Cans of worms and what the Auditor-General is thinking of digging up next. The hints are there for the taking

By Verona Burgess

Friday October 4, 2019

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THE OBSERVER: The Australian National Audit Office’s annual work program gives departments and agencies the chance to fix problems before the auditors arrive. Not everyone takes the hint.

Every year around tax time a flurry of stories erupts in the media about what dodgy claims the Australian Tax Office will focus on, along with cautionary tales of what not to (over)claim on your tax return lest you be subject to the scary prospect of an audit or worse.

Similarly, the Australian National Audit Office’s publication of its annual work program not only lists audits already in progress but also flags a Pandora’s Box of “potential” audits, some of them bound to send shivers down departmental and agency spines.

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With the financial year already three months in, most are still in the “potential” basket but a few are underway (and still taking contributions).

These include performance audits of fraud control, all due to be tabled in June 2020, in the departments of Social Services, Foreign Affairs and Trade, and Home Affairs. There is also an audit into the implementation in “selected entities” of ANAO and parliamentary committee recommendations (due in May), and another into Defence’s procurement of the Offshore Patrol Vessels (June).

Still on the “potential” list flags are a number of hot topics.

Those unfamiliar with the Kafkaesque nightmare of litigation with the government, and indeed some who are familiar with it, may not have heard of the “model litigant obligations”. These obligations require Commonwealth entities to act honestly and fairly in handling claims and litigation.

“Entities must reduce costs and delays in the handling of litigation and must not commence legal proceedings unless satisfied that litigation is the most suitable method of dispute resolution,” the ANAO explained.

It flagged investigating several entities’ “adherence to their model litigant obligations”. Those entities are the ATO; the Department of Home Affairs; and the Attorney-General’s Department (whose office of legal services coordination is responsible for “assisting” agencies to comply with the obligations).

The problem, in a nutshell, is enforcement.

Back in 2014 (yes, three prime ministers and two Attorneys-General ago) the Productivity Commission’s Report 72, Access to Justice Arrangements, found that the MLOs, as they are known, should be enforceable.

A private member’s bill brought by former Senator David Leyonholm, “Judiciary Amendment (Commonwealth Model Litigant Obligations) Bill 2017”  attempted to provide mechanisms to do that. It lapsed with the end of the last parliament but in any case, it would have failed.

The Senate legal and constitutional affairs committee considered the bill and reported in December 2018.

While a number of the 30-odd submissions (some of which detailed horrendous experiences) agreed a mechanism was required, the committee found that this bill wouldn’t do the job.

It said, “While the committee recognises that the bill has merit and that action needs to be taken to ensure compliance with the model litigant obligation, the committee recommends that the Senate not pass the bill in its current form.”

However, it also recommended that the government initiate action to fully ascertain the nature and extent of the problem of non-compliance, such as an independent audit of compliance; and that the government include tribunals, as well as courts, in any proposed legislation relating to enforcement by courts.

So here we are today, with a potential (but not yet actual) audit and a lot of very bitter and unhappy people out there who have experienced the full force of the Commonwealth bearing down on them in litigation, with seemingly bottomless pockets and scant regard for the model litigant obligations.

This leads us to another hot-button “potential” audit — into the Australian Federal Police’s use of statutory powers.

“This audit would assess the effectiveness of the establishment and administration of the [AFP’s] framework to ensure the lawful exercise of powers,” said the ANAO.

The proposed audit criteria, it said, aligned with those of its Report No. 39 of 2016–17 on the Australian Border Force. It would ask: Is there an effective accountability and reporting framework for the AFP’s lawful exercise of powers? And do AFP officers have adequate knowledge of their powers and how to use them?

“In 2017, the AFP was investigated by the Commonwealth Ombudsman following a breach of legislation by AFP staff (relating to access to a journalist’s telecommunications data without a warrant),” the ANAO said. “The investigation found contributing factors included insufficient awareness of warrant requirements and heavy reliance on manual checks and corporate knowledge (no strong system controls).”

Now add into the mix the police raids in July of the ABC and of News Corp journalist Annika Smethurst’s home, and last week’s intervention by the Attorney, Christian Porter ordering the AFP to seek his permission before charging journalists under national security laws, and it’s a no brainer that this audit, if it eventuates, could be extremely interesting.

But wait, there’s more. The ANAO is also thinking of a performance audit into workforce planning at the Australian Security Intelligence Organisation. It said, “The Government’s 2017 Independent Intelligence Review highlighted continuing challenges in maintaining intelligence capabilities in light of the specialised nature of the function and the limited pool from which personnel can be drawn.”

Another hot-button audit, involving the Department of the Prime Minister and Cabinet and the Attorney-General’s Department, would investigate the management of the register of lobbyists as a follow-up to its 2017-18 audit.

And just in case you were thinking of heading out the door with a lovely redundancy package, the ANAO is also thinking of auditing the management of Senior Executive Service retirement arrangements, in particular, the use of the incentive-to-retire provisions.

Finally, it’s gratifying to know the auditors never take their eagle eyes off the always productive issue of grants management. The ANAO has also flagged an audit into the efficiency and effectiveness of centralised government grants hubs, including the Business Grants Hub (in the Department of Industry, Innovation and Science), the Community Grants Hub (the Department of Social Services) and GrantConnect, the whole-of-government grant information system.

“Grants hubs are intended to reduce red tape for grant applicants and recipients and result in administrative efficiencies for government. This audit would assess whether grants hubs deliver efficiency savings and provide sufficient transparency and assurance about grant processes and outcomes.”

Ooh, pork barrelling — always a good one.

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