practice is.

The Hon. S.G. Wade: I've consulted senior members.

The CHAIRMAN: I will decide what the practice is in this chamber—not you.

The Hon. J.M.A. LENSINK: Moving to the Lotteries Commission of South Australia, I note that some minor matters were raised in relation to Volume III, Part B, page 715, and the Auditor-General made a number of recommendations, which I will quote from the text. It says:

...including sign off of the gaming/general ledger system reconciliation process, improved recording of checks performed of daily gaming activity, and independence in the maintenance and review of changes to the accounts payable system creditors master file.

Do I take it from the Auditor-General's comments that he is satisfied that those changes have been made?

The Hon. G.E. GAGO: Yes; the audit opinion on the financial report was unqualified. The assessment of controls was that they are sufficient to provide reasonable assurance and, in the balance sheet, the current receivables decreased by $26 million and the current payables decreased by $26.2 million in 2007-08. The balance, at 30 June 2007, included a receivable from the national Lotto Bloc and a prize payable with respect to the South Australian winner of a $25 million Oz Lotto prize, won on 19 June. The prize was paid to the winner and settlement was received from the interstate bloc members on 4 July.

Property, plant and equipment decreased by $4.6 million in 2007-08, which included the disposal of components of the on-line lottery system, totalling $1.5 million. The minor recommendations were made for the control improvements, including sign off of reconciliations, improved recording of daily checks and review of creditors master file changes. I have been advised that these issues raised by the auditor were resolved by 5 August 2008.

The Hon. J.M.A. LENSINK: I refer to page 717 and note that the minister has responded to questions from government members relating to the distribution from the commission, which increased to what I understand would be the highest level in history, in 2007-08, to $91.7 million. One of the explanations is that it was partly due to an increase in gambling tax of $3 million and an increase in dividend payment of $2 million. My question is: in going forward, does the government anticipate that that distribution will increase; and, if so, what would it be attributed to?

The Hon. G.E. GAGO: I do not have the details of that with me, but I am happy to take that on notice and bring back a response.

The Hon. J.M.A. LENSINK: Going to Volume I of Part B, on page 90, the Auditor-General seems to criticise the Residential Tenancies Fund for lack of policies and procedures to manage bonds which are paid outside the statutory time frame, and the department has been given a deadline of December 2008 to implement the documentation. Can the minister advise what the process is and whether that deadline is expected to be met?

The Hon. G.E. GAGO: This relates to section 62 of the Residential Tenancies Act 1995, which requires landlords and agents to pay bonds to OCBA within specified time frames, and provides that failure to do so is an expiable offence. Audit identified that, whilst OCBA had measures in place to identify and monitor bonds paid outside the regulatory time frames, OCBA did not have documented policies and/or procedures which specified the extent to which possible breaches of this section of the act were to be investigated and enforced.

At the time this matter was identified OCBA gave an undertaking to the Auditor-General that the necessary policies and procedures would be documented by December 2008, which is acknowledged in the Auditor-General's Report. OCBA has now drafted the necessary policies and procedures for the Commissioner's consideration, and it is expected that these policies and procedures will be implemented in December 2008.

The Hon. J.M.A. LENSINK: Given that breaches of timetables are expiable offences, would it be fair to say that, because the policies were not in existence, these expiations were not being issued in the manner in which they should?

The Hon. G.E. GAGO: We do not have the answer to that question, but I am happy to take it on notice and bring back a response.

The Hon. J.M.A. LENSINK: I move to page 131 of the same volume, and note that the total income for the Residential Tenancies Fund increased by some 25 per cent from 2007—from $6.6 million to $8.3 million, a quite extraordinary amount. Does the government have trends information regarding that increase? Was it due to increases in rents or in volumes, or was it some combination of both?

The Hon. G.E. GAGO: The interest revenue comprises interest earned from three sources: balances held with the Department of Treasury and Finance; investments with the Public Trustee; and amounts received from the South Australian Housing Trust, based on the value of bond guarantees held by the fund. Interest revenue increased from $6.433 million in 2006-07 to $8.63 million in 2007-08—an increase of $1.63 million.

This can be attributed mainly to an increase in the interest received from the Public Trustee. Market interest rates increased during 2007-08 (we may have forgotten what that looks like these days) and, as a result, the interest revenue earned on investments held by the fund with the Public Trustee increased, due the value of the portfolio held by this fund. This increase was substantial. Interest received from other sources also increased, although the value of this was not quite as substantial.

The Hon. J.M.A. LENSINK: I am not sure whether the minister is able to answer this (the department may not keep this information), but is there some reflection in the cost of rentals to renters or in terms of volumes and so forth? Have rents gone up or has the number of renters increased and therefore impacted on the fund?

The Hon. G.E. GAGO: Again, we do not have a detailed answer, but I am happy to take it on notice and bring back a response.

The Hon. J.M.A. LENSINK: I refer to page 137 of the same volume, and 'Other expenses', which is listed as No. 5. The first listed item there is titled 'Decrement on revaluation of investments'. I do not understand what the word 'decrement' means (I am not sure whether it is in the Macquarie Dictionary these days or not); it is also a fairly significant amount of money—$1.776 million—and I note that it was not listed as an item in 2007. Can the minister provide an explanation of what that item means and why it is such a significant amount?

The Hon. G.E. GAGO: 'Decrement on revaluation of investment' simply means that there is a decrease in the value of the fund—I think they like to use this terminology so that no-one can understand it. The other expenses of the Residential Tenancies Fund increased from $0.864 million in 2006-07 to $2.896 million in 2007-08, which is mainly attributable to a decrease in the component of the fund invested with the Public Trustee. The value of the investments held by the fund with the Public Trustee decreased in 2007-08, and the portion of this decrease (or decrement) was perceived by accounting standards to be recognised as an expense of the fund, and that was $1.776 million.

The increase in expenses is partially offset by an increase in interest revenue—approximately $1.63 million—received from the Public Trustee. Market interest rates increased during 2007-08 and, as a result, the interest revenue earned on the investments held by the fund with the Public Trustee increased.

Mr Acting Chair, I am happy to extend the time for examination to allow the member an opportunity to complete her questions.

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