Portfolio overview

The Prime Minister and Cabinet portfolio is responsible for providing support and policy advice to the Prime Minister, the Cabinet and ministers on public and government administration matters, including policy development and whole-of-government coordination, and providing services to Indigenous Australians.

The Department of the Prime Minister and Cabinet (PM&C) is the lead entity in the portfolio. The department’s key purposes are to support the Prime Minister as the head of the Australian Government and the Cabinet; and to provide advice on major domestic policy and international national security matters. PM&C also supports the National COVID-19 Coordination Commission and the National Bushfire Recovery Agency. Further information is available from the department’s website.

In addition to PM&C, there are 20 entities within the portfolio (excluding subsidiaries), which cover a broad range of functions and policy areas. This includes the new National Drought and North Queensland Flood Response and Recovery Agency, and the National Indigenous Australians Agency (NIAA). Established on 1 July 2019, the NIAA’s functions include leading and coordinating policy development, program design and implementation, and service delivery for Aboriginal and Torres Strait Islander peoples; and providing advice to the Prime Minister and the Minister for Indigenous Australians on whole-of-government priorities for Aboriginal and Torres Strait Islander peoples.

In the 2019–20 Portfolio Budget Statements (PBS) for the Prime Minister and Cabinet portfolio, after accounting for Portfolio Additional Estimates Statements (PAES), where applicable, the aggregated budgeted expenses for 2019–20 total $3.01 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through the 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. PM&C represents the largest proportion of the portfolio’s expenses, and administered expenses are the most material component, representing 61 per cent of the entire portfolio’s expenses.

Figure 1: Prime Minister and Cabinet portfolio — total expenses and average staffing level by entity

Source: ANAO analysis of 2019–20 PBS and 2019–20 PAES.

The Prime Minister and Cabinet portfolio coordinates policy development across government in economic, domestic and international affairs, public service stewardship, and Aboriginal and Torres Strait Islander policies and programs. The strategic purposes of the department are supporting the Prime Minister as head of the Australian Government and the Cabinet; providing advice on how to make Australia more prosperous and to improve its security on a global scale; and working with government entities to build a more diverse public service.

Audit focus

In determining the 2020–21 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement, and emerging risks from new investments, reforms or changes in the operating environment. In the Prime Minister and Cabinet portfolio, considerations predominantly relate to its responsibilities to deliver timely and targeted services to Aboriginal and Torres Strait Islander peoples, and its ability to articulate the performance and impact against policy objectives for the programs and activities it funds. The portfolio also carries governance risk through the delivery of activities by its many corporate entities, and ensuring transparency and effectiveness of these entities. PM&C is the primary coordination point for policy development, and as such influences the risks and expectations for evidence-based policy development across the public sector.

During 2019–20 and into 2020–21, the department and its portfolio entities are also managing the government’s response to the bushfire emergency and COVID-19 pandemic. This environment creates significant additional risks that need to be considered and managed to achieve the right balance between rapid policy advice and implementation, and governance and compliance controls and management of longer term business impacts. In this portfolio, risks resulting from the bushfires and COVID-19 have emerged in 2019–20 — and will continue into 2020–21 — in relation to public administration, rapid policy development and access to appropriate evidence and data, stakeholder management, and coordination.

Governance

The portfolio includes 11 entities that have been established as either corporate Commonwealth entities or Commonwealth companies limited by guarantee, to serve the interests of Aboriginal and Torres Strait Islander peoples. The nature and remoteness of some of these entities creates heightened governance and transparency risks for the performance of their activities and expenditures.

As a frontline policy development portfolio for both the COVID-19 pandemic response and bushfire recovery assistance, risk management is a critical consideration in these periods of rapid response to implement new policy changes and measures. If risk tolerances change during an emergency response period, these need to be documented, implemented consistently, and the impacts across the business considered.

Service delivery

Recent audit work has identified areas for improvement in the portfolio’s ability to demonstrate value for money and impact of programs for the benefit of Aboriginal and Torres Strait Islander people. This risk is evidenced through issues in program implementation oversight, in establishing clear performance targets and in the management and measurement of outcomes for Aboriginal and Torres Strait Islander grants and programs.

There are risks with grants management with regard to the justification for the selection of grant recipients and the extent to which existing experience and knowledge is leveraged from the regional network of National Indigenous Australians Agency staff.

Supporting Indigenous communities during the pandemic and through the impacts of widespread bushfires bring additional access, communication and service delivery risks.

Policy development

The department established a COVID-19 taskforce to support the Prime Minister and provide policy advice to the National Cabinet and the Australian Public Service. To support the implementation of the Australian Government’s reform agenda and rapid policy response in a period of emergency, the department needs to ensure the provision of timely, evidence-based advice when coordinating the development of policy in areas of significance. This requires clear articulation to government of the evidence relied on and likely impacts of proposals, including through use of relevant data. The department also has broader responsibilities for data policy, including through the Australian Government Public Data Policy Statement.

Financial statements and other audit engagements

Overview

Entities within the Prime Minister and Cabinet portfolio, and the risk profile of each entity, are shown in Table 1.

Table 1: Prime Minister and Cabinet portfolio entities and risk profile

 

Type of entity

Risk of material misstatement

Number of higher risks

Number of moderate risks

Material entities 

Department of the Prime Minister and Cabinet

Non-corporate

Moderate

0

1

National Indigenous Australians Agency

Non-corporate

Moderate

1

2

Indigenous Business Australia

Corporate

Moderate

0

1

Indigenous Land and Sea Corporation

Corporate

Moderate

1

6

Non-material entities 

Australian Institute of Aboriginal and Torres Strait Islander Studies

Corporate

Low

 

Aboriginal Hostels Limited

Company

Moderate

Anindilyakwa Land Council

Corporate

Low

Australian Public Service Commission

Non-corporate

Low

Central Land Council

Corporate

Low

National Australia Day Council Limited

Company

Low

National Drought and North Queensland Flood Response and Recovery Agency

Non-corporate

Low

Northern Land Council

Corporate

Moderate

Office of National Intelligence

Non-corporate

Low

Office of the Official Secretary to the Governor-General

Non-corporate

Low

Old Parliament House

Corporate

Low

Outback Stores Pty Ltd

Company

Moderate

Tiwi Land Council

Corporate

Low

Torres Strait Regional Authority

Corporate

Low

Workplace Gender Equality Agency

Non-corporate

Low

Wreck Bay Aboriginal Community Council

Corporate

Low

Other audit engagements (including Auditor-General Act 1997 section 20 engagements)

Aboriginals Benefit Account

Central Land Council Native Title Representative Body

Northern Land Council Native Title Representative Body

     

Material entities

Department of the Prime Minister and Cabinet

The Department of the Prime Minister and Cabinet (PM&C) is responsible for coordinating policy development across government in economic, domestic and international affairs; and for public service stewardship.

PM&C’s total budgeted expenses for 2019–20 are just over $402 million, with 30 per cent of these expenses attributable to payments to corporate Commonwealth entities, as shown in Figure 2.

Figure 2: Department of the Prime Minister and Cabinet’s total budgeted expenses by category ($’000)

 

Source: ANAO analysis of 2019–20 PAES.

The key risk for PM&C’s 2019–20 financial statements that the ANAO has highlighted for specific audit coverage in 2019–20, and that the ANAO considers a potential key audit matter (KAM), is the transfer of staff, assets and liabilities to the newly created National Indigenous Australians Agency, which requires significant judgements and manual calculations (KAM – Completeness, accuracy and valuation of assets and liabilities).

National Indigenous Australians Agency

The National Indigenous Australians Agency (NIAA) was established on 1 July 2019 by an executive order of the Governor-General. The primary functions of NIAA are to:

  • lead and coordinate Commonwealth policy development, program design and implementation, and service delivery for Aboriginal and Torres Strait Islander peoples;
  • provide advice to the Prime Minister and the Minister for Indigenous Australians on whole-of-government priorities for Aboriginal and Torres Strait Islander peoples;
  • lead and coordinate the development and implementation of Australia’s Closing the Gap targets in partnership with Indigenous Australians; and
  • lead Commonwealth activities to promote reconciliation.

The NIAA’s total budgeted expenses for 2019–20 are just over $1.9 billion, with 69 per cent of these expenses attributable to grants, as shown in Figure 3.

Figure 3: National Indigenous Australians Agency’s total budget expenses by category ($’000)

 

Source: ANAO analysis of 2019–20 PAES.

The three key risks for the NIAA’s 2019–20 financial statements that the ANAO has highlighted for specific audit coverage in 2020–21, including those that the ANAO considers potential key audit matters (KAMs), are the:

  • effectiveness of internal control activities and financial reporting arrangements for the administered grants programs, due to the grants being disbursed across Australia, often in remote areas, with the NIAA making payments through a number of different IT systems operated by several other government agencies (KAM – Occurrence and accuracy of grant expenses);
  • valuation of land, building, infrastructure, and plant and equipment assets, due to the location of many of these assets in remote and regional Australia, where market data on comparable assets is limited; and
  • the transfer of staff, assets and liabilities from the Department of the Prime Minister and Cabinet upon the creation of the NIAA on 1 July 2019, which requires significant judgements and manual calculations (KAM – Completeness, accuracy and valuation of assets and liabilities).

Indigenous Business Australia

Under its enabling legislation, the Aboriginal and Torres Strait Islander Act 2005, Indigenous Business Australia’s (IBA’s) purposes are to assist and enhance Aboriginal and Torres Strait Islander self-management and economic self-sufficiency; and to advance the commercial and economic interests of Aboriginal and Torres Strait Islander peoples by accumulating and using a substantial capital base for their benefit. IBA has 22 actively trading subsidiaries, which are audited by the ANAO.

IBA’s total budgeted expenses for 2019–20 are just under $236 million, with 34 per cent of these expenses attributable to supplier expenses, as shown in Figure 4.

Figure 4: Indigenous Business Australia’s total budgeted expenses by category ($’000)

 

Source: ANAO analysis of 2019–20 PBS.

The key risk for IBA’s 2019–20 financial statements is the valuation of investment properties, land and buildings, and investments in associate entities, due to the judgements and assumptions involved in these valuations.

Indigenous Land and Sea Corporation

The Indigenous Land and Sea Corporation’s (ILSC’s) purpose is to assist Aboriginal and Torres Strait Islander people to acquire and manage land so as to provide economic, environmental, social and cultural benefits; and to provide land management assistance to support the delivery of sustainable benefits from land acquisition. The ILSC’s purpose also includes investing in water-based projects to generate social, cultural, environmental and economic opportunities that land and water ownership can bring to Indigenous Australians.

The ILSC’s total budgeted expenses for 2019–20 are just over $71 million, with 58 per cent of these expenses attributable to supplier expenses, as shown in Figure 5.

Figure 5: Indigenous Land and Sea Corporation’s total budgeted expenses by category ($’000)

 

Source: ANAO analysis of 2019–20 PBS.

The seven key risks for the ILSC’s 2019–20 financial statements are the:

  • valuation and management of property, plant and equipment, and intangibles held by the ILSC’s subsidiary, Voyages Indigenous Tourism Australia Pty Ltd, in relation to the Ayres Rock Resort. This is due to the judgements and assumptions involved in the valuation of these assets;
  • tax effect accounting and tax loss recognition in relation to gross carried forward tax losses of Voyages Indigenous Tourism Australia Pty Ltd. This is due to the complexities involved in tax effect accounting, calculation and recognition criteria for tax losses;
  • tax effect accounting in relation to gross carried forward losses of the ILSC’s subsidiary, Primary Partners Pty Ltd. This is due to the complexities involved in tax effect accounting, calculation and recognition criteria for tax losses;
  • valuation of a concessional loan liability and associated asset in relation to the financing of Ayers Rock Resort by Voyages Indigenous Tourism Australia Pty Ltd;
  • valuation of property, plant and equipment, and livestock of the ILSC and Primary Partners Pty Ltd. Valuation of biological assets involves complex judgements and assumptions;
  • existence of livestock of the ILSC and its subsidiary, Primary Partners Pty Ltd, primarily due to the remote locations of large cattle stations; and
  • recognition and reporting of revenue and expenses by Voyages Indigenous Tourism Australia Pty Ltd, due to the varying revenue and purchasing streams and the decentralised nature of the entity’s operations.