The objective of the audit was to assess the effectiveness of ARPANSA’s management of the regulation of Commonwealth nuclear, radiation facilities and sources, including ARPANSA’s compliance with its legislative requirements.

Summary

Introduction

1. Radiation and nuclear technologies have a range of uses in Australia, including to diagnose and treat disease. There are however inherent risks associated with radiation and radioactive substances, ranging from acute effects at high exposure to increased risk of cancers, depending on levels of exposure. Given these risks, and broader public sensitivities about the use of these technologies, it is important that their possession and use is managed safely by operators, and subject to an effective regulatory framework.

2. The Australian Radiation Protection and Nuclear Safety Agency (ARPANSA) was established in 1998 under the Australian Radiation Protection and Nuclear Safety Act 1998 (the ARPANS Act).1 ARPANSA’s role, among other responsibilities, is to protect the health and safety of people and the environment from the harmful effects of radiation. This role includes regulating the use of radiation and the safety of nuclear installations by, and for, Australian Government entities.2

3. Following an assessment process, ARPANSA may issue a licence authorising an entity’s use of specified materials and apparatus (collectively known as ‘sources’)3 and facilities (nuclear installations or other radiation facilities). ARPANSA also monitors compliance with the licence conditions through a program of periodic inspections and reporting requirements. Further, ARPANSA may initiate non‑compliance and enforcement action, if required, under its legislation.

4. At present, ARPANSA regulates over 40 entities—including departments of state, statutory authorities, and government companies.4 Existing licences cover approximately 65 000 individual sources (of which over 60 000 belong to the Department of Defence—Defence)5 and 36 facilities (over half of which are operated by the Australian Nuclear Science and Technology Organisation—ANSTO). The nature of the regulated equipment and the risks associated with its use can vary significantly. Regulated equipment includes: x‑ray baggage scanners in office buildings; lasers used for research by the Commonwealth Scientific and Industrial Research Organisation (CSIRO) and linear accelerators for examining cargo by the Australian Customs and Border Protection Service (Customs); and ANSTO’s nuclear research reactor at Lucas Heights in Sydney.6

5. To inform its work, ARPANSA engages with key international organisations involved in nuclear and radiation safety, particularly the International Atomic Energy Agency (IAEA), of which Australia is a member state. The IAEA’s role is to promote international cooperation in the safe, secure and peaceful use of nuclear technologies. ARPANSA has adopted the IAEA’s Fundamental Safety Principles as an internationally‑recognised framework for the regulation of nuclear technologies.7 The IAEA framework establishes key principles, including the assignment of responsibility for the safe management of ionising radiation, which are reflected in ARPANSA’s regulatory framework. The first principle is that ‘the prime responsibility for safety must rest with the person or organization responsible for facilities and activities that give rise to radiation risks’. The second principle is that ‘an effective legal and government framework for safety, including an independent regulatory body, must be established and sustained’.

Previous ANAO audit

6. The ANAO’s 2005 performance audit of the regulation of Commonwealth radiation and nuclear activities8 found that ARPANSA did not have a systematic approach to planning, undertaking and monitoring its activities. The audit made 19 recommendations. This current ANAO audit is not a direct follow up from the 2005 audit, as it does not focus primarily on the issues and recommendations made in the previous audit. However, in the course of audit fieldwork and analysis, the ANAO has been able to assess the extent to which ARPANSA has implemented the recommendations of the previous audit.

Audit objective, criteria and scope

7. The objective of the audit was to assess the effectiveness of ARPANSA’s management of the regulation of Commonwealth nuclear, radiation facilities and sources, including ARPANSA’s compliance with its legislative requirements.

8. To assist in evaluating ARPANSA’s performance in terms of the audit objective, the ANAO used the following high level criteria:

  • ARPANSA has established appropriate governance arrangements to support effective regulation;
  • a structured risk management framework is used to assess and manage regulatory risks, and ARPANSA employs a risk‑based approach to monitoring compliance; and
  • ARPANSA has policies and procedures to support responses to non‑compliance, and its responses are proportionate to the risks presented by the non‑compliance.

9. The audit focused on ARPANSA’s regulatory role, and did not directly examine ARPANSA’s other functions, in particular its scientific, advisory and fee‑for‑service activities and its role in promoting the national uniformity of radiation and nuclear safety policies and practices across the Commonwealth, states and territories. The audit approach was informed by the 2007 ANAO Better Practice Guide Administering Regulation and previous ANAO audits into regulatory bodies. A revised Better Practice Guide is scheduled to be released in 2014.

10. The ANAO examined relevant internal and public documents and guidance that support ARPANSA’s regulatory role; interviewed key ARPANSA staff; examined a sample of ARPANSA’s licence applications and cost recovery arrangements; held discussions with several regulated entities and the former Department of Health and Ageing (now the Department of Health); and accompanied ARPANSA staff on site inspections to observe the inspection process.

Overall conclusion

11. Radiation and nuclear technologies have diverse applications in the government, commercial, health and research sectors, including x‑ray scanning for security purposes, the use of lasers for scientific research and the production of radioactive substances at Lucas Heights. While the risks to human health and the environment posed by such technologies have long been recognised, they can be effectively managed through the appropriate use and care of equipment and materials by operators and the application of an effective regulatory framework. Australian Government entities’ use of radiation and nuclear technologies9 is regulated by the Australian Radiation Protection and Nuclear Safety Agency (ARPANSA), while state and territory based regulators are responsible for administering radiation protection legislation in their jurisdictions, covering operators such as hospitals, universities and industry.

12. ARPANSA has been generally effective in managing key aspects of the regulatory framework applying to the possession and use of radiation and nuclear sources and facilities by Australian Government entities. ARPANSA has developed and implemented procedures for licensing and monitoring regulated entities, supported by a suite of guidance materials for staff and regulated entities. ARPANSA also continues to develop and apply a risk‑based approach to regulation which, if further expanded to the assessment of licence applications and its inspection program, could improve the focus and cost‑effectiveness of its administration. However, shortcomings identified in an earlier (2005) ANAO performance audit10, relating to the management of potential conflicts of interest and the application of cost‑recovery arrangements, have not been fully addressed and have detracted from ARPANSA’s overall performance in administering the regulatory framework.

13. To support the administration of its licensing responsibilities under the framework, ARPANSA has, since 2005, published a range of guidance materials, forms, and assessment templates that align with the relevant legislative requirements.11 The ANAO’s analysis of a sample of licence applications indicated that licensing decisions were, with one exception, supported by an appropriate level of evidence. There has also been a significant improvement in the average time taken to assess applications for source licences, from 153 days in 2007–08 to 42 days in 2012–13. However, the licence assessment process could be further improved by providing clear advice to applicants on ARPANSA’s expectations relating to supporting information, to avoid repeated ARPANSA requests for additional information and often lengthy delays in the application assessment process.12 There is also scope for ARPANSA to extend its risk‑based regulatory approach to the licence assessment process, to enable staff to focus on the hazard of each source or facility and the applicant’s compliance history. Further development of the risk‑based approach would help streamline the licensing process, better target available resources and reduce the regulatory impost on applicants.

14. ARPANSA’s approach to monitoring entities’ compliance with regulatory requirements focuses on regular entity reporting and a periodic schedule of inspections, including unannounced inspections.13 Since 2005, ARPANSA has established procedures for monitoring entities’ compliance with their reporting requirements and assessment of entities’ reports, addressing a shortcoming identified in the ANAO’s earlier audit. Further, between 2008–09 and 2012–13, ARPANSA has mostly met its target of 60 planned inspections per year, and the inspections observed by the ANAO largely followed the documented procedures.

15. To address identified non‑compliance, ARPANSA applies a graded approach, which requires entities to report on corrective action undertaken to remediate breaches, and which may trigger additional inspections in the event of identified non‑compliance. However, aspects of the inspection process, particularly unannounced inspections, are largely driven by geographical convenience rather than risk14, and ARPANSA’s risk‑based approach should also be extended to this aspect of its operations.

16. The ANAO observed in 2005 that ARPANSA’s legislated functions, including its role as both a regulator and a licence holder15, create scope for potential conflicts of interest. While ARPANSA continues to exercise functions which may give rise to such conflicts16, only recently, in 2011, did it formally enter into an arrangement for an outside body to undertake independent inspections of its compliance with its own licence conditions. To date however, only one external inspection has been conducted, and an ongoing program of independent reviews would strengthen confidence in ARPANSA’s arrangements for managing potential conflicts of interest and its compliance with licence conditions. ARPANSA has also released a Chief Executive Instruction (CEI) to provide guidance to staff in managing their self‑regulatory role and when providing scientific and advisory services, including those on a fee‑for‑service basis, to regulated agencies—aspects of ARPANSA’s work which can also give rise to conflicts of interest. However, there is no evidence that the CEI is actively implemented or monitored, nor is any training provided for staff on conflicts of interest issues. ARPANSA should strengthen its approach to managing conflicts of interest, assisted by its Audit and Risk Committee.

17. While ARPANSA’s cost‑recovery arrangements have evolved since 2005, several aspects remain inconsistent with better practice. Since 2008–09 ARPANSA has under‑recovered its regulatory expenses by almost $4 million, and has used revenues from its scientific and advisory services functions to cross‑subsidise its regulatory function. Further, ARPANSA’s calculations indicate that there is cross‑subsidisation occurring between licence holders.17 While intra‑government charging is excluded from the Australian Government Cost Recovery Guidelines (the Guidelines)18, ARPANSA has informed stakeholders that it has adopted the Guidelines as a basis for implementing a better practice approach to cost recovery, which includes the avoidance of cross‑subsidisation between business activities.19 In the course of the audit, ARPANSA initiated a review of its cost recovery arrangements to better align them with the Guidelines.

18. The ANAO’s 2005 performance audit of ARPANSA’s regulatory function20 made 19 recommendations. Between 2005 and 2007 there was limited work to implement the recommendations, with significant delays experienced. Despite several assessments of progress in recent years and regular monitoring by ARPANSA management and the Audit and Risk Committee, in the course of this audit the ANAO assessed that only 11 recommendations have been adequately implemented, with six partially implemented. By not implementing agreed recommendations in a timely manner, ARPANSA has foregone opportunities to enhance its performance.21

19. The ANAO has made four recommendations aimed at strengthening ARPANSA’s management of potential conflicts of interest and expanding the risk‑based approach to regulation.

Key findings by chapter

Governance and Risk Management (Chapter 2)

20. Sound corporate governance arrangements enable a regulator to meet its legislative and regulatory responsibilities, and be accountable for its decisions and actions.22 Such arrangements should include documented plans that articulate a regulator’s objectives and functions for the immediate and longer term. These plans should be supported by policies and procedures on key issues, including managing conflicts of interest. Regulators also require a mature approach to assessing and managing risks, articulated through a risk management framework.

21. ARPANSA has established a corporate planning framework for its regulatory functions that is aligned with its statutory role, is internally consistent, and cascades downwards from high level strategic documentation through to branch‑level planning. ARPANSA has also established an information management and quality system to support its regulatory functions, which includes the two yearly review and update of policy and procedural documents, with many of these being publicly available on the ARPANSA website.23

22. The roles and responsibilities established under the ARPANS Act create scope for several potential conflicts of interest to arise.24 In 2005, the ANAO recommended that ARPANSA improve its management of conflict of interest issues. Since then, ARPANSA has put in place a Chief Executive Instruction (CEI) covering ARPANSA’s self‑regulatory role and providing scientific and advisory services, including those on a fee‑for‑service basis, to regulated agencies, as guidance to staff. However, a gap in the CEI is the absence of guidance on managing personal conflicts, that is, where an individual’s personal interests and relationships could be seen to unduly influence their responsibilities as an ARPANSA officer and an employee under the Public Service Act. Additionally, there is no training provided for staff on conflicts of interest issues, and no evidence that the policy is actively implemented or monitored. There remains scope for ARPANSA to strengthen its approach to managing conflicts of interest, including through staff training and the preparation of annual declarations—assisted by its Audit and Risk Committee.

23. ARPANSA’s corporate and regulatory risk management framework exhibits several positive features, including the recent introduction of explicit statements about its risk appetite and tolerance for risk across its various areas of corporate and regulatory responsibilities. There are, however, several areas where improvements could be made, including more clearly defining strategic and operational risks and suitable treatment strategies to address these. ARPANSA could usefully consider reviewing its definition of these risks to provide greater clarity around their rating, priority, and treatment.

24. To support its staff in consistently applying a risk‑based approach to their regulatory roles, ARPANSA has developed specific guidance for assessing risks associated with each licence. This guidance, which serves as a useful framework for the initial risk ranking of a licence, could be further enhanced by expanding this guidance material to include advice on how particular risk rankings should inform ARPANSA’s ongoing management of each licence, including the use of discretionary regulatory activities (such as frequency of inspections, reporting, and unannounced inspections).

Licence Application Process (Chapter 3)

25. Under the ARPANS Act, entities require a licence from ARPANSA to possess and operate facilities and sources that emit radiation. A well designed licence application process will feature clear guidance material for staff and applicants that facilitates the preparation, submission and assessment of applications in a timely manner, and at reasonable cost to the regulator and applicant.

26. ARPANSA has published a series of guides on the licence application process to assist entities in preparing and submitting their applications, and for its regulatory staff involved in the assessment process. ARPANSA’s published guidance, as well as its application forms and internal assessment templates, generally align with and address the statutory requirements set out in ARPANSA’s legislation.25 Existing guidance materials could usefully be supplemented to include clear advice on the extent and depth of supporting information required as part of the application process. At present, information for applicants is limited to advice that documentation provided in support of an application should be commensurate with the hazard and risk of the application. Entities consulted by the ANAO and the sample of applications examined by the ANAO identified that, as a consequence of applicants’ uncertainty over information requirements, ARPANSA is frequently required to make repeated requests for additional information, an iterative approach often resulting in lengthy delays in the application process.

27. Between July 2007 and June 2013, ARPANSA received 81 licence applications, 60 of which were for new or modified source licences. The ANAO’s analysis showed there have been significant improvements over this period in the average time taken to assess source licence applications, from 153 days in 2007–08 to 42 days in 2012–13; while the time taken to assess facility applications has remained relatively stable.26 The ANAO’s analysis of 10 licence applications showed that ARPANSA’s conclusions on the applications were, except in one case, supported by evidence, although the extent of analysis undertaken in the report to the delegate varied and there was not always a clear correlation with the apparent risk of the application. Further, there were: several cases of unclear or inconsistent communication between the applicant and ARPANSA; frequent information requests from ARPANSA; and application fees routinely did not accompany the applications analysed by the ANAO—contrary to section 34 of the ARPANS Act.

28. To more effectively use ARPANSA’s limited resources and create a more efficient and streamlined application assessment process, ARPANSA should adopt a risk‑based approach to its internal application assessment process. Such an approach could leverage off the existing risk ranking framework, taking into account applicants’ compliance histories, as well as the hazard of the source or facility.

Monitoring and Enforcement (Chapter 4)

29. A key function of a regulator is the ongoing monitoring of regulated entities’ compliance with regulatory requirements and, where required, enforcement in cases of non‑compliance. A risk‑based monitoring framework can help regulators provide assurance to the public and stakeholders that regulated entities are meeting their compliance obligations, while more efficiently targeting the regulator’s available resources.

30. Regular reporting by entities, combined with a varied program of inspections27 are key regulatory tools used by ARPANSA to verify licence holders’ compliance with their licence conditions. ARPANSA has developed policies and procedures to support its inspection staff as well as published guidance for licence holders on reporting and inspection requirements. In 2012–13 ARPANSA conducted 59 inspections, with ANSTO being the primary agency targeted for inspections as it operates more than half the licenced facilities regulated by ARPANSA.

31. While ARPANSA’s policy documentation establishes the expectation that its inspection program should be risk‑based, the ANAO’s examination of the inspection program indicated that ARPANSA could not always demonstrate a clear linkage between the risk associated with the licence and the frequency and scheduling of inspections. As discussed earlier (see paragraph 24), the absence of guidance on how to apply the risk ranking of licences in the context of the ongoing licence management and monitoring regime, may have contributed to the lack of alignment between assessed risk and the inspection approach adopted by ARPANSA. In addition, the ANAO found that the use of unannounced inspections, which are intended to give ARPANSA a better understanding of the day‑to‑day operations of licence holders and to follow up on any incidents or intelligence, is driven mainly by geographical convenience rather than risk. To enhance its risk‑based approach to regulation, ARPANSA should establish a more direct link between risk and the inspection program.

32. A challenging area, acknowledged by ARPANSA, is identifying unlicenced activities. These are sources or facilities that ARPANSA is unaware of, but which are nonetheless required to be regulated under the ARPANS Act and Regulations. ARPANSA’s regulatory officers are expected to be familiar with licensees and able to identify any additional sources that require licensing. ARPANSA also relies heavily on entities self‑reporting the acquisition of relevant equipment. There is scope for ARPANSA to periodically approach regulated entities to reinforce their obligations under the ARPANS Act, as a means of proactively seeking to identify unlicenced sources.28

33. ARPANSA continues to be both a regulator and a licence holder.29 The ANAO recommended in 2005 that ARPANSA take action to better manage this conflict of interest. Only recently, in 2011, did ARPANSA formally enter into an arrangement for Queensland Health to undertake independent inspections of ARPANSA’s compliance with its own licence conditions.30 To date, only one external inspection has been conducted, in May 2012, which made 33 recommendations relating to a source licence held by ARPANSA’s Medical Radiation Services Branch. A program of independent reviews of ARPANSA licences and the facilities they cover, as well as regulatory decisions regarding its own licence applications and its own Regulation 51 requests, would strengthen confidence in ARPANSA’s compliance with licensing conditions and its arrangements for managing its conflict of interest as both a regulator and licence holder.

Regulatory Cost and Cost Recovery (Chapter 5)

34. When establishing ARPANSA in 1998, the Australian Government’s intention was that ‘Commonwealth entities regulated under the ARPANS Bill should bear the costs of such regulation, ensuring that there will be no additional burden on the Commonwealth or the public purse’.31 The ARPANS Act authorises ARPANSA to recover costs associated with assessing licence applications and the annual management of each licence, with the fee or charge dependent upon the type and number of items covered in the licence. Annual management charges constitute ARPANSA’s main source of revenue from regulatory activities, which totalled $4.43 million in 2012–13, the majority of which is collected from ANSTO and Defence as the predominant holders of sources and facilities.

35. While intra‑government charging is excluded from the Australian Government Cost Recovery Guidelines32, ARPANSA has informed stakeholders that it has adopted these Guidelines as a basis for implementing a good practice approach. There are, however, several areas where ARPANSA could adopt improvements to better align its cost recovery arrangements with the Guidelines.

36. The ANAO’s analysis of ARPANSA’s cost recovery datasets indicates that since 2008–09 ARPANSA has under‑recovered its regulatory expenses by almost $4 million.33 Additionally, revenues from its scientific and advisory services functions have been used to cross‑subsidise its regulatory function, and ARPANSA’s own calculations indicate that there is also cross‑subsidisation occurring within the population of licence holders.34

37. Accurate cost recovery relies on regularly capturing and monitoring both direct and indirect staff effort and other costs for regulatory activities. The Guidelines set out key principles including that agencies undertake cost recovery on an activity basis where possible35, so as to avoid cross‑subsidisation between activities within an agency. However, ARPANSA does not have a method or system for regularly tracking the cost of its regulatory activities, including at an activity level.

38. The ANAO conducted a small sample test of annual charge payments, which identified an inconsistent approach by ARPANSA to pro‑rating36 and a pattern of late payment of annual charge fees by agencies. These practices are inconsistent with the requirements of the Regulations, which require all annual charges to be paid before 31 July of that financial year, or, in the case of a new licence, 30 days after the licence is issued.

39. ARPANSA has made efforts in recent years to progressively recover more of its identified regulatory costs and minimise the estimated level of cross‑subsidisation across regulated entities. In the course of the audit, ARPANSA advised the ANAO that it had initiated a further review of its cost recovery model.

Reporting and Relationships (Chapter 6)

40. Well‑defined performance indicators enable a regulator to measure, monitor and report on regulatory performance, as well as providing measures to assess the extent to which the regulator is meeting expectations. Over time, ARPANSA’s public reporting has reduced to only one Key Performance Indicator (KPI)—the number of safety incidents involving Commonwealth users—as a basis for measuring the effectiveness of the regulatory function. While this measure is appropriate, it does not reflect the breadth of ARPANSA’s regulatory work, and ARPANSA could consider developing additional indicators, particularly to reflect its recent focus on promoting holistic safety and a safety culture amongst licensees.37

41. The quality of the relationship between a regulator and its stakeholders can affect regulatory outcomes, and establishing open and responsive relationships can increase the level of voluntary compliance by reinforcing confidence and transparency in the regulatory framework. ARPANSA has established a range of channels to enable stakeholder feedback and communication. ARPANSA’s own surveys and stakeholder feedback provided to the ANAO during the course of this audit, indicate that stakeholders reported a general level of satisfaction with ARPANSA’s regulatory performance; with differing opinions on scope for improvement, particularly in terms of timeliness and consistency. Overall, stakeholders reported that ARPANSA was approachable and professional, and commented on the generally positive working relationship between ARPANSA and its regulated entities.

42. The ANAO’s 2005 performance audit of ARPANSA’s regulatory function38 made 19 recommendations. Between 2005 and 2007, work on implementing the recommendations was limited, leading to significant delays in ARPANSA progressing to an adequate stage of implementation. Notwithstanding regular monitoring by ARPANSA management and its Audit and Risk Committee, as well as several assessments of progress in implementing the recommendations, the ANAO assessed that only 11 of the 19 recommendations from this earlier audit had been adequately implemented, with six assessed as partially implemented.

Summary of agency response

43. The Australian Radiation Protection and Nuclear Safety Agency’s (ARPANSA) letter in response to the proposed audit is reproduced at Appendix 1. ARPANSA’s response to the proposed audit report is set out below:

ARPANSA agrees with the recommendations made by ANAO in this performance audit and will continue to: advance the internal framework for managing declaration of interests and the related procedures and processes; advance the internal procedures for licence application assessment to support and promote a risk‑informed approach; strengthen the existing risk‑informed compliance monitoring program and strategic targeting of inspections; and improve the frequency of our rigorous self‑inspection program and explore options for a broader base of suitable organisations for independent review of ARPANSA’s own licences.

ARPANSA also agrees with the ANAO’s view that it should further improve its alignment with the Australian Government Cost Recovery Guidelines. ARPANSA will continue to advance its cost recovery model in a staged approach in consultation with licence holders. This will be supported by ARPANSA’s current review of the regulatory delivery model to reduce regulatory burden.

44. The ANAO provided the Australian Nuclear Science and Technology Organisation (ANSTO), the Department of Defence (Defence), and the Department of Health with extracts of those parts of the report which were relevant to them. The letters from ANSTO and Defence are also included at Appendix 1. The Department of Health did not comment on the report.

Recommendations

Recommendation No.1

Paragraph 2.23

To maintain stakeholder confidence in the independence and impartiality of its regulatory operations and decisions, the ANAO recommends that ARPANSA:

(a) periodically conducts training for regulatory staff on identifying and managing conflicts of interest, including personal conflicts; and

(b) obtains written declarations from regulatory staff at annual intervals indicating whether they have any potential, perceived or actual conflicts.

ARPANSA response:Agreed.

Recommendation No.2

Paragraph 3.48

To streamline its applications process and more effectively use its limited resources, the ANAO recommends that ARPANSA implements a documented risk‑based approach to assessing licence applications, having regard to the:

(a) hazard of the source or facility to workers, the public and environment; and

(b) the applicant’s compliance maturity.

ARPANSA response:Agreed.

Recommendation No.3

Paragraph 4.30

To strengthen its risk‑based approach to monitoring compliance, the ANAO recommends that ARPANSA more directly links its management of licences to risk rankings, focusing particularly on:

(a) clearly aligning its planned inspection program to risk rankings of licences; and

(b) strategic targeting of unannounced inspections.

ARPANSA response:Agreed.

Recommendation No.4

Paragraph 4.65

To improve transparency and support continuing public confidence in the regulation of licences held by ARPANSA, the ANAO recommends that:

(a) inspections of its own licences are conducted periodically using inspectors from a state or territory radiation regulator; and

(b) provisions are made for independent review of other regulatory decisions relating to ARPANSA’s own licences, particularly licence applications and Regulation 51 approvals.

ARPANSA response:Agreed.

Footnotes

[1] At the time of this audit, the ARPANS Act was under review by the Department of Health in its role as portfolio agency with responsibility for health protection policy and ARPANSA’s governance.

[2] State and territory governments have also established regulators for related activities by private entities and government organisations within their jurisdiction.

[3] Controlled material emits ionising radiation spontaneously, and a controlled apparatus is an apparatus that is capable of producing ionising or harmful non‑ionising radiation. An example of a controlled material is Technetium‑99, which is commonly used in nuclear medicine, and an example of a controlled apparatus is an X‑ray machine.

[4] ARPANSA also regulates one private company—Silex Systems Ltd, which operates within a prescribed Commonwealth place.

[5] Defence informed the ANAO that the majority of their sources are used as safety devices for illumination of sights and gauges, with approximately 50 per cent being tritium‑based beta lights, and a further 25 per cent being lasers. Defence also noted that less than five per cent of their sources are in the form of solid radioactive material or x‑ray apparatus.

[6] Australia’s only operational nuclear reactor at Lucas Heights in Sydney is used for research purposes and to produce radioisotopes, but not for generation of electricity. In global terms, as a research reactor, its size of 20 megawatts is typical. There are about 240 research reactors operating in 56 countries, ranging up to 100 megawatts. While power reactors are much larger and can generate up to 3000 megawatts, research reactors are typically more complex in design, operation and risk. For more information see http://www.world‑nuclear.org/info/Non‑Power‑Nuclear‑Applications/Radioisotopes /Research‑Reactors/ [accessed 12 March 2014].

[7] IAEA, Fundamental Safety Principles, Safety Fundamentals No. SF‑1, Vienna, 2006.

[8] See ANAO Audit Report No.30 2004–05 Regulation of Commonwealth Radiation and Nuclear Activities.

[9] The three largest licence holders are ANSTO (which operates the Open Pool Australian Lightwater (OPAL) reactor at Lucas Heights), CSIRO, and Defence.

[10] See paragraph 6.

[11] The ARPANS Act and Regulations are discussed in paragraph 2.

[12] Conversely, there is an obligation on Australian government entities to submit applications of appropriate quality and to respond to reasonable follow‑up requests in a timely way.

[13] Unannounced inspections can be a useful regulatory tool to gain insight into an entity’s daily operations and compliance with licensing requirements.

[14] For example, an entity may be subject to an unannounced inspection due to its proximity to another entity that has a scheduled inspection rather than being linked to its risk ranking.

[15] See ANAO Audit Report No.30 2004–05 Regulation of Commonwealth Radiation and Nuclear Activities. In particular, ARPANSA: requires licences under the legislation to conduct some of its non‑regulatory functions (a self‑regulatory role); provides services on a fee‑for‑service basis to regulated entities; and provides subject matter expert advice to regulated entities. Officers may also have established relationships with regulated entities or particular personnel (an issue faced by many regulators).

[16] ARPANSA currently holds one facility licence (which covers three facilities) and two source licences in order to provide certain services on a fee‑for‑service basis, and for scientific and advisory services provided by other parts of the organisation.

[17] In effect, the higher fees and charges of some licence holders are being used to reduce the fees and charges of other licence holders.

[18] Department of Finance and Administration, Australian Cost Recovery Guidelines, Financial Management Guidance No. 4, July 2005.

[19] The Guidelines advise that: ‘any charges should reflect the costs of providing the product or service’ (see p.2) and ‘as far as possible, the agency should identify costs against particular activities to minimise the need to distribute costs arbitrarily among activities’ (see p. 40).

[20] See paragraph 6.

[21] The risks of not implementing or inadequately implementing audit recommendations were recently discussed in ANAO Audit Report No.25 2012–13 Defence’s Implementation of Audit Recommendations, p.13 and 15; and ANAO Audit Report No.53 2012–13 Agencies’ Implementation of Performance Audit Recommendations.

[22] ANAO Better Practice Guide—Administering Regulation, March 2007, Canberra, p. 7.

[23] The majority of the regulatory policy documents reviewed by the ANAO during the course of the audit had been updated within the last 18 months.

[24] See footnotes 15 and 16.

[25] One guidance document—Regulatory Assessment Principles for Controlled Facilities—has not been updated since 2001 and does not directly align with statutory requirements and the information required for a facility application. ARPANSA anticipates a review of this document will be completed by December 2015.

[26] In 2012–13 it was 144 days for a facility licence. These figures include ‘pause’ time, that is, following a request for additional information, assessment of the application cannot proceed until this information is supplied by the applicant.

[27] Inspections can be planned, incident‑based or unannounced.

[28] Another potential source of unlicensed dealings are legacy sites—sites that existed prior to the introduction of the ARPANS Act in 1998. Regulating legacy sites can be problematic as they may contain mixed sources of contamination and responsibility for managing the site may therefore be split between different authorities. For example, the Little Forest legacy site near Lucas Heights contains both radiological and non‑radiological material such as heavy chemicals. Additionally, ARPANSA informed the ANAO that the ARPANS Act—currently under review—does not contain explicit provisions for licensing a legacy site.

[29] See footnote 15.

[30] ARPANSA held initial discussions with the Victorian Department of Human Services in 2007 about the conduct of such inspections, but an agreement was not entered into.

[31] House of Representatives Hansard, 11 November 1998, p. 90.

[32] Department of Finance and Administration, Australian Cost Recovery Guidelines, Financial Management Guidance No. 4, July 2005.

[33] ARPANSA has not updated its methodology for calculating its regulatory cost inputs since 2009.

[34] In effect, the higher fees and charges of some licence holders are being used to reduce the fees and charges of other licence holders.

[35] The Guidelines advise that: ‘any charges should reflect the costs of providing the product or service’, p2, and ‘as far as possible, the agency should identify costs against particular activities to minimise the need to distribute costs arbitrarily among activities’, p. 40.

[36] Under the Regulations, there are provisions for the pro‑rating of the annual licence charge if the licence has not been held for a full financial year.

[37] In 2011 ARPANSA established a team to assess and improve the safety culture of licence holders, including developing an assessment tool to conduct safety culture reviews.

[38] See paragraph 6.