Commonwealth Review of State Insurance Arrangements
A fundamental principle of the arrangements in place for the Australian Government to help the states and territories (the states) pay for natural disaster relief and recovery costs is that the assistance should not discourage governments, individuals or business from taking out insurance to protect their assets. Following the flooding in parts of Australia over the summer of 2010–11 and Cyclone Yasi, the Australian Government agreed to amend the Natural Disaster Relief and Recovery Arrangements (NDRRA) to incorporate a new process under which the Commonwealth will be able to vary the level of Commonwealth support provided in response to disaster where a state’s prudential arrangements are found to be not reasonably adequate. States wishing to be covered by the NDRRA are required to have an independent assessment of their insurance arrangements undertaken, with Finance to review these assessments so as to:
- establish benchmarks for the appropriateness of each states’ insurance arrangements;
- assess the appropriateness of states’ insurance arrangements; and
- make recommendations as to differential thresholds or differential rates of assistance that should apply under the NDRRA depending on the appropriateness of individual state’s insurance arrangements.
States wishing to be covered by the NDRRA are required to have their first independent assessment completed by 30 September 2011, with Finance required to report on its review within 90 days of receiving any state’s assessment. The amendments to the NDRRA also outlined that the Commonwealth Auditor-General is to periodically conduct audits of the Australian Government’s responsibilities. Accordingly, an audit would examine Finance’s review of these initial assessments.
Implementation of Improvements to the Administration of Parliamentarians’ Entitlements
Audit Report No.3 2009–10 examined the administration of Parliamentarians’ entitlements by Finance. A positive outcome of that audit was that, in July 2009, the Australian Government made some decisions concerning the reform of certain entitlements and agreed to a ‘root and branch’ review of the entitlements framework. The Australian Government further agreed to provide significant additional funding for Finance to improve the administration of entitlements as well as for publishing, online, details of the entitlements framework and expanding the current reporting regime to table and publish on the Finance internet site all entitlements expenditure administered by Finance.
Against this background, and given the significant public interest in the administration of Parliamentarians’ entitlements, the ANAO proposes to undertake an audit examining the implementation of improvements to the entitlements framework and its administration.
Administration of the Costing of Election Commitments
The Charter of Budget Honesty Act 1998 (the Charter) outlines arrangements under which the Secretaries of the Department of the Treasury and Finance (the Secretaries) may be asked to cost Government and Opposition election commitments during the caretaker period before a general election. Under the Charter, the Secretary to the Treasury is responsible for costing aspects of policies affecting revenue, while the Secretary of Finance is responsible for costing aspects of policies that affect government outlays and expenses. The Secretaries have, in accordance with the Charter, issued guidelines for the methodology to be used in the preparation of policy costings (the guidelines). The guidelines outline the principles and processes to be followed by the Treasury and Finance, with the aim of achieving consistent and transparent policy costings.
An audit would assess the timeliness and effectiveness of the costing of election commitments under the Charter, with particular reference to the caretaker period for the 2010 Federal Election.
Delivery of the Commonwealth New Building Project
In October 2005, the then Australian Government agreed to increase staffing levels at the Australian Security Intelligence Organisation (ASIO) to 1860 by 2010–11. As a consequence of this growth, the then Australian Government further agreed that a new central office building for the organisation was required. In this respect, the Commonwealth New Building Project involves the construction of a purpose-designed new central office facility located adjacent to the Defence Offices at Russell in Canberra. The overall budget for the project is $589 million as of 2008–09, with ASIO expected to move into the completed building during 2012.
An audit would examine Finance’s management of the design and delivery of the project, with the objective of assessing:
- the adequacy of the planning and delivery processes for the project; and
- the value-for-money achieved in the delivery of the project, including with regard to the suitability of the centre for its intended purpose.
Administration of the Contingency Reserve
The Contingency Reserve is an allowance, included in aggregate expenses, to allow for: amounts not yet allocated to individual programs; the tendency to underestimate costs of existing programs in future years; and the tendency to overestimate administered item expenses in the early years of the implementation of new programs. As outlined in the 2011–12 Budget Papers, while the Contingency Reserve is designed to ensure that aggregate estimates are as close as possible to expected outcomes:, it is not appropriated. Allowances that are included in the Contingency Reserve can only be drawn on once they have been appropriated by Parliament. These allowances are removed from the Contingency Reserve and allocated to specific agencies for appropriation and for outcome reporting closer to the time when the associated events eventuate. The 2011–12 Budget included a figure of $1.1 billion for the Contingency Reserve for 2011–12, and $15.6 billion over the following three years.
An audit would examine the use of the Contingency Reserve and its administration, as well as the accountability arrangements for the Reserve.