Portfolio overview

The Industry, Science and Resources portfolio is responsible for supporting a productive, resilient, and sustainable economy that is enriched by science and technology. It does this by growing innovative and competitive business, industries and regions, investing in science and technology and supporting a strong resources sector.

The department also operates a Business Grants Hub and a shared services hub, which provides services to other Commonwealth entities, including: grants administration and payments processing; human resources and financial transactions processing; and the management information systems to support these processes. Further information is available from the department’s website.

In addition to the Department of Industry, Science and Resources, there are six entities within the portfolio (excluding subsidiaries), with responsibilities for nuclear medicine, geoscience, innovations in science and technology, Australia’s intellectual property rights system, offshore petroleum safety and environmental management, and to provide increased flows of finance into priority areas of the Australian economy.

In the 2023–24 Portfolio Budget Statements (PBS) for the Industry, Science and Resources portfolio, the aggregated budgeted expenses for 2023–24 total $6.4 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 Industry, Science and Resources represents the largest proportion of the portfolio’s expenses, and departmental expenses of the portfolio are the most material component, representing 57 per cent of the entire portfolio’s expenses.

Figure 1: Industry, Science and Resources portfolio – total expenses and average staffing level by entity

Portfolio expenses and staffing level

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

Audit focus

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 risk identified for the portfolio relates to procurement, including compliance with the Commonwealth Procurement Rules and contract management.

Specific risks in the Industry, Science and Resources portfolio relate to procurement; regulation; and asset management and sustainment.

Procurement

The department’s procurement practices are relied upon by government to support industry policy. Compliance with the Commonwealth Procurement Rules in design and conduct, and the achievement of value for money in procurement are key risks, along with effective contract management.

Regulation

Rapid and disruptive technology change is affecting this portfolio in its role supporting science, commercialisation, business investment and capability, as well as regulating industry, science and resources. There are risks in the use of technology in industries such as mining, manufacturing, retail and medical sciences.

Asset management and sustainment

The portfolio has a range of nuclear scientific and resource assets in the portfolio. Environmental and financial risks are associated with the sustainment, decommissioning and rehabilitation of these assets.

Previous performance audit coverage

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 Industry, Science and Resources portfolio were included in tabled ANAO performance audits 16 times. The conclusions directed toward entities within this portfolio were as follows:

  • one was unqualified;
  • six were qualified (largely positive);
  • six were qualified (partly positive); and
  • three were adverse.

Figure 2 shows the number of audit conclusions for entities within the Industry, Science and Resources 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 Industry, Science and Resources 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 Industry, Science and Resources portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Industry, Science and Resources portfolio, 2018–19 to 2022–23

 

Source: ANAO data.

Performance statements audit

The audit of the 2022–23 Department of Industry, Science and Resources (DISR) annual performance statements is being conducted following a request from the Minister for Finance on 16 January 2023, under section 40 of the Public Governance, Performance and Accountability Act 2013. The audit is conducted under section 15 of the Auditor-General Act 1997.

The 2022–23 DISR audit is an initial engagement which increases the inherent risk due to unknowns around the overall quality of performance statements preparation processes. However, given the moderate level of complexity in DISR’s operating environment, and the clear alignment of DISR’s purposes, key activities and performance measures, it is expected this initial engagement will not be high risk.

Key risks for DISR’s performance statements that the ANAO has highlighted include:

  • the appropriateness of the performance measures and targets;
  • the maturity of performance statements preparation processes; and
  • the overall completeness of the performance information.

Financial statements audits

Overview

Entities within the Industry, Science and Resources portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Industry, Science and Resources portfolio entities and risk profile

 

Type of entity

Engagement risk

Number of higher risks

Number of moderate risks

Material entities 

Department of Industry, Science and Resources

Non-corporate

Moderate

2

1

Australian Nuclear Science and Technology Organisation

Corporate

Moderate

1

1

Commonwealth Scientific and Industrial Research Organisation

Corporate

Moderate

2

1

Geoscience Australia

Non-corporate

Low

0

2

Non-material entities 

IP Australia

Non-corporate

Low

 

National Offshore Petroleum Safety and Environmental Management Authority

Corporate

Low

National Reconstruction Fund

 
         

Material entities

Department of Industry, Science and Resources

The Department of Industry, Science and Resources is responsible for supporting a productive, resilient, and sustainable economy that is enriched by science and technology. It does this by growing innovative and competitive businesses, industries and regions, and supporting a strong resources sector.

The department’s total budgeted revenues for 2023–24 are just under $2.1 billion, with royalties representing 62 per cent, as shown in Figure 4. The rehabilitation provision represents 79 per cent of total budgeted liabilities, and grants expenses represent 30 per cent of total budgeted expenses.

Figure 4: Department of Industry, Science and Resource’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’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).

  • The completeness and accuracy of Administered Royalty Revenue given the significant value of royalty revenue and the reliance on data reporting and administrative functions performed by third partied including State governments and other federal government entities. (KAM – completeness and accuracy of royalty revenue)
  • The valuation of the Ranger Rehabilitation and the Northern Endeavour Decommissioning Provision given the size of the balance and the judgement involved in estimating the value of the rehabilitation provision. (KAM – valuation of the rehabilitation and decommissioning provision)
  • The occurrence, completeness, and accuracy of grants expenses and payables given the significant value and the number and diversity of grants programs managed by the Department.

Australian Nuclear Science and Technology Organisation

The Australian Nuclear Science and Technology Organisation (ANSTO) is Australia’s national nuclear research and development organisation. ANSTO operates Australia’s only nuclear multi-purpose reactor and the Australian Synchrotron, contributes to radiopharmaceutical production and supply, and conducts research into areas of national priority, including human health, the environment and the nuclear fuel cycle. ANSTO also provides advice to government and other stakeholders on matters relating to nuclear science, technology and engineering.

As shown in Figure 5, ANSTO’s total budgeted expenses for 2023–24 are just over $489.2 million, with employee benefits and supplier expenses representing 73 per cent. Total budgeted liabilities are just under $701.6 million, with 87 per cent attributable to other provisions (decommissioning and waste management). Total budgeted assets are just over $1.7 billion, with 79% of attributable to property, plant and equipment and land and buildings.

Figure 5: ANSTO budgeted financial statements by category ($’000)

 
 

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

There are two key risks for ANSTO’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage.

  • The valuation of the decommissioning and nuclear waste management provisions, due to the complexity of the calculation, reliance on the exercise of significant judgement to determine key inputs into the valuation and the unique nature of the operations and industry to which the provisions relate.
  • The valuation and subsequent depreciation of non-financial assets, due to the unique nature of property, plant and equipment held by ANSTO, materiality of the balances and the exercise of significant judgement to determine the key inputs into the estimation of fair value.

Commonwealth Scientific and Industrial Research Organisation

The primary functions of the Commonwealth Scientific and Industrial Research Organisation (CSIRO), as set out in the Science and Industry Research Act 1949, are to carry out scientific research and facilitate the application or utilisation of the results of such research. CSIRO is responsible for delivering innovative scientific and technology solutions to benefit industry, the environment and the community through scientific research and capability development, services and advice.

The CSIRO’s total budgeted assets for 2023–24 are just under $3.4 billion, with 65 per cent of these assets attributable to: land and buildings; and property, plant and equipment, as shown in Figure 6. Sales of goods and services contribute to 29 per cent of total budgeted revenue, with other revenue streams contributing to 9 per cent. Total budgeted liabilities are just under $614.2 million, with other provisions contributing to 10 per cent.

Figure 6: CSIRO’s budgeted financial statements by category ($’000)

 
 

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

There are three key risks for CSIRO’s 2022–23 financial statements that the ANAO has highlighted for specific audit coverage.

  • The completeness and accuracy of research project revenue, due to the degree of judgement involved across a number of revenue streams from a variety of sources and funding models.
  • The valuation of unlisted companies, including within the CSIRO innovation funds, due to their diverse nature, early-stage development and funding arrangements.
  • The valuation of CSIRO’s property, plant and equipment, and properties held for investment. These are material balances sensitive to movements in assumptions adopted in the underlying valuation models and are subject to possible impairment.

Geoscience Australia

Geoscience Australia delivers information and advice on Australia’s geology and geography to support government, industry and community decision-making. The agency develops applications and solutions in response to Australia’s challenges by bringing together observations, data and knowledge from across geoscience disciplines.

Geoscience Australia’s total budgeted revenues for 2023–24 are just over $387.1 million, with the sales of goods and rendering of services contributing to 16 per cent. Total budgeted assets are just under $495.2 million, with 16 per cent of these attributable to property, plant and equipment, as shown in Figure 7.

Figure 7: Geoscience Australia’s budgeted financial statements by category ($’000)

 
 

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

There are two key risks for the Geoscience Australia 2022–23 financial statements that the ANAO has highlighted for specific audit coverage.

  • The valuation of mineral and fossil collections and other assets, including plant and equipment, as this process involves estimation and judgement.
  • The recognition of revenue related to long-term contracts and the relevant deferred revenue at year end, as it is a complex process that involves judgement.