Public Accounts CommitteeParliament of New South Wales

Annual ReportYear ended 30 June

1986

Report Number 27 August 1986

The Public Accounts CommitteeAnnual Report Year Ended 30 June, 1986

The New South Wales Public Accounts Committee iscomposed of five members of the Legislative Assembly ofthe New South Wales Parliament. Its functions are definedin the Public Finance and Audit Act and its role generallyis to serve as a Parliamentary watchdog of governmentexpenditure to ensure that government organisations areimplementing government policy as efficiently andeffectively as possible.

ContentsMembers of the Public AccountsCommittee 2Highlights 4Chairman's Review 5Objectives 6Charter and Procedures 7Report on Performance 1985-86 10Activities 1985-6 15Post-Financial Year Reports andCurrent Projects 19Staffing 20Financial Statements 21APPENDICES1 Functions of the Committee 242 Evolutionof the Public Accounts Committee 253 Chart of Meetings 1985-86 264 Past Reports 295 Matters Considered in

Relation to 1984-85 Auditor-General's Report 32

Members of thePublic Accounts Committee

The members of the Public AccountsCommittee of the Forty-EighthParliament were:

Mr John Murray, M.P., Chairman*John Murray, formerly a teacher, waselected Member for Drummoyne inApril, 1982. An Alderman onDrummoyne Council for three terms,John Murray was Mayor of the Councilfor five years and served four years asCouncillor on Sydney County Council.He was a member of the

· Prostitution Committee and currentlyserves on the ParliamentaryAmenities Committee and the HouseCommittee.

Dr Andrew Refshauge, M.P., Vice-Chairman** Andrew Refshauge waselected as Member for Marrickville inOctober, 1983. He previously practisedas a Medical Practitioner with theAboriginal Medical Service and was apast President of the Doctors' ReformSociety. He is currently a fellow of theSenate of the University of Sydney.

Mr Colin Fisher, M.P.Colin Fisher was elected Member forUpper Hunter in February, 1970. FormerMinister for Local Government (1975)and Minister for Lands and Forests(1976), in opposition Colin Fisher hasserved as National Party Spokesman onLocal Government, on Planning andEnvironment, and on Energy.

Mr Phillip Smiles, M.P.Phillip Smiles was elected Member forMosman in March, 1984. A managementand marketing consultant since 1974,Phillip Smiles has been involved withentrepreneurial business activities since

his teens. Since entering Parliament hehas been actively interested in the areasof small business, emergency services,welfare and financial analysis.

Mr Allan Walsh, M.P.***Allan Walsh was elected Member forMaitland in September, 1981. Followingeight years as a Mirage Fighter pilot withthe R.A.A.F., he was involved inbusiness management. Allan Walsh hasalso taught industrial relations,management and history at technicalcolleges.

The Committee a t present consists ofthree members of the Labor Party, andone member each from the Liberal andNational Parties. The CommitteeMembers cease to hold office when theLegislative Assembly is dissolved, and anew Committee is appointed when a newParliament has commenced.

Ministers of the Crown andParliamentary Secretaries are noteligible for appointment to theCommittee.

* Mr John Aquilina was Chairman of theCommittee until he was appointedMinister forNatural Resources on 5 February, 1986.Mr JohnMurray was elected Chairman on 20February,1986.

** Dr Refshauge was elected Vice-Chairman on 20 February, 1986.

*** Mr Walsh was appointed to theCommittee on 20 February, 1986.

2

Committee Members. From left: Andrew Refshauge (Vice-Chairman), Phillip Smiles,Colin Fisher, John Murray (Chairman), Allan Walsh

3

Highlights of The Year

1985 4 July Report tabled on Macarthur Growth Area

9 July Report tabled on Statutory Funds of the Department ofEnvironment and Planning

29 July Report tabled on Land Commission of NSW

25 September Annual Report 1984-85 tabled1986 20 February Mr John Murray elected Chairman of the Public Accounts

Committee, Dr Andrew Refshauge elected Vice-Chairmanand

Mr Allan Walsh appointed to the Committee

7 March Report tabled on Year-End Spending

7 April Follow-up Report tabled on NSW Public Hospital System

1 May Report tabled on Recommended Changes to the Public

Accounts30 May Report tabled on Proposed Annual Reporting Regulations

for Departments

27 June Follow-up Report tabled on Overtime Payments to CorrectiveServices Offioers

27 June Regulations Accompanying Annual Reports (Department)Act and Public Finance & Audit Act gazetted

Chairman's Review

John Murray, Cha/rman

Three years after the Committee producedits Seventh Report on the reportingrequirements of statutory authorities therehave been massive changes to annualreporting in the public sector:· there is an annual reporting act covering

annual reporting in the hundreds ofNew South Wales statutory authorities;

· there is an annual reporting actcovering annual reporting bygovernment departments;

· there are extensive regulations coveringannual reporting in both statutoryauthorities and governmentdepartments;

· the form and content of annual reportshas greatly improved.

It is on this note that the Committee isproudly able to report a very successful yearfor 1985-86.There are many other examples of theCommittee's success. One such example isthe effect of the Committee's originalinquiry in 1983 into the level of overtime

payments to Corrective Services officers. Inits follow-up report, completed during 1985-86 the Committee found that in the threeyears since the original inquiry, savings onovertime payments amounted to at least$18.9 million, a very significant saving tothe taxpayer.

The effect of the Committee's inquiry intoovertime payments to prison officersunderscores not only the success of theCommittee's work, but also the impact ofheightened public accountability, There isno doubt that public sector efficiencyimprovements are now occurring at anunprecedented pace.During 1985-86 the Committee tabled ninereports. I believe this has been a year ofconsiderable achievement. The Committeehas broken new ground, with inquiries intoyear-end spending and the recently releasedreport on the collection of parking andtraffic fines.

The coming year will see the Committeeconcentrating on specific organisations suchas the Builders Licensing Board, whilst stillcarrying out its traditional watchdog role.The Committee is also exploring thepossibility of a joint inquiry with acounterpart committee of theCommonwealth Parliament. Such aninquiry would again break new ground.

I note that the Committee has received co-operation from all government agencies andofficials in the course of its work during1985-86 and for this I thank all concerned.The Committee's work has again beensustained by its high calibre staff. A numberof secondees from the Auditor-General'sOffice and State Treasury, and outsideadvisors have supplemented the Secretariat.On behalf of the Committee I would like toexpress our appreciation to all staff for theirefficient and highly competent assistanceduring the year.

John Murray, M.P, Chairman

5

Objectives

The Public Accounts Committee has theoverall objective of promoting value formoney in the public sector and greaterpublic accountability to the Parliamentand to the public.

Consistent with this overall objective, thelegislative functions of the Committeeallow it to pursue the following broadobjectives:

· to increase the efficiency andeffectiveness with which governmentpolicy is implemented;

to increase the public sector'sawareness of the need to be efficientand effective, and accountable for itsoperations;

· to increase the awareness andunderstanding of Parliamentariansand members of the public of thefinancial and related operations ofgovernment.

Plans for 1986-87

The Committee's specific objectives forthe 1986-87 year are:

· to complete the inquiry into theoperations of the Builders LicensingBoard;

· to complete the follow-up inquiry intothe Committee's 1982 report on the

level of overtime payments to PoliceOfficers;

· to complete reviews of the StateCancer Counci.I, the Harness RacingAuthority and the Sydney OperaHouse Trust;

· to conduct a follow-up inquiry of the1983 report into the operations of theGrain Sorghum Marketing Board;

· to conduct an inquiry into aspects ofGovernment funding of communitygroups;

· to inquire and report on any matterrelated to the accounts referred to theCommittee by the LegislativeAssembly, a Minister or the Auditor-General;

· to examine the anomalies anddeficiencies highlighted by theAuditor-General in his 1985-86Report;

· to examine payments in 1985-86made in accordance with section 22of the Public Finance and Audit Act1983;

· to hold the Biennial Conference ofPublic Accounts Committees, to beattended by similar Committees inother Australian and overseasparliaments.

6

Charter and Procedures

The Public Accounts Committee is aCommittee of the Legislative Assembly ofthe New South Wales Parliament,established to exercise Parliament's reviewpowers over the efficiency and effectivenessof the public sector.As such the Committee plays a vital role inour democratic system, for just as membersof Parliament, as representatives of thepeople, are responsible to the public, sogovernments and their bureaucracies areresponsible to Parliament.The importance of this role has beenrecognised in recent years as governmentexpenditure has increased, and demands ongovernment for services have grown.Concomitant with these developments hasbeen a growing public concern withinsuring that the taxpayer is receiving valuefor money in relation to the expanded publicsector.

LegislationIn recognition of these trends the N.S.W.Public Accounts Committee, originallyestablished by the Audit Act 1902, receivedadditional powers under the Audit (PublicAccounts Committee) Amendment Act1982. The latter legislation was replaced bythe Public Finance and Audit Act 1983,which came into force on 6 January 1984(Appendix 1).Under the Public Finance and Audit Act1983 the Committee is empowered:· to examine the Public Accounts;· to examine the accounts of Statutory

Authorities;· to examine the Auditor General's

Report and . related documents;· to report to the Legislative Assembly

upon any items in or circumstancesconnected with these accounts, reportsor documents;

· to report to the Assembly on anyalteration the Committee thinksdesirable in the form of the accounts, orin the method of keeping accounts, orthe receipt, expenditure or control ofmoney;

· to inquire into and report to theAssembly on questions relating to theaccounts referred to it by the LegislativeAssembly, a Minister or the Auditor-General;

· to inquire into and report on any over-expenditure by Ministers.

The Committee is precluded by the PublicFinance and Audit Act 1983 from inquiringinto Government policy. However, while theCommittee does not seek to question theadequacy of Government policy, it mustinform itself about the nature ofGovernment policy in order to determinewhether policy is being adequatelyimplemented.The Committee therefore may questionwitnesses on matters relating to theimplementation of Government policy, suchas management decisions made by adepartmental official administering policy.The Committee also considers that anecessary part of its functions is to inquireinto present administrative policies andpractices in addition to past accounts.A brief history of the evolution of the PublicAccounts Committee is contained inAppendix 2.

ProceduresPublic Accounts Committee inquiries mayresult from a reference from a Minister, theAuditor-General or the LegislativeAssembly, or may be initiated by theCommittee itself. Inquiries initiated by theCommittee usually result from mattersraised in the Auditor-General's Report orinformation received from members of thepublic.

Inquiries Arising from a Reference

Specific references from a Minister, theLegislative Assembly or the Auditor-General arean important source of Committee inquiries.In these inquiries, once terms of referenceare established, advertisements are placed inthe press informing the public of the inquiryand seeking submissions from interestedparties.If relevant, letters or questionnaires may bewritten to Government organisations orprivate bodies seeking information orsubmissions.Answers received and submissions tenderedare studied by the Committee. Organisationsand interested parties may then be called togive evidence at a public hearing.The Committee finds inspectionsparticularly useful in getting a first handview of an organisation. During 1984-5some of the inspections carried out by theCommittee were:

Maitland, Parklea and Cessnock gaols;HomebushAbattoir; Police computer facilities,Parramatta;Newcastle, Chariestown, Hornsby andNorthSydney Police Stations; and the BuildersLicensing Board, St Leonards andHornsby offices.Following the collection of all necessaryinformation, a report is drafted and

considered by the Committee in privatemeetings.

Of the twenty-four reports which theCommittee tabled to 30 June, 1986, fourarose from references from a Minister,five from references from the Treasurerand three from references from theAuditor-General. The table followingsummarises the source of Committeeinquiries.

Source of Committee InquiriesReports to 30 June, 1986

Reference fromReport

Noa

ReportAuditorMinister

InitiatedTreasurer General by

P.A.C.123456789

10

1112

13

14151617

18192021

22

23

24

Expenditure Without Parliamentary SanctionOver-expenditure in Health Funding to HospitalsPublic Accountability in Public HospitalsExpenditure without Parliamentary SanctionOvertime Payments to PoliceOvertime Payments to Corrective Services OfficersAccountability of Statutory AuthoritiesGrain Sorghum Marketing BoardMatters examined in relation to Auditor-General'sReport 1981-2Superannuation Liabilities of StatutoryAuthoritiesAnnual Report 1983-4Matters examined in relation to Auditor-General'sReport 1982-3Proposed Regulations to Annual Reports(Statutory Bodies) Act andPublic Finance and Audit ActInvestment Practices in NSW Statutory AuthoritiesPerformance Review PracticesBrief Review of Macarthur Growth AreaBrief Review of Statutory Funds of Departmentof Environment and PlanningBrief Review of Land Commission of NSWAnnual Report 1984-5Report on Year-End SpendingFollow-up Report on Inquiries into NSWPublic Hospital SystemReport on Recommended Changes toPublic AccountsProposed Regulations Accompanying theAnnual Reports (Departments) Act 1985Follow-up Report on Overtime Payments toCorrective Services Officers

**

*

F*

*

.

*

·

*

**

*F

A*

A*

A*

.

A**.

A*

A*A*.

A*

TOTAL 4 5 3 12Matters raised in Auditor General's Report.F -- Follow-up inquiries initiated by the Committee, but original inquiries referred byMinister or Auditor-General

Examination of the Auditor-General's Report

The Committee examines the Auditor-General'sReport for anomalies or deficiencies revealed bythe Auditor-General or noted from the Report byCommittee members.Matters which the Committee considers warrantfurther action are identified. The Chairman thenwrites to the organisations seeking response tothe concerns raised by the Auditor-General orthe Committee. On receiving responses, theCommittee may decide that some mattersrequire no further action or no action at present.

For other matters the Committee may considerthat further evidence and investigation areneeded. In these cases public hearings are held,after which the Committee decides on the formin which it will report the matter to Parliament.In some cases, such as the Committee's inquiriesinto the Land Commission of N.S.W., StatutoryFunds of the Department of Environment &Planning and the Macarthur Growth Area,separate reports may be produced.

The Inquiry Process

TIME OF MEETINGThe Committee is limited to meeting when theLegislative Assembly is not sitting, unlessexpress leave is given by the Assembly to meeton sitting days.

POWER TO CALL WITNESSESWitnesses may be summoned to give evidencebefore the Committee by an order of theCommittee signed by the Chairman. In practice,witnesses are notified by telephone of the time,place and subject matter of the hearing, and thesummons is handed to them before the hearing.

The Committee has thus far had the fullest co-operation of public officials in attending itshearings. It has never yet had to exercise itspowers to compel a witness to attend through theissue of a warrant under the ParliamentaryEvidence Act.

PUBLIC HEARINGSBefore giving evidence, witnesses are required totake an oath or to make an affirmation. TheCommittee has found that taking oral evidenceis often an effective way of reaching a fullunderstanding of issues before it. Not only canthe Committee immediately pursue gaps in

information, inconsistencies ormisunderstandings, but public officials have anopportunity to fully explain their administrationof government policies.

While written submissions are useful, they oftenraise further questions which are best exploredthrough the exchanges possible in hearings. Thetranscripts of evidence are used as a basis forfurther inquiry and provide a useful reference forreport writing.

Through public hearings, which are regularlyattended by members of the media, theCommittee aims to ensure that its activities areas open and public as possible and to encourageparticipation and consultation.In seeking full information from public officials,the Committee is sympathetic to answers whichreveal deficiencies yet also show commitmentand a strategy to overcome problems.Indeed, the Public Finance and Audit Actprovides, that with some exceptions, theCommittee must take all evidence in public. Ifthe Committee, however, considers that evidencerelates to a secret or confidential matter theCommittee may decide to take evidence inprivate.Alternatively, if a witness requests to giveevidence in private, and the Committee agreesthat this evidence relates to a secret orconfidential matter, the request is granted.Secret or confidential evidence usually relates toaspects of those organisations which competewith the private sector on a commercial basis.

Similarly a document may be treated asconfidential. Secret or confidential evidencetaken in private at the request of a witness is notto be disclosed or published without the writtenconsent of the witness. Otherwise, evidencetaken in private can only be disclosed with theauthority of the Committee.The Committee clearly prefers to hold publichearings and only rarely has it been considerednecessary to protect confidentiality by holdingprivate hearings. The Committee may howeverwithhold the private addresses of witnesses frompublished records.

The Committee meets in closed session when itreceives briefings, deliberates or reviews draftreports. A summary of the Committee's meetingsduring 1985-6 is attached Appendix 3.

9

Report on Performance 1 985-86

In its annual report for the year ended 30 June 1985the Committee identified a number of broadobjectives and a number of specific plans or goals for1985-86.

Achievement of Broad ObjectivesThe Committee's overall objective of increasingpublic sector value for money and accountability isexpressed in terms of three subsidiary objectives. TheCommittee is unable to measure all three objectivesin precise quantitative terms, although somequalitative evidence is available. In this regard theCommittee's follow-up inquiries are helpful as theyassess the effectiveness of prior inquiries. TheCommittee also relies on comments by externalparties as an indicator of performance.

Achievement of each of the broad objectives is nowexamined in turn.

To increase the efficiencyand effectivenesswith which government policy is implemented

The Committee believes it has been spectacularlysuccessful in this area. Evidence is provided below.1. In 1982 the Committee received a reference

from the Auditor-General to inquire into, andreport on, the level of overtime payments toCorrective Services Officers. In its follow-upinquiry the Committee found that:"Its investigation of overtime andsubsequent action by the Departmenthave resulted in a minimum saving of$18.9 million in overtime paymentsduring the last three years, during aperiod when the staff: prisoner ratioremained relatively constant."

The effect of the Committee's inquiry isdemonstrated in the graph below:

2. In 1982 the Committee received a referencefrom the Auditor-General to inquire into, andreport on, the level of overtime payments toPolice Officers. During 1985-86 theCommittee commenced a follow-up inquiryto assess the effect of the prior inquiry.

Preliminary figures show that hours ofovertime worked by police decreased from903,000 in 1980-81 (prior to the

Committee'sinquiry) to 680,937 in 1984-85 (after theCommittee's inquiry), a reduction of

222,063hours. The dollar value of this reduction hasnot yet between ascertained.

3. In April 1986 the Committee tabled itsfollow-up report on its 1982 inquiries intothe hospital system.

The Government subsequently launched itsHealth 2000 program which contained manyof the Committee's recommendations. Thebrochure outlining the program containedseven separate references to the Com m

ittee'swork.

4. The editorial in the Sydney Morning Heraldof

11 July, 1985 stated:"The Wran Government has had until

nowan excellent record of financial reform.The resuscitation of the Public AccountsCommittee,... bears testimony to this."

5. Comments made about the N.S.W. PAC atthe Biennial Conference of Public AccountsCommittees in Adelaide in July 1985. TheCommittee was described by delegates as theleading committee in Australia. Somespecific comments on the Chairman's paperincluded:Mr D. Hayward, M.P. (Deputy

Chairman,Victorian EBRC):"First, I would like to congratulate you(Mr Aquilina, Chairman, N.S.W. PAC) onwhat I think is a most excellent andimportant paper..."

The Hon. Mr Justice E. Else-MitchellC.M.

(Chairman, Commonwealth GrantsCommission):"l join with the other speakers andcommend the New South WalesCommittee for the work that it is doing

.··

6. The editorial in the Financial Review of 17th

September, 1985 stated:

"The N.S.W. Public Accounts Committee,widely regarded as one of the moreinnovative and effective in Australia, isconducting an inquiry into follow-upaction on its past reports."

7. The following comment appeared inColumn

8, Sydney Morning Herald of 27thSeptember,

1985:"The annual report of the NSW PublicAccounts Committee, the parliamentarywatchdog on government spending, wastabled in State Parliament this week. TheCommittee aims to ensure thatgovernment money is spent efficiently,and it appears to practise what itpreaches· The committee's budget forthe year ended June 1985 was $273, 000-- but it spent only $258,901."

8. On the John Laws Program on 12th March,1986, Mr George Paciullo, Minister forPolice, commented on the Committee's reportinto Year-End Spending by GovernmentDepartments. He stated:"... the Government put it (the PAC)there for the very purpose of ensuringthat there wasn't any spending forspending's sake and I think it is doing avery valuable job."

9. Commenting on the Committee's report onthe Collection of Parking and Traffic Fineson 2 July, 1986, the Commissioner of theDepartment of Motor Transport writes:"First of all let me say that the draft

reportclearly represents a lot of earnest effortby the Committee and its supportingsecretariat and it will do much towardsclarifying the issues involved withimproving the processes of finecollection. I have no doubt that it will beseen as a significant contribution to and aspringboard for the next assault on thefine collection problem."

10. The editorial in the Australian of 24 July,1986 headed "Parking Fine Follies" came outin support of the Committee'srecommendations in its Parking and TrafficFine Report, commenting:

"There must be a better way. ·. Our hard-stretched police should not have to

11

waste their time on the triviality ofserving warrants for parkingoffenders. There are, no doubt,practical problems with a systemwhereby fine defaulters automaticallylose either their driver's licence orvehicle registration. None the less, theNSW Government should investigatethese and other alternatives as amatter of priority with a view toreforming an inefficient andunproductive system."

To increase public sector’s awareness ofthe need to be efficient and effective, andaccountable for its operations

The Committee's work has enhanced publicsector awareness. This is demonstrated by:

1. Discussion of the role of the P.A.C. andissues of concern to it at public sectorconferences and seminars during 1985-86. For example, the Chairman of theCommittee presented papers to fourseminars and conferences during theyear.

2. The enactment of the Annual Reporting(Government Departments) Act andgazettal of the accompanyingregulations during 1985-86 hasdramatically increased public sectorawareness of the need for greateraccountability. These Governmentinitiatives, strongly supported by theCommittee, arose in part from theCommittee's inquiry into annualreporting by statutory bodies in 1983.

3. Frequent comments about theCommittee's work in the media. It iswell known that these are read bysenior departmental officers. TheGovernment Officers Magazine too hasreported on the Committee's activities.The increased awareness amongstpublic servants is demonstrated by theMagazine's comment in September,1985 which stated:

"Up to 3 years ago the NSW PublicAccounts Committee (PAC) wasvirtually dead and buried. But likeLazarus it somehow got a secondwind. Now it is trying to bring life andefficiency to the PS."

To increase the awareness andunderstanding of Parliamentarians andmembers of the public of the financialand related operations of government.

1. The Public Accounts Committee iswithout question a vehicle for publicdisclosure of the financial affairs ofGovernment and by its nature attractsthe attention of members of Parliamentother than its own members. Forexample, during the current inquiryinto the operations of the BuildersLicensing Board the Committee hasreceived 23 submissions from Membersof Parliament.

2. Typical of the Committee's work inaddressing and exposing new issues forpublic and parliamentary attention wasthe Committee's report on Year-endSpending by Government Departments.Commenting on this report on the JohnTingle Program on 12th March, 1986Ross Gittins, Economics Editor of theSydney Morning Herald said:

"1 think what is significant about thisreport is that it is the first time I knowof where any government body hasactually had a look at this practice,documented it, demonstrated that itdoes go on, named a few of the moreextreme cases and put it on the agendaas something that has got to havesomething done about it. I think that'swhat is significant."

A regulation has since been gazetted bythe Treasurer requiring all departmentsto produce diagramatic representationsof spending by month in their annualreports.

The tables on the following page,extracted from the Committee'sTwentieth Report, illustrate spendingpatterns in two governmentdepartments.

3. A further important vehicle inachieving this objective has been theCommittee's own Annual Report.

Letters were received congratulatingthe Committee on the quality of its1984-85 Annual Report. Commentscontained in the letters included:

12

"The Report of the Committee was veryeasy to read. It is a very good formatthat contains all the information that thereader would require. Well done."(Rod Cavalier, M.P., Minister forEducation)

"1 am writing to congratulate you, yourcolleagues, and the staff of the PublicAccounts Committee on the Committee's1984-85 Annual Report.

The Report is not only excellentlypresented but also indicates a verysignificant workload and effectiveresults.Might I suggest that the Report besubmitted to the Australian Institute ofManagement's Annual Report A wardScheme, as I believe it sets an excellentexample for other Parliamentarycommittees."(Mike Egan, Former Chairman of thePublic Accounts Committee; Senior

Policy Advisor, Office of the Ministerfor Transport, October, 1985)

Ann Robinson, visiting politicalscience expert from the UnitedKingdom, described the PAC'sannual report format and content as"excellent and unprecedented in anyjurisdiction".

4. Copies of reports produced by theCommittee are sent to all Membersof Parliament and circulated tolibraries and other relevantorganisations both in New SouthWales and interstate. In additioncopies of reports are sold tomembers of the public through theNew South Wales GovernmentInformation Service. During 1985-86, 974 copies of Committee reportswere sold through the Service.

13

Achievement of Specific Objectives for1985-86The specific plans for 1985-86 weredesigned to achieve the Committee's broadobjectives which have been discussed above.Most of the plans were carried out. Detailsfollow.· To examine patterns of expenditure

by Government departments andselected statutory authorities todetermine whether there is anyevidence of unjustified year-endspending and make recommendationsin respect of any deficienciesidentified.Inquiry completed, and report (No. 20)tabled March, 1986.

· To inquire into and report on theaccountability of communityorganisations for grants receivedfrom government.

Not carried out.· To complete the inquiry into the

collection of parking and traffic fines.This was completed in July, 1986(Report No. 25).

· To inquire into the incidence of sickleave, workers compensationpayments and overtime indepartments and authorities.

Partially carried out in relation to twodepartments, the Police Departmentand the Department of CorrectiveServices.

· To inquire and report on any matterrelated to the accounts referred tothe Committee by the LegislativeAssembly, a Minister or the Auditor-General.One reference was received during1985-86. This was from the HonourableR. J. Carr, Minister for ConsumerAffairs into the operations of theBuilders Licensing Board. The inquirywas one-third complete as at 30 June,1986.

· To review the reports of theCommittee completed prior to 31December, 1984 so as to --(a) ascertain whether deficiencies

highlighted in these reports havebeen corrected by the relevantgovernment organisations.

(b) ascertain those recommendationsthat have been implemented andrecommendations which have notbeen implemented.

(c) estimate costs savings or extracosts incurred as a result of theexecution of the Committee'srecommendations.

(d) recommend further action whereappropriate.

Follow-up inquiries were completedduring 1985-86 in relation to thefollowing:

-- the 1982 inquiries into the publichospital system (Reports 2 and 3);

-- the 1982 inquiry into the level ofovertime payments to CorrectiveServices officers (Report No. 6).

Follow-up inquiries, commenced butnot completed during 1985-86, were inrelation to:

-- the 1982 inquiry into the level ofovertime payments to policeofficers (Report No. 5);

-- the 1983 inquiry into annualreporting by statutory authorities(Report No. 7) (completed July,1986).

Follow-up inquiries still to becommenced concern:

-- the 1983 inquiry into the operationsof the Grain Sorghum MarketingBoard (Report No. 8)

-- the 1984 inquiry into the unfundedsuperannuation liability of statutoryauthorities (Report No. 1 O)

To examine anomalies anddeficiencies highlighted by theAuditor-General in his 1984-85Report.This examination was carried out. Atotal of 21 matters were raised andthese are summarized in Appendix 5.

· To examine payments in 1984-85made in accordance with section 22 ofthe Public Finance and Audit Act(1983).This was carried out. The Committeedid not consider any of the paymentswere worthy of report to Parliament.

14

Activities 1985-86

Nine reports were tabled in the last financialyear during the forty-eighth Parliament. Briefsummaries of each report follow. The month oftabling is shown in brackets.

Sixteenth Report -- Brief Review of theMacarthur Growth Area (July 1965)."Accounts Committee head calls Macarthur'financial albatross"' Australian FinancialReview, 5 July, 1986.

This Report arose out of the Committee'sexamination of the 1982-83 Report of theAuditor-General, which raised a number ofissues concerning the Macarthur Growth Area(M.G.A.). The Committee was mainlyconcerned that the role of the M.G.A. hadchanged (from a primary focus on planning to aco-ordination and marketing role) and that thischange had not been adequately recognised bythe organisation in its operations.The Committee noted that the total accumulateddeficiency of the M.G.A. at 30 June, 1984 was$91 million.in summary, the Committee recommended that:

· the current role of the M.G.A. be clarified;· clear and realistic objectives be established for

the M.G.A. which reflect its changing, roleand the expected life of the project;

· performance measures be identified and ,targets set for the long and short terms;

· that the organisation and staffing be reviewedwhen new objectives have been established;and

· that the question of repayment of debts to theState and Commonwealth Government beresolved as quickly as possible to enable theM.G.A.'s financial accounts to reflect theactual losses that have been accepted.

Seventeenth Report -- Brief Review of theStatutory Funds of the Department ofEnvironment and Planning (July 1985).The thrust of this short report was the need toreview the operation and relevance of the sevenstatutory funds administered by the Departmentof Environment and Planning (D.E.P.).

The inquiry was commenced as a result of theCommittee's examination of matters raised in

the 1982-83 Auditor-General's Report.

The major conclusions of the Report were:· the purpose and objectives of each of the

Statutory Funds were not clearly stated andperformance measures had not beendeveloped;

· there appeared to be little direct linkbetween the structure of the RegionalDevelopment Funds and the organisationstructure of the Department;

· participation in development activities bythe D.E.P. and the Department of IndustrialDevelopment and Decentralisation requiredclarification; and

· funding strategies for the RegionalDevelopment Funds required review.

Eighteenth Report -- Brief Review of theLand Commission of New South Wales(July 1985)."Landcorn in conflict: profit or welfare"Sydney Morning Herald, 1 August, 1985."Landcom may get help in search for identity"Australian, 3 August, 1985.

This brief report also arose out of theCommittee's examination of comments in the1982-83 Auditor-General's Report on thefinancial operations of the Land Commission ofNew South Wales.In general, the Committee noted the efficiencyof Landcora's operation and projectmanagement' practices, but was hampered in itsassessment of the organisation's effectivenessdue to the lack of clear objectives.

The major concerns of the Committee focusedon the role of Landcorn, its relations with theprivate sector and its overall effectiveness.Underlying conflicts in roles and objectives werealso explored by the Committee.

Nineteenth Report -- Annual Report, YearEnded 30 June 1985 (September 1985).

This was the second annual report of the PublicAccounts Committee. Whilst the Committee isnot

a statutory authority the report followed asclosely as possible the Committee's ownrecommendations on the reporting requirementsof Statutory Authorities.

Twentieth Report -- Report on Year-EndSpending in Government Departments andSelected Authorities (March 1986)."Committee slams giant spend-up by Govt.bodies" Daily Telegraph, March 11,1986."Cash-before-delivery sprees to use upBudget allocations"Sydney Morning Herald, March 11,1986.

The Committee's inquiry into year-end spendingin the public sector arose from concern that thedisproportionate amounts of expendituretraditionally made at the end of each financialyear might result in wasteful expenditure ofgovernment funds.

Following the announcement of the inquiry on 28April, 1985, questionnaires were sent to allgovernment departments and a number ofstatutory authorities, requesting details ofmonthly expenditure for the years 1982/3,1983/4 and 1984/5. In addition public hearingswere held in September and November, 1985involving some 15 departments and authorities.

The Committee established beyond any doubtthat the level of expenditure in the last twomonths of the financial year wasdisproportionately higher than for other periods.

The Report concluded that many of the itemspurchased at year-end were ordered and paid forin great haste, in what appeared to have been anunplanned manner.

The Committee stated: "it strains credulity toview the purchase of large numbers of itemssuch as typewriters, refrigerators, personalcomputers, T.V's and ergonomic furniture inthe last few weeks of the year as anythingother than a spend-up".

The Report also draws attention to the practiceof drawing cheques prior to 30th June andholding such cheques in safes until services hadbeen performed and goods delivered.The Committee concluded "the drawing of

cheques prior to the faithful performance ofservice constitutes a breach of the PublicFinance and Audit Act and that such apractice invites danger, particularly whencheques are actually issued to suppliers inadvance of the performance of service".

The Report finds that the major underlying causeof high year-end spending is the desire byDepartments to spend all funds appropriatedbefore they lapse at the end of the year. TheCommittee concluded that this behaviour ismotivated by three factors:· a desire to preserve the funding base for the

year;· poor management practices including excessive

conservatism and a lack of proper planningand execution of budgets; and

· departments wishing to purchase items whichare not of maximum priority.

Twenty-first Report -- Follow-up Report onInquiries (1982)into the N.S.W. PublicHospital System (April 1986)"Hospitals censured for $9m o verspending';Sydney Morning Herald, 8 April, 1986."Sack inefficient hospital boards, saysCommittee".Australian, 8 April, 1986.

This report was the first follow-up reportproduced by the Committee, following itsadoption of a program of reviewing the outcomeof past inquiries and action taken on pastrecommendations.The Committee's report reviews action taken onits Second Report (1982), into the causes ofexpenditure over-runs in health funding and itsThird Report (1982) into the standard of publicaccountability in public hospitals.The Committee found a number of areas whereaction taken had either been ineffective or tardy.These areas concerned the delineation of hospitalroles, the budgeting process, the provision ofworthwhile incentives to hospitals, hospitalaccountability and hospital performancemeasurement and comparison.The Report is critical of both hospitals and theHealth Department, for the slow progress inreforming health administration in N.S.W.

16

The report noted that in view of the highcost of the public hospital system to thepublic purse, the Committee may in thefuture investigate in detail the financialaffairs of individual hospitals should currentbudget overruns continue.

Many of the Committee's recommendationshavebeen taken up by the Government in itsHealth 2000 program.

Twenty-second Report -- Report onRecommended Changes to the PublicAccounts (May 1986)

This Report arose out of a reference fromthe Treasurer Mr Ken Booth, in terms ofSection 57 of the Public Finance and AuditAct, to examine a review conducted by hisoffice and the Auditor-General's office onthe format of the Public Accounts. (ThePublic Accounts are published each year inPart 1 of the Auditor-General's Report).In essence, the review recommendedchanges to the presentation of the PublicAccounts to reduce duplication, particularlyin Table 4 'Consolidated Fund-Payments inDetail'.

The Committee examined the proposedchanges on the basis of whether they wouldbe detrimental to Parliament's and thepublic's interest in full disclosure andreporting of finances.

The Committee agreed with the main thrustof the Treasury Review's Report. Where theamount of information available to thepublic would be reduced by the proposedchanges, however, the Committee did notsupport change.

The Committee has a longstanding interestin the clarity of the Public Accounts and theReport notes that further steps need to betaken to increase the readability andunderstandability of the Accounts. In thiscontext, the Report made a number ofadditional recommendations including: thatresearch be conducted into users of thePublic Accounts and their informationneeds; the Public Accounts and BudgetPapers be reviewed by Treasury with a viewto increasing ease of understanding; andthat Treasury give consideration to theannual publication of a layman's 'Guide tothe Public Accounts and Budget Papers'.

Twenty-third Report -- Report onproposed regulations accompanying theAnnual Report (Departments) Act 1985and miscellaneous amendmentsconcerning annual reporting (May 1986).This report arose out of a reference from theTreasurer, Mr Ken Booth, requesting theCommittee to examine and report onproposed regulations on the annualreporting of departments. Referral of suchregulations to the Committee is requiredunder the Annual Reports (Departments)Act and the Public Finance and Audit Act.The Committee considered that theregulations would significantly enhance thecause of accountability and public disclosureof information, by extending many of thereporting requirements of statutory bodies todepartments.

The Committee also recommended theinclusion of a number of additionalrecommendations.The regulations were gazetted on 27 June1986, together with amendments to theregulations for statutory bodies.

The Committee was pleased to note that theproposed amendments to the annualreporting requirements of statutory bodiesincluded the Committee's earlier suggestionthat information on performancemeasurement be required. This was omittedfrom the original regulations for statutorybodies.The Committee is also pleased to note theinclusion of the recommendation made inits Report into Year-End Spending (20thReport) that monthly spending for storesand equipment purchases be shown indepartments' annual reports by means of agraph or other pictorial representation.

Twenty-fourth Report -- Follow-upReport onOvertime Payments to CorrectiveServicesOfficers (June 1986)."Prison officers in sick leave scam,Committee claims".Sydney Morning Herald, 1 July, 1986.

In its second follow-up report, theCommittee reviewed action on its SixthReport (1983) and

17

concluded that significant reductions hadbeen made in overtime payments of prisonofficers since 1982-3. In fact the Committeeestimated that minimum savings of $18.9million had been made as a direct result ofthe Committee's investigation andsubsequent positive action by the CorrectiveServices Commission.The Report notes, however, that overtimestill costsnearly $10 million annually and thatovertime in 1985-6 shows an increase overthe previous year.

Sick leave was found to be the major causeofovertime worked by prison officers,accounting for 38% of overtime or 197,250hours in 1984-5.The Committee found that annual sick leavetaken by prison officers had increased froman average of 15 days in 1981-2 to 21 daysin 1985-6.

The Report states:

"The Committee is dismayed to find threeyears after its last report that annualaverage sick leave has increased by sixdays. The Committee must reiterate itsview that this level of sick leave is quiteunjustifiable and represents a seriouswaste of taxpayers' money",

The Committee concluded that sick leavewas seen by many prison officers as part oftheir recreation leave entitlement for theyear, to be used to take time off, rather thansolely for incidences of illness.The Committee recommended that a surveyinto the health of prison officers beundertaken by the Division of OccupationalHealth of the Department of IndustrialRelations, and that the Department ofCorrective Services employ its own medicalofficer. The Report foreshadows the

Committee's intention to review prisonofficer sick leave at a later date.

Other Activities

Review of Matters Raised in theAuditor-General's 1984-5 Report

One of the Committee's objectives for 1985-6 was "to \examine anomalies and deficiencieshighlighted by theAuditor-General in his 1984-5 Report". Inline with this, the Committee undertook a comprehensivereview ofmatters raised by the Auditor-General.

On some matters the Committee held publichearings and discussions with relevantofficers or undertook visits of inspection.On others, letters were sent seekingresponses to the matters raised by theAuditor-General. A summary of mattersreviewed, the Committee's decision andcurrent status is shown in Appendix 5.

Section 22 PaymentsThe Public Finance and Audit Act 1983,Section 22, makes provision for paymentsmade in anticipation of Parliamentaryappropriation. Previously, such paymentswere automatically "unauthorised", but maynow be made by the Treasurer, with theapproval of the Governor, in anticipation ofappropriation by Parliament.The Auditor-General's Report 1984-5 listedpayments made in accordance with Section22.

The Committee examined such payments,amounting to $154 million by sevendepartments and authorities. TheCommittee sought explanation for thisexpenditure and is satisfied with theresponses obtained.

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Post Financial Year Reports and Current Projects

Two reports were tabled in July 1986. A briefsummary of each follows:

Twenty-fifth Report -- Collection ofParking and Traffic Fines (July 1986)This inquiry was initiated in 1984 due toconcern at the high value of outstandingfines. These amounted to $34 million at 30June, 1983. By June 1985 outstanding finestotalled $52 million.

In brief, the Report recommends the use, ona trial basis, of cancellation of driver'slicences for certain categories of finedefaulters and the use of commercialagencies to locate repetitive fine defaulters.The report also concludes that alternativesanctions to the imprisonment of finedefaulters must be found.

Twenty-sixth Report -- Follow-up ReportonAnnual Reporting of StatutoryAuthorities.(July 1986)This follow-up report reviewed action taken

on the Committee's Seventh Report, intoannual reporting of statutory bodies, and

Thirteenth Report, dealing with regulationsto the annual reporting legislation.

The Committee found that the vast majorityof its recommendations had been included inannual reporting legislation. The Committeewas concerned to note, however, that 78% ofstatutory authorities had received at least oneexemption to the legislation and that othershad not conformed to the legislation, but hadnot applied for exemption.

The Committee foreshadowed its intention toinquire at a later date into the content ofannual reports and conformity with thelegislation.

Current Projects

Builders Licensing Board

The Committee received a reference on 28April, 1986 from the then Minister forConsumer Affairs, Mr Bob Carr, to examineand report on the operations of the BuildersLicensing Board. In particular the Ministerasked the Committee to examine:

· the operations of the Board's insurance

funds including the appropriateness ofcurrent premium levels;

· whether client needs are being met in asatisfactory manner;

· the adequacy of the Board's informationand control systems and performancemonitoring practices; and

· any other aspect which impinges on theefficiency or effectiveness of the Board'soperations.

Since announcing its inquiry, the Committeehas received approximately 1 O0submissions from members of the public andinterested organisations, a number of publichearings have been held and inspectionsundertaken. The Committee will be holdingfurther public hearings during Septemberand October and expects to table its reportbefore the end of the year.

Follow-up Inquiry into Police Overtime

The Committee is currently reviewing actiontaken on its Fifth Report (1983) intoovertime payments to police officers. TheFifth report found that overtime paymentsmore than doubled between 1976/7 and1980/1, increasing from $8.7 million to$21.5 million. While the Committee believedthat sick leave was a major contributorycause of overtime, no reliable data wasavailable on this at the time.The Committee's follow-up inquiry has todate involved correspondence with the PoliceDepartment, public hearings and a numberof visits of inspection to police stations. TheCommittee has widened its inquiry to includethe private use of police vehicles.

It is anticipated that the report will bereleased in October, 1986.

Brief Reviews of State Cancer Council,Harness Racing Authority and SydneyOpera House TrustThe Committee is finalising its brief reviewsof these three organisations. The inquiries allarose out of matters raised by the Auditor-General in his 1984-5 Report to Parliament.The Committee initially wrote to theorganisations and subsequently held anumber of public hearings at whichrepresentatives of the bodies gave evidence.

Staffing

During 1985-86 the New South WalesPublic Accounts Committee had a full-time secretariat of four -- a Director,Senior Project Officer and two secretary-word processor operators. On 4 June,1986 the Speaker approved the abolitionof the position of Director, effective from1 August, 1986, and the creation of anew position, Clerk to the PublicAccounts Committee. The Committeeseconds public servants and engagesoutside consultants as necessary for itsinquiries.

Staff at 30 June, 1986Mr Frank Sartor, B.E., B.Com.(Hons).Director

Ms Sue Chappie, B.A.(Hons).Senior Project Officer

Mr Bob Pritchard, AASA, C.P.A.Advisor on secondment from theAuditor-General'sOffice

Mr Max Sullivan, M.EcAdvisor on part-time secondment fromthe Treasury

Mrs Christina AssargiotisSecretary-Word Processor Operator

Miss Heidi-Marie ZywkoSecretary-Word Processor Operator

Staff Changes· Mr Bob Pritchard was seconded

from the Auditor-General's Office toserve with the Committee as anadvisor from Feburary, 1985 until

June, 1986, In July, 1986 Mr JohnLynas joined the Secretariat on part-time secondment from the Auditor-General's Office.

· Mr Ken Dixon was seconded fromthe Treasury from September 1985to February 1986. Mr Dixonprovided valuable assistance with theCommittee's Year-End SpendingInquiry. Mr Max Sullivan joined theSecretariat on a part-time basis inJune 1986.

ConsultantsDuring 1985-86 the Committee hiredconsultants as follows:Follow-Up Report -- N.S.W. PublicHospital System

Mr Jack O'Donnell, LL.B, FASA,CPA, Former Auditor-General of NSW

Inquiry into Builders Licensing Board

Touche Ross Services Pty(Management Consultants)

M.I.R.A.(Insurance Consultants)The Honourable Mr Justice Toose islegal advisor to the Committee.

The Committee has compiled a registerof consultants in appropriate fields tofacilitate the speedy commissioning ofconsultants when an inquiry is initiated.Over one hundred individuals andorganisations are now on theCommittee's register.

2O

Statement of PaymentsFor the Year Ended 30 June, 1 986

PreviousYear 1985-86

$ $107,183 Salaries, Wages, etc. (Secretariat) 115,42612,592 Salaries, etc. (Seconded Staff) (Note 4) 22,7521,796 Workers Compensation Insurance --

36 Meal Allowances (Staff) --5,042 Travelling and Subsistence 11,7781,008 Committee Allowances (Chairman) 7814,646 Advertising and Publicity 4,582

415 Books, Periodicals and Newspapers 8342,231 Postal, Telephone Expenses (Note 3) 4,254

82,057 Fees for Services Rendered (including Consultants) 14,07230,587 Printing 20,8484,458 Stationery 6,3735,406 Office Furniture and Equipment 1,767

- Gas and Electricity (Note 3) 4,4641,444 Minor Expenses not elsewhere included 1,894

$258 901 TOTAL EXPENDITURE $209,825

Statement by Appointed Officers

I state that:(a) The accompanying financial statement has been prepared in

accordance with the provisions of the Public Finance and AuditAct 1983, the Public Finance and Audit (Departments) Regulation1986, and the Treasurer's Directions to the extent that such Act,Regulations and Directions are applicable to the accounts of theCommittee.

(b) The statement presents a true and fair view of the paymentsrelating to the Committee for the year ended 30 June, 1986.

(c) There are not any circumstances which would render anyparticulars included in the above Statement to be misleading orinaccurate.

A.J. Refshauge, M.P., P. Smiles, M.P.,Vice-Chairman. Member

6 August, 1986 6 August, 1986

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Notes to the Statement Auditor-General'sof Payments Certificate

1. The Committee is neither a statutorybody nor a government department. Theapplicable legislation for those bodies:the Public Finance and Audit Act, 1983,the Annual Reports (Statutory Bodies)Act, 1984 and the Annual Reports(Departments) Act, 1985 does not applyto the Committee. It receives anallocation for working expenses from theConsolidated Fund under theappropriation to the LegislativeAssembly.

SBudget Allocation for 1985/86 383,000Funds Expended 209,825Balance of Allocation not expended $173,175;

2. The Statement has been prepared on acash accounting basis except for theaccrual of salaries unpaid at 30 June,1986, $1,159. No other amounts owed toor by the Public Accounts Committee atthe close of the year are included in theStatement. Outstanding financialcommitments as at 30 June, 1986 were$15,568.

3. This statement includes the cost for1985/86 for telephone and gas andelectricity charges allocated on a pro-ratabasis. Other building services utilised bythe Committee, e.g. rent, form a chargeagainst the Legislature's generaloperating expenses and are not includedin the Committee's statement.

4. In the current year, the salaries of anadvisor seconded (part-time) from the

Treasury were not met from theCommittee's funds. The amount ofsubsidy received is estimated at $10,348.

5. Current and deferred liability for staffsuperannuation costs are met by StateTreasury.

6. Members of the Committee receive anallowance for their service on theCommittee. The cost of these allowancesis paid direct by State Treasury and notfrom the Committee's funds. The amountpaid in 1985/86 was $14,307.

7. Workers' compensation insurance($1,796 in 1984/85) was not paid fromCommittee funds in 1985/86. TheCommittee staff were insured by themaster policy covering all staff of theLegislature, the cost being included in theLegislature's general operating expenses.

The accounts of the Public AccountsCommittee for the year ended 30 June,1986 have been audited as required bySection 35(2) of the Public Finance andAudit Act, 1983 and in accordance withSection 34 of that Act.

In my opinion the accompanyingstatement of expenditure, read inconjunction with the notes thereto,exhibits a true and fair view oftransactions for the year then ended.

K. J. Robson, FASA CPAAuditor-General of New South WalesSydney, 19 August, 1986

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Expenditure by Month, 1 985-86

The Committee's Twentieth Report onYear-end Spending recommended thatannual reports provide, in graphicalform, monthly spending for stores andequipment purchases. Thisrecommendation has since beenincorporated in the Annual Report(Departments) Regulations 1986 inClause 4(b).The expenditure by the Committee forstores and equipment purchases isimmaterial in 1985/86 ($1,767). In theinterest of full disclosure the expenditurepattern for all non-salary items and totalexpenditure are included in the graphsbelow.

The non-salary expenditure for the

months of April 1986 and June 1986 washigher than for other months for thefollowing reasons:· In April, printing costs for

Committee reports represented 89%of the total monthly expenditure.These reports covered Committeeinquiries that had commenced earlierin the year.

· In June, travel and advertising costswere incurred in connection with theinquiry into the Builders LicensingBoard which commenced in lateApril 1986.

Appendix 1Functions of the Public Accounts Committee

Section 57 (1) to (3) of the PublicFinance and Audit Act, 1983 reads asfollows:1. The functions of the Committee are --

(a) to examine the Public Accountstransmitted to the LegislativeAssembly by the Auditor-General;

(b) to examine the accounts ofauthorities of

the State, being accountsthat have been --(i) audited by the Auditor-

General or an auditorappointed under section 47(1); or

(ii) laid before the LegislativeAssembly by a Minister ofthe Crown;

(c) to examine the reports of theAuditor-General transmittedwith the Public Accounts or laidbefore the Legislative Assemblywith the accounts of an authorityof the State (including anydocuments annexed or appendedto those reports);

(d) to report to the LegislativeAssembly from time to timeupon any item in, or anycircumstances connected with,those accounts, reports ordocuments which the Committeeconsiders ought to be brought tothe notice of the LegislativeAssembly;

(e) to report to the LegislativeAssembly from time to time anyalteration which the Committeethinks desirable in the form ofthose accounts or in the method

of keeping them or in the methodof receipt, expenditure or controlof money relating to thoseaccounts;

(f) to inquire into, and report to theLegislative Assembly upon, anyquestion in connection with thoseaccounts which is referred to itby the Legislative Assembly, aMinister of the Crown or theAuditor-General; and

(g) to inquire into expenditure by aMinister of the Crown madewithout Parliamentary sanctionor appropriation or otherwisethan in accordance with theprovisions of this Act or anyother Act and report to theLegislative Assembly from timeto time upon any matterconnected with that expenditurewhich the Committee considersought to be brought to the noticeof the Legislative Assembly.

2. The functions of the Committeeextend to an examination of, inquiryinto or report upon a matter ofgovernment policy if and only if thematter has been specifically referredto the Committee under subsection(1)(f) by the Legislative Assembly ora Minister of the Crown.

3. The functions of the Committee donot extend to an examination of,inquiry into or report upon theestimates of any proposedexpenditure by the State or by anauthority of the State.

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Appendix 2Evolution of the Public Accounts Committee

1902 · The New South Wales PublicAccounts Committee wasestablished by the Audit Act1902.

The Committee had two functions:· to inquire into matters relating

to the Public Accountsreferred to it by theLegislative Assembly, aMinister or the Auditor-General.

· to inquire into expenditure byMinisters which had notbeen sanctioned andappropriated by Parliament.

1978 · Report of the Select Committeeof the Legislative Council onPublic Accounts and FinancialAccounts of StatutoryAuthorities chaired by Mr LloydLange M.LC.

1980 · Progress Report of the JointCommittee on Public Accountsand the Financial Accounts ofStatutory Authorities chaired byMr Vince Durick, M.P.

1981 · Final Report of the JointCommittee on Public Accountsand the Financial Accounts ofStatutory Authorities, chaired byMr Laurie Brereton, M.P.

· Reference from the Minister ofHealth to inquire into over-expenditure in public hospitalsand the general accountability ofthe public hospital system. Thiswas the first occasion on whichthe Committee had exercised itsfunction of inquiring into matters

referred to it.

1982 · The Committee held publichearings for the first timeconcerning over-expenditure.

· Audit (Public AccountsCommittee) Amendment Act1982. This Act greatly expandedthe powers of the PublicAccounts Committee. In additionto its former functions, theCommittee was empowered:· to examine the public

accounts;

· to examine the accounts ofstatutory authorities;

· to examine the Auditor-General's Report and relateddocuments;

· to report to the LegislativeAssembly upon any items inor circumstances connectedwith those accounts, reportsor documents;

· to report to the Assembly onany alteration the Committeethinks desirable in the formof the accounts, or in themethod of keeping accounts,or the receipt, expenditure orcontrol of money.

1983 · Audit Act 1902 replaced by thePublic Finance and Audit Act1983.· Permanent secretariat

established.

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Appendix 3Meetings of the Public Accounts Committee --I July, 1985-30 June, 1986

MeetingNo. Date Subject Organisation Witnesses

130 7/8/85 Deliberative meeting131 20/8/85 Deliberative meeting132 9/9/85 Public hearing -- Inquiry into (1) Government Supply Mr David Ingall

year-end spending by Department Mr Mark Leslie Hancockgovernment departments arid Mr Raymond Irvin Jenningsauthorities

(2) New South Wales Police Mr Leo VineburgDepartment Mr Colin Kennedy

Mr Denis Raymond Leys(3) Department of Main Roads Mr Bruce Norman Loder

Mr Peter Guion Lisle WolfeMr Kevin Bradfield Kerr

133 12/9/85 Public Hearing -- Inquiry into (1) Department of Industrial Mr David Murray Eassonyear-end spending in Development and Mr Timothy James Campbellgovernment departments and Decentralisation Rogersauthorities Mr Rodney Ernest Jones

(2) Department of Health Mr Robert Donald McGregorMr John David WoodgerMr Kenneth Reginald Barker

(3) Department of Education Mr Vincent DelanyMr Errol Kevin Williams

(4) Forestry Commission of Mr Roy Alan FreeNew South Wales Mr Vivian William Carlow

134 13/9/85 Public Hearing -- Inquiry into (1) Public Service Board Mr David Charles Mooreyear-end spending by Dr Kevin Patrick Sheridangovernment departments and Mr Bevan John Porterauthorities

(2) Department of Mineral Mr Geffrey RoseResources Mr John Charles Read

Mr Peter Robert Broadfoot(3) Public Works Department Mr William Keith Pilz

Mr Donald John Stanton

135 16/9/85 Public Hearing -- Follow-up (1) Royal Prince Alfred Hospital Emeritus Professor CharlesInquiry into the Public BlackburnHospital System Dr Donald Child

(2) Royal North Shore Hospital Mr Patrick JohnsonDr Stewart SpringMr Joseph PhillipsMr Norman FullMs Margaret Booth

(3) Department of Health Mr Robert Donald McGregorMr John David WoodgerMr Kenneth Reginald BarkerDr Christopher Scarf

136 3/10/85 Deliberative meeting137 17/10/85 Deliberative meeting138 24/10/85 Discussions with Computer Funding Priorities Committee139 31/10/85 Deliberative meeting

26

MeetingNo. Date Subject Organisation Witnesses

140 5/11/85 Public Hearing -- Inquiry into(1)Department of Youth and Mr Heinz Heilpernyear-end spending by Community Services Mr Peter Daffengovernment departments and Mr Geoffrey Hudsonauthorities Mr lan Reddie

Mr Terry Marshal(2) Government Printer Mr Donald West

Mr Alan FisherMr Graham Esler

141 6/11/85 Public Hearing -- Inquiry into(1)Auditor-General's Mr Kevin Fennellyear-end spending in Department Mr John Seedsmangovernment departments andauthorities (2) Treasury Mr Norman Oakes

Mr Donald NicholsMr Robert Scullion

(3) Department of Lands Mr Robert WilsonMr William PriceMs Kristine Thomas

142 8/11/85 Discussions with (1) Department of Finance, Canberra(2) Commonwealth Public Accounts

Committee

143 28/11/85 Deliberative meeting

144 9/1/86 Deliberative meeting145 28/1/86 Visit of inspection Homebush Abattoir146 20/2/86 Deliberative meeting147 27/2/86 Deliberative meeting148 13/3/86 Deliberative meeting149 17/3/86 Public Hearing -- Matters (1) Sydney Opera House Trust Mr David Lloyd Martin

arising from the 1984-85 Mr lan StephensAuditor-General's Report Mr Brian Frederick Springall

(2) Harness Racing Authority Mr Michael George CummingsMr Colin Bryan RobertsonMr Keith Howard Lambeth

(3) State Cancer Council Mr Keith William SteelMs Elaine HenryMr Peter John Shehadie

150 20/3/86 Deliberative meeting151 26/3/86 Deliberative meeting152 4/4/86 Visit of Inspection Maitland and Cessnock Gaols153 10/4/86 Deliberative meeting154 17/4/86 Deliberative meeting155 24/4/86 Deliberative meeting156 28/4/86 Visit of Inspection Parklea Prison157 1/5/86 Deliberative meeting

27

MeetingNo. Date Subject Organisation Witnesses

158 6/5/86 Public Hearing -- Follow-up(1) Corrective Services Mr Vernon DaltonInquiry into Overtime Commission Mr John HortonPayments to Corrective Mr Phillip CrosleyServices Officers Mr Wayne Ruckley

(2) Prison Officers Vocational Mr Patrick ArmstrongBranch, P.S.A. Mr Peter Smith

Mr lan Stannaway159 7/5/86 Public Hearing -- Follow-up(1) Police Department Mr John Avery

Inquiry into Overtime Mr Robert HawthornePayments to Police Officers Mr Mervin Squires

Mr Leo VineburgMr Angus GrahamMr Keith AskewMr Jeffrey Jarrat

(2) Police Association Mr John GreavesMr Lloyd TaylorMr Geoffrey GreenMr Sean MacCormaic

160 8/5/86 Public Hearing -- Inquiry intoBuilders Licensing Board Mr Brian CahillBuilders Licensing Board Mr Barry Wheeler

161 21/5/86 Visit of inspection Hornsby Police Station162 27/5/86 Meeting with Victorian Department of Consumer

Affairs re: BLB Inquiry163 28/5/86 Meeting with (1) Master Builders Association,

Victoria(2) Housing Guarantee Fund Limited,Victoria

164 29/5/86 Meeting with (1) Housing Industry Association,Victoria

(2) Institute of Architects, Victoria

165 4/6/86 Public Hearing -- Inquiry into (1)Master Builders Association Mr Ray RocherBuilders Licensing Board Mr John Twyford

(2) Housing Industry Association Mr lan Frew166 5/6/86 Visit of inspection (1) Central Police Station, Newcastle

(2) Charlestown Police Station167 10/6/86 Deliberative meeting168 24/6/86 Deliberative meeting

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Appendix 4Past Reports

Prior to 30th July, 1985 the Committee tabledfifteen reports. Brief summaries of each ofthese reports follow:

First Report -- Expenditure withoutParliamentary Sanction or Appropriation(November 1981)The Committee investigated over expenditu[eby Ministers in 1980-81. Over-expenditures of$162 million by ten Ministers were examined.The Committee concluded that departmentalexplanations were satisfactory in all cases.

Second Report -- Over-Expenditure inHealth Funding to Hospitals (February 1982)Inquiry into a reference made by the Ministerof Health concerning budget overruns of $15.7million by 37 N.S.W. public hospitals. TheCommittee concluded that the budget overrunwas attributable, not only to the budgetaryprocess, but also to the failure of departmentaland hospital officials to take budgets seriously.Action taken on this report was reviewed bytheCommittee during 1985-86 and theCommittee'sFollow-up Report into the N.S.W. PublicHospitalSystem was tabled in May, 1986.

Third Report -- Public Accountability inPublic and other Subsidised Hospitals (April1982)Inquiry into a reference made by the Ministerfor Health. The Committee made 44recommendations to improve the standard ofaccountability in hospitals.

Action taken on this report was reviewed bytheCommittee during 1985-86 and theCommittee'sFollow-up Report into the N.S.W. PublicHospitalSystem was tabled in May, 1986.

Fourth Report -- Expenditure withoutParliamentary Sanction or Appropriation(September 1982)The Committee investigated over-expenditureby

14 Ministers in 1981-82 amounting to a totalof $294 million.

The Committee concluded that theexplanations provided were satisfactory, withthe qualification that the cost of theGovernment Cleaning Service warrantedfurther investigation.

Fifth Report -- Overtime Payments to Police(November 1982)Inquiry into a reference made by the Auditor-General into overtime payments to policeofficers. By 1980-81 police overtime paymentsamounted to $21.5 million, a rise from $8.7million in 1976-77 despite an increase of 1000police officers.The Committee concluded that a:

'considerable amount of overtime isavoidable and arises from inappropriatepolicy, inefficient fostering and inefficientjob organisation.'

The Committee is currently reviewing actiontaken on this report and expects to table afollow-up report in September 1986.

Sixth Report -- Overtime Payments toCorrective Services Officers (May 1983)

Inquiry into a reference made by the Auditor-General. The report showed that more thanhalf N.S.W. prison officers had receivedovertime payments in excess of 50% of theirnormal salary and 10% received more than100% of their salary in overtime payments.In 1981-82 overtime payments had totalledalmost $14 million, representing over 35,000hours of overtime per fortnight. After thedevelopment of a strategic plan in June 1982,overtime was.reduced in early 1983 toapproximately 22,000 hours per fortnight.The Committee noted that one of the majorcauses of overtime was the high level of sickleave and foreshadowed its interest in sickleave throughout departments.The Committee's Follow-up Report intoOvertime Payments to Corrective ServicesOfficers (Twenty-fourth Report) was tabled inJune 1986.

29

Seventh Report -- Accountability ofStatutory Authorities (June 1983)

Inquiry into a reference made by theTreasurer. The Treasurer's reference was aresponse to widespread concern about theneed for greater information from statutorybodies.

Most of the recommendations in theCommittee'sreport have been incorporated in the newAnnual Reports (Statutory Bodies) Act 1984and thePublic Finance and Audit (Amendment) Act1984.A follow-up report was tabled in July 1986(Twenty-sixth Report).

Eighth Report -- Grain SorghumMarketing Board (November 1983)Inquiry into a reference by the Minister forAgriculture and Fisheries concerning theadministration, efficiency, effectiveness andaccountability of the Grain SorghumMarketing Board.The Minister for Agriculture and Fisheriesreferred this inquiry to the Committee out ofconcern for the $3 million indebtedness ofthe Board. The Committee found that theprecarious financial position of the Boardwas due largely to producers (including allproducer members of the Board) failing todeliver to the Board.

Most of the recommendations by theCommittee, which were designed to apply toall marketing boards in N.S.W. wereembodied in the Marketing of PrimaryProducts Act, 1983.

Ninth Report -- Auditor-General's Report1981-82 (December 1983)The Ninth Report details mattersinvestigated in relation to the Auditor-General's 1981-82 Report. The Committeepublished answers from 28 departments andauthorities in response to the Committee'sconcerns about comments made in theAuditor-General's Report. Whereexplanations were not consideredsatisfactory, the Committee sought furtherinformation through public hearings.

Tenth Report -- SuperannuationLiabilities of Statutory Authorities(August 1984)

Inquiry into a reference made by theTreasurer. The Report found that N.S.W.Statutory Authorities had unfundedsuperannuation liabilities in the order of$2.5 billion. The Committee recommendedfull disclosure and proper recognition ofaccounting expenses in relation tosuperannuation costs and full-funding tomeet deferred superannuationcommitments. The Committee alsorecommended that a consistent policy ofaccounting and reporting forsuperannuation costs should be introduced.The Committee's recommendationsconcerning disclosure of accruedsuperannuation liabilities and expenses havesubsequently been incorporated into thePublic Finance & Audit Act Regulations.

Eleventh Report -- Annual Report, YearEnded 30 June 1984 (August 1984)

This was the Committee's first annualreport. It followed as closely as possible theCommittee's own recommendations on thereporting requirements of StatutoryAuthorities.

Twelfth Report -- Matters Examined inRelation to the 1982-83 Report of theAuditor-General (October 1984).The Committee wrote to 65 organisationsseeking information about matters raised inthe 1982-83 Auditor-General's Report. TheReport summarises the issues raised, theorganisations' responses and the results ofthe Committee's deliberation.

Thirteenth Report -- ProposedRegulationsaccompanying the Annual Report(Statutory Bodies) Act, 1984 and PublicFinance andAudit Act, 1983 (January, 1985).

Pursuant to the requirements of the AnnualReports (Statutory Bodies) Act and thePublic Finance and Audit Act, regulationsto the Acts were forwarded to theCommittee for examination and report.

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The regulations werepublished in the Government Gazette on 14June, 1985. A total of 95% of the Committee'srecommendations were gazetted. I n June1986, an amendment to the regulations wasgazetted which incorporated the Committee'srecommendations concerning performancemeasurement.

Fourteenth Report -- Investment PracticesofNew South Wales Statutory Authorities(June1985).This inquiry arose from concern to ensure thatinvestments of New South Wales statutoryauthorities, worth at least $11 billion, werebeing invested so as to maximise returns to theState. The Committee found that whileinvestment performance was generally good,there were substantial differences in thestrategies, policies and practices of authorities,which, if not corrected, would in the long termresult in poor investment returns. TheCommittee considered that the income earnedby many authorities, particularly the smallerones, could be significantly increased.

Fifteenth Report -- Performance ReviewPractices in Government Departments andAuthorities (June 1985).The Report examined the measures taken byheads of departments and authorities to ensureefficiency, effectiveness and internal control oftheir organisations, as required by the PublicFinance and Audit Act 1983.As a result of its inquiry the Committee madecomprehensive recommendations, including:

· departments and authorities be required topublish their external objectives and keyperformance measures in annual reports;

· establishment of a unit within the PublicService Board to provide training incomprehensive auditing;

· efficiency audit reports and managementstrategy review be tabled in Parliamentwithin 18 months of their presentation tothe Minister along with the organisation'sresponse and programme of action.

Appendix 5Matters Considered in Relation to 1984-85 Auditor-General's Report

PageItem No. Action taken and

Status as atNo. Pt.1 Subject Committee Decision

30.6.861 15 Computer Processing · Meeting held with Computer

IncompleteA-G. commented deficiencies in Funding Priorities CommitteeGovernment computer systems; the · Letter sent to Treasury re themultiplicity of brands and models Budgetary Accounting System (B.A.S.)in use; problems with B.A.S. · Letters sent to departments

implementing B.A.S. System.2 22 Commonwealth Payments · Reviewed by Committee,

CompletedAccounts -- Capital · No further action re 1984-85.A-G states re universities that abalance of $45m has been heldsince 1972-73,

3 30 Commonwealth Funding of · Letters to Youth & Community Services,Completed

Child Care Centres and Department of Housing, seekingA-G notes $3.6m from Commonwealth explanations of current statusfor 1984-5 not drawn down. of monies.Also outstanding balances from 1983-4, · No further action.and S0.69m still held from 1973-4for ethnic child care centres.

4 56 Health Department Covered in follow-up of CompletedFailure of Health Department to inspect Health Report. (Report No.21)50% of hospitals each financial year.

5 97,98 Crown Lands Office · Letters to Treasury and CompletedConcerning collection shortfalls in Crown Lands Office seekingrelation to Closer Settlements. description of financial and other

arrangements re Closer Settlementprograms in the country areas of N.S.W.· No further action.

6 Variations of Statute · Letters written toCompletedVariations of statute were organisations Concerned.reported by the Auditor-General · No further action.in relation to:

· Environmental Planning & Assessment Act 1979· Local Govt Act 1919· Pastures Protection Act 1934· Stamp Duties Act 1920· Totalizator (Off course Betting) Amendment Act, 1982· Transport Act 1930· Weights and Measures Act, 1915

7 16 State Rail Authority · Reviewed by Committee.Completed

Concerning increase in workers · No further action 1984-5.compensation payments from $28.02min 1983-4 to $30.9m in 1984-5.

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PageItem No. Action taken and

Status as atNo. Pt.2 Subject Committee Decision

30.6.868 31 Department of Main Roads · Reviewed by Committee.

CompletedConcerning the losses made · No further action re 1984-85on the Waterfall/Bulli tollway.Shortfall of $2.53m in 1984/5 broughttotal shortfall to $28.5m.

9 35 Maritime Services Board · Letter sent to MaritimeCompleted

Concerning the following Services Board seekingmatters under the jurisdiction of the comments.Maritime Services Board: · No further action.

(i) Port Kembla CoalLoader-- losses;(ii) Walsh Bay Wharves -- subsidisation

of rent Sydney Theatre Company;

(iii) Outstanding debtorsLong delays in issuing accounts.

10 62 State Brickworks · Reviewed by Committee. CompletedAccounting procedures not · No further action re 1984-85.conforming to AAS2 and lossessustained at Homebush yard.

11 63 State Dockyard · Reviewed by Committee. CompletedLoss of $2.7m 1984-5 brought · Deferred for considerationaccumulated deficiency to $17.1 m. with the A.-G.'s 1985-86 Report.

12 87 Water Resources Commission · Letter to Water ResourcesCompleted

Concerning the waiving of payments in Commission seeking update ofirrigation areas. action taken on the Efficiency Audit

carried out at the Commission and onprogress in satisfying outstandingaccounts.

13 G.I.O.117 (i) Concerning the G.I.O.'s · Reviewed by Committee. Completed

third party insurance scheme · No further action 1984-5.

117 (ii) Concerning the Wambo Mining · Reviewed by Committee. CompletedCorporation Pty Ltd -- · Deferred until 1985-86trading loss of $7.94m, 1984 A.-G.'s Report.

154 (iii) Concerning the I.P.C. · Letter to I.P.C. CompletedDust Disease's Outstanding · No further action.Liability Reserve Fund --shortfall of $31.3m in fundsavailable to meet liability.

14 184 Aboriginal Land Councils · Letter sent to Minister. CompletedA.-G. lists difficulties encountered · No further action 1985-6.during 1983-4 audits.

15 278 Sydney Opera House Trust · Letter to Sydney Opera House Trust.IncompleteRe the operation of parking facilities · Public hearing held.at a loss.

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PageItem No. Action taken andStatus as atNo. Pt.2 Subject Committee Decision30.6.8616 293 Great Pyramid Appeal, Royal · Letter to Director

CompletedBotanical Gardens Royal Botanic Gardens.Funds raised apparently well short · No further action.of likely eventual cost of project.

17 306 Harness Racing Authority e Letter to Harness Racing Authority.incomplete

Accumulated deficiency at 30.6.85, · Public hearing held.$450,673.

18 318 Homebush Abattoir Corporation · Field inspection undertaken.Incomplete

Losses sustained.

19 337 Barley Marketing Board · Letter sent to Board. CompletedOperating loss 1984-5. · No further action, 1984-5.

20 398 Health Professionals Registration · Letter sent to Health Department. CompletedBoards · To be reviewed 1986-87.Concerning shortfall in receipts inrelation to various boards and latenessin forwarding financial statements to the A.-G.

21 392 State Cancer Council · Public hearing held. IncompleteA-G noted premises purchased for$400,000, unoccupied from Sept 1984.Mortgage loan to Medical Director.

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