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. Further information is available from the department’s website at pmc.gov.au.

In addition to PM&C, there are 21 entities within the portfolio (excluding subsidiaries), which cover a broad range of functions and policy areas. These entities includes the newly created National Recovery and Resilience Agency (NRRA) as well as the National Indigenous Australians Agency (NIAA).

The NRRA was established on 5 May 2021. Its role is to lead Commonwealth action and national efforts to improve preparedness for, reduce risks associated with, and support relief and recovery from, disasters and emergencies of all kinds, including by providing strategic leadership, policy advice and program delivery, community outreach and stakeholder engagement.

The NIAA was established on 1 July 2019. Its functions include leading and coordinating policy development, program design and implementation, and service delivery for Aboriginal and Torres Strait Islander peoples, as well as 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 2021–22 Portfolio Budget Statements (PBS) for the Prime Minister and Cabinet portfolio, the aggregated budgeted expenses for 2021–22 total $3.8 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. The NIAA 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 2021–22 PBS.

Audit focus

In determining the 2021–22 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.

In the Prime Minister and Cabinet portfolio, considerations 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.

The department and its portfolio entities continue to have a key role in 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.

Specific risks in the Prime Minister and Cabinet portfolio relate to governance, service delivery and policy development.

Governance

The portfolio includes 11 entities that have been established as either corporate Commonwealth entities or Commonwealth companies to serve the interests of Aboriginal and Torres Strait Islander peoples. Audits have highlighted increased governance and transparency risks for these entities, including in managing conflicts of interest and the timeliness of reporting to Parliament.

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

The ANAO’s program of audits examining the government’s COVID-19 response have highlighted that planning in a crisis is difficult due to the imperative to commence implementation as soon as possible. In such circumstances, planning documentation does not need to be elaborate. It is more important to apply a structured process to planning key aspects of the project (such as governance, risk and stakeholder engagement) and ensure that entities involved in the response have clarity about roles and responsibilities and follow processes consistent with statutory requirements.

Service delivery

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 peoples. This risk is evidenced through issues in program implementation oversight, establishing clear performance targets, and managing and measuring outcomes for Aboriginal and Torres Strait Islander grants and programs.

The ANAO’s audits have also identified risks with grants management, including with regard to assessing applications, justifying the selection of grant recipients and managing provider compliance. While the Commonwealth Grants Rules and Guidelines (CGRGs) intend to provide entities with flexibility to administer grants, this flexibility should not be used to the detriment of the principles of accountability and value for money that are at the core of the CGRGs. When non-competitive approaches are used, they should be supported by a robust and up-to-date business case that demonstrates how value with relevant money will be achieved.

Supporting Indigenous communities during the COVID-19 pandemic and through the impacts of widespread bushfires has brought additional access, communication and service delivery risks. Establishing a new entity to support communities impacted by natural disasters also brings challenges. The NRRA will need to bring together several government functions and programs effectively and rapidly to ensure that it is able to support affected communities and adequately plan for future disasters and subsequent recovery.

Policy development

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.

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

3

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

Digital Transformation Agency

Non-corporate

Low

National Australia Day Council Limited

Company

Low

National Recovery and Resilience Agency

Non-corporate

TBC

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

Low

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 public service stewardship and for coordinating policy development across government in economic, domestic and international affairs.

PM&C’s total budgeted expenses for 2021–22 are just over $408 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 2021–22 PBS.

The key risk for PM&C’s 2020–21 financial statements that the ANAO has highlighted for specific audit coverage, and that the ANAO considers a potential key audit matter (KAM), is the recognition and measurement of revenue from shared services provided by PM&C to other Commonwealth entities.

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 the 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 2021–22 are just under $2.2 billion, with 70 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)

 

Note a: Finance costs, writedown and impairment of assets, mining witholding tax, payments associated with land councils, subsidies, and payments to corporate Commonwealth entities

Source: ANAO analysis of 2021–22 PBS.

There are three key risks for the NIAA’s 2020–21 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).

  • 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 information technology systems operated by several other government agencies. (KAM – Occurrence and accuracy of grant expenses)
  • The compliance by providers of services under the Community Development Program with their roles and responsibilities under the program. (KAM – Occurrence and accuracy of Community Development Program expenses)
  • The 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.

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 18 actively trading subsidiaries, which are audited by the ANAO.

IBA’s total budgeted expenses for 2021–22 are just under $247 million, with 37 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 2021–22 PBS.

There are three key risks for IBA’s 2020–21 financial statements.

  • The valuation of the loan portfolio, including fair value assessment and amortised cost, which requires the use of judgement and estimates.
  • The valuation of expected credit losses relating to the loan portfolio, which requires the use of judgement and estimates.
  • 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 peoples 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 2021–22 are just over $111 million, with 64 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 2021–22 PBS.

There are seven key risks for the ILSC’s 2020–21 financial statements.

  • 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 Ayers Rock Resort. This is due to the judgements and assumptions involved in the valuation of these assets.
  • The 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.
  • The 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.
  • The 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.
  • The valuation of property, plant and equipment, and livestock of the ILSC and its subsidiary, Primary Partners Pty Ltd. Valuation of biological assets involves complex judgements and assumptions.
  • The existence of livestock of the ILSC and its subsidiary, Primary Partners Pty Ltd, primarily due to the remote locations of large cattle stations.
  • The 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.