Portfolio overview

The Agriculture, Fisheries and Forestry portfolio is responsible for advising the government and implementing programs on rural adjustment and drought issues, plant and animal biosecurity and Australia’s agricultural, fisheries, food and forestry industries.

The Department of Agriculture, Fisheries and Forestry is the lead entity in the portfolio. It is responsible for developing and implementing policies and initiatives to promote more sustainable, productive, internationally competitive and profitable Australian agricultural, food and fibre industries; and safeguarding Australia’s animal and plant health status to maintain overseas markets and protect the economy and environment from exotic pests and diseases. Further information is available from the department’s website.

In addition to the Department of Agriculture, Fisheries and Forestry, there are 8 entities within the portfolio that are responsible for: Commonwealth fisheries; regulating pesticides and veterinary medicines; farm business loans; and research and development for wine, cotton, fisheries, grains and rural industries.

On 1 July 2022 an Administrative Arrangements Order took effect which changed some of the responsibilities of the Agriculture, Fisheries and Forestry portfolio, (formerly the Agriculture, Water and the Environment portfolio). The total expenses and average staffing level by entity for Agriculture, Fisheries and Forestry portfolio will be updated in this overview following the Budget, expected in the third quarter of 2022, which will reflect these changes.

Audit focus

In determining the 2022–23 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments, reforms or changes in the operating environment.

The primary risks identified for the portfolio relate to the department demonstrating that it can effectively implement risk based regulatory regimes and that it follows through on the implementation of agreed recommendations from the large number of review activities it undertakes or are undertaken externally of it. Failure to implement agreed recommendations would result in a risk to the department’s ability to provide Parliament assurance that it is using its resources appropriately to manage regulatory risk.

The Agriculture, Fisheries and Forestry portfolio strategic risks predominantly relate to governance, service delivery, procurement, regulation and financial management.

Governance

Measuring, evaluating and reporting on the contribution of activities to their intended outcomes has been identified as an area for improvement in a number of recent performance audits within the portfolio.

Past reviews and audits of the Department of Agriculture, Fisheries and Forestry (the department) have also found weaknesses in the department’s governance and culture. The Machinery of Government changes commencing on 1 July 2022 introduce a risk to the continuity of functions across the department. Sound record keeping, including documented rationales for key decisions, will be central in providing continuity in administration.

A key risk is a recurring theme in the Department of the commissioning of reviews followed by the failure to follow through with implementation of agreed recommendations.

Service delivery

A number of new initiatives in the Agriculture, Fisheries and Forestry portfolio have been announced over recent years. These initiatives include: $328 million Busting Congestion for Agricultural Exporters package; $400.1 million to strengthen biosecurity; and $233.6 million to implement the National Soil Strategy and associated measures. There is a risk that new initiatives may not achieve desired outcomes if they are not supported by sufficient planning, a clear rationale of where intervention is required, use of the best available evidence, and application of appropriate risk management and performance measurement frameworks.

Procurement

Previous performance audits have identified deficiencies in demonstrating value for money in the department’s procurement activities. With $1.03 billion in contract notices published in 2020–2021, establishing effective arrangements to ensure value for money will remain important for procurement activities delivered by the department.

Regulation

Effective regulatory approaches are required to achieve the desired outcomes of regulation. Past audits have identified failures with regulation in the portfolio, including the use of intelligence, establishment of a risk-based approach to regulation, implementation of effective regulatory plans and strategies, governance arrangements, compliance with procedural and legislative requirements, and performance measurement and evaluation.

Financial management

The Department of Agriculture, Fisheries and Forestry and the Regional Investment Corporation provide and manage loans, primarily to farmers on concessional terms. This is a growing area, for which the Regional Investment Corporation received an additional $2 billion in funding in 2020–21. Of particular importance will be actions taken on any loan defaults, which significantly impact the expected credit loss calculations in the financial statements.

Performance statements audit

While the audit of the 2021-22 annual performance statements of the former Department of Agriculture, Water and the Environment will be conducted following a request from the Minister for Finance on 9 December 2021, a decision on whether the Department of Agriculture, Forestry and Fisheries’ 2022-23 performance statements will be audited is subject to a request from the Minister for Finance under section 40 of the Public Governance, Performance and Accountability Act 2013. Performance statements audits are conducted under section 15 of the Auditor-General Act 1997.

Financial statements and other audit engagements

Overview

On 1 July 2022 an Administrative Arrangements Order (AAO) took effect which included changes to the responsibilities of the Agriculture, Fisheries and Forestry portfolio, (formerly the Agriculture, Water and Environment portfolio). Entities which are now part of this portfolio are shown in Table 1. The risk profile for each entity is based on the 2021–22 financial statements, which were prepared prior to the AAO on 1 July 2022, taking effect.

Table 1: Agriculture, Fisheries and Forestry portfolio entities and risk profile

 

Type of entity

Risk of material misstatement

Number of higher risks

Number of moderate risks

Material entities 

Department of Agriculture, Fisheries and Forestry

Non-corporate

Moderate

3

2

Non-material entities 

Australian Fisheries Management Authority

Non-corporate

Low

 

 

Australian Pesticides and Veterinary Medicines Authority

Corporate

Low

 

 

Cotton Research and Development Corporation

Corporate

Low

 

 

Fisheries Research and Development Corporation

Corporate

Low

 

 

Grains Research and Development Corporation

Corporate

Low

 

 

Regional Investment Corporation

Corporate

Moderate

 

 

Rural Industries Research and Development Corporation (trading as Agrifutures Australia)

Corporate

Low

 

 

Wine Australia

Corporate

Low

 

 

     

Material entities

Department of Agriculture, Fisheries and Forestry

The Department of Agriculture, Fisheries and Forestry is responsible for developing and implementing policies and initiatives to promote more sustainable, productive, internationally competitive and profitable Australian agricultural, food and fibre industries; safeguarding Australia’s animal and plant health status to maintain overseas markets and protect the economy and environment from exotic pests and diseases. On 1 July 2022 an Administrative Arrangements Order (AAO) took effect which included changes to the responsibilities of the former Department of Agriculture, Water and the Environment. The total budgeted financial statements by category for the new Department of Agriculture, Fisheries and Forestry will be updated in this overview following the Budget, expected in the third quarter of 2022, which will reflect these changes.

Financial statements audit

There are three key risks for the former Department of Agriculture, Water and the Environment 2021–22 financial statements that the ANAO has highlighted for specific audit coverage that the Department of Agriculture, Fisheries and Forestry will have responsibility for from 2022–23. The ANAO considers all of these risks potential key audit matters (KAMs).

  • The accuracy and completeness of revenue relating to import and export regulatory functions. There is a risk that the complex administrative and information technology processes that support the collection of import and export fees and charges could result in the under collection of revenue. Fees and charges are recognised on the basis of declarations by importers and exporters. (KAM – Accuracy and completeness of own-source revenue)
  • The accuracy and completeness of primary industry levies and charges, due to the complex calculations used to derive the estimated collections based on agricultural production and the risk of under collection arising from the submission of inaccurate levy returns and declarations. (KAM – Accuracy and completeness of the collection and distribution of primary industry levies and charges)
  • The valuation of drought and farm finance assistance loans due to the nature of eligibility criteria, differing limits and lending terms and the complexity of calculations in determining the valuation and impairment of the loans balance at year end. These loans are coordinated through the state and territory governments and, for new loans made after 1 July 2018, through the Regional Investment Corporation. (KAM – Valuation of loans to the state and territory governments for drought and farm finance assistance)
  • As a result of the Administrative Arrangements Order which took effect on 1 July 2022 the ANAO’s 2022–23 financial statement audit will also focus on risks arising from Machinery of Government changes. These risks relate mainly to the completeness and accuracy of assets and liabilities transferred to the department from the former Department of Agriculture, Water and the Environment. This is due to the materiality of the assets and liabilities transferred to the department and resultant increase in complexity of the process for preparation of the financial statements.
  • In addition, there are two risks that were identified for the former 2021–22 Department of Agriculture, Water and the Environment financial statements that will now be considered as part of the 2022–23 financial statements for the Department of Climate Change, Energy, the Environment and Water. These are:
    • The calculation of the government’s liability to restore Antarctic bases to their original condition, given the significant judgements required in the selection of the assumptions used in the valuation model. (KAM – Valuation of restoration obligations in Antarctica)
    • The valuation of the government’s water entitlement assets, due to the estimation and judgement involved in the valuation methodology and given the trading of water assets is a relatively new and developing market. (KAM – Valuation of water entitlements)

Potential audits

Potential Performance audit: 2022-23
Activity

In progress audits

Performance audit (Open for contribution)
Activity

Recently tabled