Prime Minister and Cabinet portfolio

The Prime Minister and Cabinet portfolio is responsible for: providing advice and support to the Prime Minister, the Cabinet, Portfolio Ministers and Assistant Ministers on matters that are at the forefront of public policy and government administration; and providing stewardship of the Australian Public Service (APS). The Department of the Prime Minister and Cabinet (PM&C) is the lead entity in the portfolio. It is responsible for supporting the Prime Minister as the head of the Australian Government and the Cabinet and providing advice on major domestic policy and international and national security matters. Further information is available from the department’s website.

In addition to PM&C, there are 19 entities  within the portfolio that are responsible for: Australian Government Aboriginal and Torres Strait Islander policy, programs and service delivery; improving results for Aboriginal and Torres Strait Islander people through enhanced Indigenous economic rights to support economic independence; improved access to education, employment, health, wellbeing and other services, as well as the maintenance of cultural identity; coordination and evaluation of Australia’s foreign intelligence activities; Australian Government employment workplace relations policy to position the APS workforce for the future by improving people management and manage capability and professional development across the APS; support to the Governor-General to perform her official duties; and promoting and improving workplace gender equality in Australian workplaces.

In the 2024–25 Portfolio Budget Statements (PBS) for the Prime Minister and Cabinet portfolio, the aggregated budgeted expenses for 2024–25 total $4.3 billion. The PBS contain budgets for those entities in the general government sector (GGS) that receive appropriations directly or indirectly through annual appropriation Acts.

The level of budgeted departmental  and administered  expenses, and the average staffing level for entities in the GGS within this portfolio are shown in Figure 1. The National Indigenous Australians Agency represents the largest proportion of the portfolio’s expenses, and administered expenses of the portfolio are the most material component, representing 63 per cent of the entire portfolio’s expenses.

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

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

In determining the 2024–25 audit work program, the ANAO considers prior-year audit and other review findings and what these indicate about portfolio risks and areas for improvement. The ANAO also considers emerging risks from new investments or changes in the operating environment.

The ANAO had regard to the final report of the capability review of the Australian Public Service Commission (APSC) that was endorsed by the Department of the Prime Minister and Cabinet in June 2023. The review identified areas for improvement including: the APSC being clear around its purpose and priorities; developing its own workforce planning; providing proactive assurance of workforce policies across the APS; and actively supporting the APS in implementing reform .

The primary risk identified for PM&C is providing effective stewardship of the APS, including coordinating improvements to public sector integrity and capability. The primary risk for the National Indigenous Australians Agency (NIAA) relates to its role in coordinating the Australian Government’s commitment to Closing the Gap.

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

Governance

PM&C and the APSC have a lead role in developing the capacity, capability and integrity of the APS. The first priority of the APS reform agenda is developing an APS that embodies integrity in everything it does . Audits have shown Australian Government entities on occasion falling short of ethical requirements . Priorities two, three and four of the APS reform agenda focus on the capacity and capability of the APS . A risk is PM&C’s and APSC’s ability to provide assurance that APS reforms are being implemented effectively and efficiently in accordance with reform priorities; and to quantify the cost and benefits of the reforms .

In 2023, of public sector entities with more than 100 ongoing staff members, the APSC had the highest attrition rate at 32.9% and PM&C had the third highest rate at 27.7% . High attrition, particularly for critical roles, creates business continuity risks within the APS.

Among PM&C’s roles is enabling a well-functioning Cabinet and providing advice to the Prime Minister, the Cabinet and ministers. As holders of sensitive Cabinet information PM&C needs to ensure it has appropriate arrangements for information management and security.

The portfolio includes 13 entities that have been established to serve the interests of Aboriginal and Torres Strait Islander peoples. Audits have highlighted governance deficiencies in relation to managing risk; establishing fraud control arrangements; managing conflicts of interest; and establishing sufficient transparency and oversight . A risk for the NIAA is identifying its role in supporting the improvement of governance arrangements in Indigenous portfolio agencies.

Service delivery

The NIAA states that it will continue to work across Australian Government agencies to lead and coordinate the National Agreement on Closing the Gap . The Commonwealth Closing the Gap Annual Report 2023 reported that, of 18 outcome targets, three were on track and four were worsening . These results highlight risks for the NIAA in coordinating and assuring the achievement of Closing the Gap targets.

Priority reform 1 of the 2024 Closing the Gap Implementation Plan is ‘formal partnerships and shared decision-making’ . A key risk for the NIAA is demonstrating and facilitating the achievement of genuine partnership with Aboriginal and Torres Strait Islander groups and peoples.

Grants administration

ANAO audits since the NIAA was established in 2019 have raised issues relating to NIAA’s management of Indigenous Advancement Strategy grants including: assurance over provider data; the management of potential provider fraud and non-compliance; calculation and reporting of performance information; and demonstrating value for money and impact . Recent ANAO audits have identified risks with grants management by Australian Government entities, including with regard to measuring outcomes from grants programs .

Policy development

PM&C’s focus in 2024–25 is on supporting the Prime Minister, Cabinet and portfolio ministers to achieve their policy priorities. There are risks associated with ensuring that advice and major policy decisions are supported by sound evidence and analysis, and the views of a diverse range of stakeholders are considered.

The NIAA has policy oversight responsibility for Indigenous agencies in the portfolio. Audits have highlighted risks related to the NIAA’s coordination of Indigenous portfolio entities; administration of intergovernmental agreements; coordination, implementation and monitoring of government policy; and provision of timely, proactive and evidence-based policy advice .

The ANAO’s performance audit activities involve the independent and objective assessment of all or part of an entity’s operations and administrative support systems. Performance audits may involve multiple entities and examine common aspects of administration or the joint administration of a program or service.

During the performance audit process, the ANAO gathers and analyses the evidence necessary to draw a conclusion on the audit objective. Audit conclusions can be grouped into four categories:

• unqualified;
• qualified (largely positive);
• qualified (partly positive); and
• adverse.

In the period between 2019–20 to 2023–24, entities within the Prime Minister and Cabinet  portfolio were included in tabled ANAO performance audits 21 times . The conclusions directed toward entities within this portfolio were as follows:

• two were unqualified;
• eight were qualified (largely positive);
• 11 were qualified (partly positive); and
• none were adverse.

Figure 2 shows the number of audit conclusions for entities within the Prime Minister and Cabinet portfolio that were included in ANAO performance audits between 2019–20 and 2023–24 compared with all audits tabled in this period.

Figure 2: Audit conclusions 2019–20 and 2023–24: entities within the Prime Minister and Cabinet portfolio compared with all audits tabled

Source: ANAO data.

The ANAO’s annual audit work program is intended to deliver a mix of performance audits across seven audit activities: governance; service delivery; grants administration; procurement; policy development; regulation and asset management and sustainment. These activities are intended to cover the scope of activities undertaken by the public sector. Each performance audit considers a primary audit activity. Figure 3 shows audit conclusions by primary audit activity for audits involving entities in the Prime Minister and Cabinet portfolio.

Figure 3: Audit conclusions by activity for audits involving entities within the Prime Minister and Cabinet portfolio, 2019–20 to 2023–24

Source: ANAO data.

Overview

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

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

Note a: Sourced from Public Governance, Performance and Accountability Act 2013 (Flipchart of PGPA Act) Commonwealth entities and companies (Department of Finance) as at 1 March 2024.

Department of the Prime Minister and Cabinet

The Department of the Prime Minister and Cabinet (PM&C) is responsible for providing advice to the Prime Minister, the Cabinet, portfolio ministers, and assistant ministers to improve the lives of all Australians, including through coordination of government activities, effective policy advice and development, and program delivery.

PM&C’s total budgeted assets for 2024–25 are $4.1 billion, with other investments representing 93 per cent, as shown in Figure 4.

Figure 4: Department of the Prime Minister and Cabinet’s total budgeted financial statements by category ($’000)

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

There is one key risk for PM&C’s 2023–24 financial statements that the ANAO has highlighted for specific audit coverage.

• Valuation of administered investments, as PM&C estimates the fair value of a number of corporate Commonwealth entities and companies in the Prime Minister and Cabinet portfolio including Indigenous Business Australia and the Indigenous Land and Sea Corporation.

Indigenous Business Australia

Under its enabling legislation, the Aboriginal and Torres Strait Islander Act 2005, Indigenous Business Australia’s (IBA’s) purposes are to assist and enhance Aboriginal and Torres Strait Islander self-management and economic self-sufficiency, and to advance the commercial and economic interests of Aboriginal and Torres Strait Islander peoples by accumulating and using a substantial capital base for their benefit. IBA has 14 actively trading subsidiaries which are audited by the ANAO.

IBA’s total budgeted assets for 2024–25 are $2.3 billion. Of this, 50 per cent is attributable to trade and other receivables, 32 per cent are attributable to other investments and nine per cent is attributable to investment property, as shown in Figure 5.

Figure 5: Indigenous Business Australia’s budgeted financial statements by category ($’000)

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

There are three keys risk for IBA’s 2023–24 financial statements that the ANAO has highlighted for specific audit coverage.

• The valuation of the loan portfolio, including fair value assessment and amortised cost, which requires the use of judgement and estimates.
• The valuation of expected credit losses relating to the loan portfolio, which requires the use of judgement and estimates.
• The valuation of investment properties, land and buildings, and investments in associate entities, due to the judgements and assumptions involved in these valuations.

National Indigenous Australians Agency

The National Indigenous Australians Agency (NIAA) is responsible for policy oversight in relation to the Indigenous agencies in the Prime Minister and Cabinet portfolio.

The NIAA’s total budgeted expenses for 2024–25 are $2.9 billion, with 69 per cent of these expenses attributable to grants, as shown in Figure 6. Property, plant and equipment contributes to 13 per cent of total budgeted assets.

Figure 6: National Indigenous Australians Agency budgeted financial statements by category ($’000)

Source: ANAO analysis of 2024–25 Portfolio Budget Statements.

There are four key risks for the NIAA’s 2023–24 financial statements that the ANAO has highlighted for specific audit coverage, including two risks that the ANAO considers potential key audit matters (KAMs).

• The NIAA manages approximately $1.5 billion in administered grants expenses each year across geographically dispersed locations, including remote areas, and payments are made through different IT systems operated across a number of government departments. (KAM – Occurrence of grants expenses). Grants expense is forecast to be approximately $2.0 billion for 2024–25.
• The effectiveness of controls, including the compliance framework, over the Community Development Program (CDP) and NIAA’s activities to ensure that payments made have been assessed appropriately in accordance with the underlying agreements. (KAM – accuracy and completeness of CDP payments)
• The NIAA has entered into shared services arrangements with several government departments for: financial transaction processing, including payroll and ICT infrastructure services. The NIAA remains responsible for oversight of the shared services and obtaining appropriate assurance from the service providers.
• The NIAA has substantial holdings of land, buildings, infrastructure and plant and equipment, which are dispersed around Australia and are required to be valued at fair value under the Financial Reporting Rule.