Agriculture, Fisheries and Forestry portfolio

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 (the department) 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 eight 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.

In the 2023–24 Portfolio Budget Statements (PBS) for the Agriculture, Fisheries and Forestry portfolio, the aggregated budgeted expenses for 2023–24 total $3.2 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through annual appropriation Acts.

The level of budgeted departmental  and administered  expenses, and the average staffing level for entities in the GGS within this portfolio are shown in Figure 1. The Department of Agriculture, Fisheries and Forestry represents the largest proportion of the portfolio’s expenses, and departmental expenses of the portfolio are the most material component, representing 56 per cent of the entire portfolio’s expenses.

Figure 1: Agriculture, Fisheries and Forestry portfolio – total expenses and average staffing level by entity

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

In determining the 2023–24 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 or changes in the operating environment.

The primary risks identified for the portfolio relate to the department’s implementation of risk based regulatory regimes and effective management of resources to achieve its purpose. The department is facing financial challenges that may affect all aspects of its operations, including its regulatory functions. The high value of agricultural production ($90 billion in 2022–23) increases the potential impact of any deficiencies or failures in this space.

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

Governance

Past audits of the Department of Agriculture, Fisheries and Forestry have found weaknesses in the department’s governance and culture: in particular, the audits identified issues in risk management and demonstrating value for money in the department’s procurement activities.  There is a risk that these weaknesses have not been addressed.

Effectively managing and implementing change, including documenting the rationale for key decisions, implementing recommended actions and maintaining complete records, will be central in providing effective administration.

Service delivery

Several measures were announced for the Agriculture, Fisheries and Forestry portfolio in the October 2022–23 Budget and the 2023–24 Budget, some of which involve the establishment of new programs. 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.

Regulation

The department is responsible for regulating agricultural goods imported into and exported from Australia; agricultural levies; imported food safety; imported wood and paper products; and pest and disease risks of goods, people and vessels arriving in Australia. Past ANAO audits have identified deficiencies in the department’s arrangements to manage its performance as a regulator.  There is a risk that the department is unable to provide assurance that it is effectively using its resources to manage regulatory risk.

Financial management

The department expects to collect approximately 40 per cent of its revenue from fees and charges in 2023–24. In recent years the department sought approval for operating losses from the Minister for Finance. There is a risk that financial management practices do not support the department to deliver key functions therefore affecting its performance as a regulator and its ability to effectively deliver services. The department was allocated $127 million in the 2022–23 Budget to address a funding shortfall. In the 2023–24 Budget the Government provided additional funding for biosecurity activities and the implementation of a biosecurity protection levy.

The ANAO’s performance audit activities involve the independent and objective assessment of all or part of an entity’s operations and administrative support systems. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service.

During the performance audit process, the ANAO gathers and analyses the evidence necessary to draw a conclusion on the audit objective. Audit conclusions can be grouped into four categories:

• unqualified;
• qualified (largely positive);
• qualified (partly positive); and
• adverse.

In the period between 2018–19 to 2022–23 entities within the Agriculture, Fisheries and Forestry  portfolio were included in tabled ANAO performance audits 22 times.  The conclusions directed toward entities within this portfolio were as follows:

• none were unqualified;
• 10 were qualified (largely positive);
• 11 were qualified (partly positive); and
• one was adverse.

Figure 2 shows the number of audit conclusions for entities within the Agriculture, Fisheries and Forestry portfolio that were included in ANAO performance audits between 2018–19 and 2022–23 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2018–19 to 2022–23: entities within the Agriculture, Fisheries and Forestry portfolio compared with all audits tabled

Source: ANAO data.

The ANAO’s annual audit work program is intended to deliver a mix of performance audits across seven audit activities: governance; service delivery; grants administration; procurement; policy development; regulation and asset management and sustainment. These activities are intended to cover the scope of activities undertaken by the public sector. Each performance audit considers a primary audit activity. Figure 3 shows audit conclusions by primary audit activity for audits involving entities in the Agriculture, Fisheries and Forestry portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Agriculture, Fisheries and Forestry portfolio, 2018–19 to 2022–23

Source: ANAO data.

Overview

Entities within the Agriculture, Fisheries and Forestry portfolio, and the risk profile of each entity, are shown in Table 1.

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

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.

The Department of Agriculture, Fisheries and Forestry’s total budgeted revenues for 2023–24 are just over $2.0 billion, with other taxes and sales of goods and rendering of services representing 29 per cent and 23 per cent, respectively, as shown in Figure 4. Trade and other receivables represents 70 per cent of total budgeted assets.

Figure 4: Department of Agriculture, Fisheries and Forestry’s total budgeted financial statements by category ($’000)

Source: ANAO analysis of 9 May 2023–24 Portfolio Budget Statements.

There are three key risks for the Department of Agriculture, Fisheries and Forestry’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage. The ANAO considers all of these risks as 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)