Background

The Members of Parliament (Staff) Act 1984 (MOP(S) Act) is the legislative basis for the employment by Parliamentarians of staff to work in their electorate and parliamentary offices. Staff are engaged on behalf of the Commonwealth, but are selected by, and are responsible to, their employing Parliamentarian.

The employment powers conferred on Parliamentarians by the MOP(S) Act are not exercisable otherwise than in accordance with arrangements and conditions determined by the Prime Minister. The Prime Minister has authorised the Special Minister of State(SMOS) to exercise some of his powers under the Act.

Under the SMOS's direction, Ministerial and Parliamentary Services (M&PS) in the Department of Finance and Administration(Finance) is responsible for administering most staff employed under the MOP(S) Act. Finance issues various handbooks and circulars that provide Parliamentarians with information and related administrative procedures and requirements regarding their entitlements, including staff arrangements.

As at 1 June 2003, the approved establishment for MOP(S) Act staff positions administered by Finance was 1175.2. This consisted of 686 electorate staff, 488.7 personal staff allocated to Government and non-Government office holders and other nominated Parliamentarians as determined by the Prime Minister, and one part-time consultant to the Prime Minister.

The employment terms and conditions of MOP(S) Act staff are established by Ministerial determination in accordance with the Prime Minister's authority and under the agreement making provisions of the Workplace Relations Act 1996 (WR Act). Relevant agreements are the Certified Agreement (CA) periodically negotiated with MOP(S) Act staff (and its accompanying guidelines), Australian Workplace Agreements (AWAs) negotiated with individual staff members, and written agreements with Ministerial consultants. AWAs are primarily offered to Government and nonGovernment personal staff occupying positions equivalent to the Senior Executive Service (SES) in the Australian Public Service (APS). Those staff are not covered by the CA.¹

The most significant employment-related costs incurred in relation to MOP(S) Act staff in the period examined by the Australian National Audit Office (ANAO) were salary and related payments, travel costs and allowances, and training costs. In 2001–02, direct payments made by Finance to, or on behalf of, MOP(S) Act staff amounted to $101.4 million. Costs, including corporate overheads, incurred by Finance in 2001–02 in administering the entitlements and services provided to both Parliamentarians and their staff totalled $26.9 million.

An important element of Finance's administrative framework is the provision of individual Monthly Management Reports (MMR) to all Parliamentarians and former Prime Ministers. These reports are provided to allow Parliamentarians to monitor their entitlements expenditure throughout the financial year. Parliamentarians are also provided with an End of Financial Year Management Report (EOFYMR), which sets out a summary of the expenditure reported in the MMRs, and any additional transactions relating to entitlements use in that financial year for which payment was made in the following year up to the date the report is compiled. The reports include details of individual transactions and year-to-date totals for most costs incurred by, or in relation to, the Parliamentarian's MOP(S) Act staff.

Finance necessarily relies heavily upon self-assessment by Parliamentarians for assurance that Commonwealth resources are only used within the terms of the relevant entitlement and/or employment condition. Parliamentarians are requested to provide that assurance by certifying various payments claims submitted by their MOP(S) Act staff. Those certifications may also be provided by a person the Parliamentarian has authorised, in writing, to exercise the relevant MOP(S) Act power.² During the period examined by ANAO, Parliamentarians were also requested to provide an annual certification that their entitlements expenditure, as reported in the management reports provided to them by Finance, was within the specific terms of the relevant entitlements.

In December 2000, the then SMOS accepted a recommendation by Finance that this be replaced by monthly certification of the MMRs. In April 2003, Finance advised ANAO that development of a suitable format for monthly certification had been a protracted process. A final format approved by the SMOS in April 2003 was introduced from August 2003.

Audit scope

On 2 November 2000, the Senate agreed to a resolution that the Auditor-General be requested to review all expenditures and entitlements accruing to Parliamentarians and Ministers in 1999– 2000. The resolution requested that the Auditor-General consider a number of specific matters, and report by 30 June 2001.³ In the course of that audit, examination of issues relating to Parliamentarians' staff was deferred in order to give the Auditor-General a reasonable chance of reporting reasonably close to the Senate's requested reporting timeframe. ANAO Audit Report No.5 2001–02, Parliamentarians' Entitlements: 1999–2000, was tabled in the Parliament in August 2001. A proposed audit of the administration by Finance of the entitlements of staff engaged under the MOP(S) Act was included in the ANAO Audit Work Program for 2001–02.

The objectives of this performance audit were to:

• review the effectiveness of the internal control structures in Finance concerning the administration of entitlements for MOP(S) Act staff;
• review the effectiveness and efficiency of the procurement and support services Finance provides in relation to MOP(S) Act staff; and
• identify principles of sound administrative practices to facilitate improved administrative arrangements for the future.

The audit covered Finance's administration of payments and services to MOP(S) Act staff during the period 1998–99 to 2001–02. The audit also included consideration of the extent to which relevant recommendations made in ANAO Audit Report No.5 2001–02 had been implemented, and the implications that may have had for the effective administration of MOP(S) Act staff. The administration by the Parliamentary Departments and the Department of the Prime Minister and Cabinet (PM&C) of certain MOP(S Act staff was excluded from the audit scope. Sub-section 15(c) of the Auditor-General Act 1997 precludes an audit of persons who are engaged under the MOP(S) Act. Accordingly, the audit scope also did not include examination of the responsibilities of MOP(S)Act staff.

Key Findings

Administration of services (Chapter 2)

The most significant financial limits applying to payments to, or on behalf of, Parliamentarians' electorate office staff are the annual budgets applying to expenditure on overtime (including Electorate Staff Allowance (ESA) payments), travel and relief staff. The personal staff, and one nominated electorate staff member, of Ministers and other office holders are not subject to a travel budget, but may only be paid Travel Allowance for a maximum of 120 overnight stays in Canberra each financial year.

Despite their largely manual nature, the processes undertaken by Finance in the period examined by ANAO to restrict Parliamentarians' expenditure on overtime/ESA and relief staff payments to the relevant limits were reasonably effective. The Department's processes were less effective on the few occasions when individual staff members approached or reached the 120-night cap in Canberra. ANAO considers there would be merit in Finance examining its processes in order to ensure the Department takes all reasonable steps to prevent costs in excess of entitlement from being incurred.

Where Parliamentarians do exceed the various electorate office expenditure budgets, the approach taken has been to obtain approval from the SMOS to offset the amount of the overspend against the Parliamentarian's relevant budget for the subsequent year. This approach has the potential to limit the effectiveness of the budgets as an equitable restriction on the staffrelated expenditure of Parliamentarians in a given year, and does not encourage Parliamentarians to manage their expenditure within the limits advised to them.

In June 2002, 43.9 per cent of Ministerial staff (215) did not have a current security clearance. By October 2003, there had been an improvement in this area, with the number of outstanding security clearances having declined to 18 per cent of Ministerial staf (88), of whom 50 were in progress with the security vetting agency, on long-term leave or having existing clearances updated. ANAO considers that Finance should implement adequate procedures to ensure the currency of security clearances for relevant MOP(S) Act staff is regularly monitored and reviewed.

Authorisations and certifications (Chapter 3)

The certifications requested of Parliamentarians, or other authorised persons, are policy requirements set out in entitlements handbooks and claim forms distributed by Finance. They are not requirements laid down in the relevant legislation. Given the reliance placed upon them as a basis for the payment of public money, it is important that the authorising and certification processes undertaken are rigorous, timely and reliable.

Before relying on certifications provided by persons other than the relevant Parliamentarian, Finance should ensure that sufficient, reliable information has been obtained as to the authority of that person. ANAO examined the authorising documentation held by Finance in respect of a sample of 70 persons. Deficiencies of varying consequence were identified in the documentation held in respect of over half of those persons.

This included two cases in which Finance proceeded with payment of staff travel claims despite the Department not holding written authorities from the relevant Parliamentarians for the persons who had certified the claims. ANAO considers that, in such cases, better practice would be for Finance to make reasonable inquiries of the relevant Parliamentarian in order to verify that the person was duly authorised to exercise the relevant power before proceeding with the payment.

The introduction from July 2001 of an annual review of authorised persons for each Parliamentarian's office was an improvement in Finance's capacity to ensure its records are up to date.⁴ ANAO considers that it would also be beneficial for Finance to expand the review to include a stocktake of the consistency and completeness of the authorising documentation held by the Department in respect of each relevant person. Where necessary, additional or clarifying information could then be requested from the relevant Parliamentarian. In November 2003, Finance advised ANAO that the Department agreed that an expansion of the annual review of authorisations may be beneficial, and intended to expand the next review as recommended by ANAO.

ANAO noted 25 instances where the nominated date of effect of authorisation was back-dated from the date of the written authority. Consequently, there was a risk that those persons were not duly authorised to exercise MOP(S) Act powers on behalf of the relevant Parliamentarian for at least some part of the time for which they were purportedly authorised. Where back-dating of authorisations is sought, it would be appropriate for Finance to undertake reasonable inquiries to determine whether the person had exercised the relevant powers prior to the written authority being provided. Where that is the case, certification by the Parliamentarian or another person who was appropriately authorised at the time of the transactions involved should be obtained. In August 2003, Finance advised ANAO that, as part of the 2003–04 internal review of authorisations, the Department now adopts this approach.

For a range of entitlements and payments, transaction-based certifications are not sought. This includes expenditure for MOP(S Act staff salary and related allowances, Comcar use, and travel where no Travel Allowance or Private Vehicle Allowance was claimed. Certification that such expenditure was incurred within the terms of the relevant entitlement or employment condition is only provided through the management report certifications requested of Parliamentarians.

As at August 2003, 12 current and former Parliamentarians were yet to provide an annual certification for 1999–2000. The timely return by current and former Parliamentarians of the certifications requested of them continues to be an area of concern. As at August 2003, 34 per cent had yet to certify their End of Financial Year Management Report for 2000–01 and 39 per cent had yet to provide a certification for 2001–02.

Control framework (Chapter 4)

The Financial Management and Accountability Act 1997 (FMA Act) provides the central legal framework for the proper use and management of public money. Legal advice provided to Finance in August 2002 was that, with very limited exceptions, there are no provisions of the FMA Act framework which are directly relevant to MOP(S) Act staff accessing entitlements, or to the processing of those payments by Finance. Nevertheless, Finance officials are still under an obligation under the Public Service Act 1999 (PS Act) to act with care and diligence. Finance's legal advice was that, when making payments in connection with MOP(S) Act staff, this broad obligation gives rise to a duty to take reasonable steps to ensure that any claim is properly payable given the terms of the relevant employment condition and the circumstances of the claimant.

Finance has recently sought to improve its procedures for identifying MOP(S) Act staff claims that may be outside of entitlement. However, ANAO noted various aspects of the control framework that could be further improved in order to provide greater assurance that all payments are made within the terms of the relevant employment condition.

In April 2003, Finance advised ANAO that, following enhancements to the information system used to process entitlements payments (the Parliamentary Systems Suite (PSS)), more focus could be applied to entitlement checking. However, the process for checking MOP(S) Act staff payment claims remains largely manual and resource intensive. This is particularly the case in relation to staff travel.

In September and October 2002, M&PS undertook the first post-payment review of air travel payments for MOP(S) Act staff. The review examined 92 air fare payments for travel taken in 2001–02 that had been identified as possibly outside of entitlement when the fares were being processed. It resulted in the issuing of 49 debit notes totalling $10 742 to recover the cost of travel outside of entitlement. ANAO considers that M&PS should continue to undertake periodic reviews of MOP(S) Act staff payments. There would also be merit in expanding the scope of payments and transactions reviewed, and preparing a formal report of review findings. ANAO also considers that there is scope to improve the regular, risk-based audit coverage of payments to MOP(S) Act staff.

Comparative analysis techniques can assist in identifying instances of unusually high usage or other anomalies that suggest further investigation is warranted. However, Finance does not currently employ a systematic approach to this issue. Analysis by ANAO highlighted that crosschecking between mutually exclusive payment categories would be of particular value in identifying ineligible claims by MOP(S) Act staff. Examples examined by ANAO were travel undertaken by Parliamentarians' spouses who are also engaged as electorate staff members under the MOP(S) Act, and claims for overtime while travelling on official business. In both cases, ANAO identified payments that appeared to be outside of entitlement (see paragraphs 4.17 to 4.26 of the full report). In August 2003, Finance advised that, since the review conducted in late 2002, travel by a spouse who is also employed as a staff member has been checked. Finance further advised that the Department is looking at undertaking random post-payment crosschecking of future overtime and travel claims as an ongoing process.

In the course of the 2001 ANAO audit of Parliamentarians' entitlements, the recovery of debts owed by current and former Parliamentarians and their staff came under increased focus within Finance. In September 2001, Finance's Financial Procedures Guide was amended to include a specific section on recovery of debts by M&PS. These detailed procedures separately identify the steps to be taken when pursuing the recovery of outstanding debts from each of M&PS' identified client groups, including current, ceasing and former MOP(S) Act employees.

Since then, there has been an identifiable improvement in the level of outstanding debt. In particular, the implementation of M&PS specific debt recovery procedures appears to have been effective in minimising the extent of debt owed by current MOP(S) Act employees. However, longterm debt owed by former staff has proven more difficult to address. A number of debts have been written off or waived. Since November 2002, identifiable invoices have been raised in respect of all MOP(S) Act staff debts. This is a significant improvement in this aspect of Finance's administrative framework, which should allow for a more coordinated and timely approach to the recovery of debts.

Election periods (Chapter 5)

Federal general elections were held on 3 October 1998 and 10 November 2001. Concerns were expressed by various stakeholders following both elections about the extent of payments made to MOP(S) Act staff in the periods leading up to those elections. Use of MOP(S) Act staff for party political business is not within entitlement. Staff may undertake activities in support of their employing Parliamentarian's re-election, but not in the election or re-election of others. This is based on the longstanding convention that electorate business is regarded as including activities in support of a Senator or Member's own re-election and, consequently, entitlements provided for electorate business may be used for that purpose.

Overtime payments made in the two pay periods immediately prior to and following the 1998 general election totalled some $804 000. Both periods registered significant increases over the average overtime payments for a pay period in 1998–99:197 per cent and 231 per cent respectively.⁵ Changes made in 1999 to the arrangements for remunerating staff for work undertaken outside normal hours restricted the capacity for Parliamentarians to have staff undertake significant additional paid overtime during election periods. Claims for overtime worked in the month prior to the 2001 general election totalled about $592 000. While this was more than twice the monthly average for that year, it was substantially less than the overtime incurred in relation to the 1998 election period. In all circumstances, however, paid overtime may only be undertaken for eligible purposes. In this respect, Finance is reliant upon the certifications provided by the employing Parliamentarian, or another authorised person.

The cost of personal staff travel for October 2001 was considerably higher than that incurred during any other month in the four- year period examined by ANAO. Personal staff Travel Allowance payments for October 2001 were 310 per cent, or $707 138, higher than the moving monthly average at that time. This was an amount similar in magnitude to the total Travel Allowance paid to staff of Parliamentarians from the three major political parties for travel to Melbourne during the 2001 election period, where each of the three major political parties had located their party campaign headquarters.

Finance advised ANAO in July 2003 that, in accordance with normal practice, the Department ensured that payments of Travel Allowance were appropriately authorised. In August 2003, Finance further advised ANAO that the Department: ‘has no basis for checking purpose of travel beyond relying on appropriately rendered certifications.'

Overall conclusions

The control framework applying to the administration of employment-related payments to, and on behalf of, MOP(S) Act staff was improved by Finance over the four-year period examined by ANAO. Finance also implemented, or took under consideration, additional improvements in order to address matters raised by ANAO over the course of the audit, or identified by the Department in the course of compiling information requested by ANAO.

In recent years, Finance has taken steps directed at improving the Department's capacity to rely upon transaction certifications presented to it. Monthly certification of management reports should also improve the reliability and timeliness of that process as a control on the expenditure of public money. However, this will not be the case where Parliamentarians do not provide the requested certifications, or do not provide them in a timely manner.

There is no legal requirement for Parliamentarians to provide those certifications. The absence of any certification from a Parliamentarian in respect to his or her use of a number of entitlements represents a significant gap in the accountability and control framework. ANAO suggests that Finance continue to explore ways of obtaining a higher response rate to certification requirements.

ANAO recognises that Finance relies to a large extent on individual Parliamentarians' selfmanagement of their entitlements use, as reported to them in the management reports. Nevertheless, an increased focus on analysis of those reports by Finance could also assist the Department in discharging its obligation to investigate excessive or otherwise anomalous payments, and would also assist in identifying other possible entitlements breaches.

The risk of MOP(S) Act staff being used for duties relating to party political business increases in the periods leading up to, and during, general elections and by-elections. However, there is not yet an adequate shared understanding and consensus among all relevant stakeholders as to the appropriate use of MOP(S) Act staff, and Parliamentarians' entitlements in general, during election periods. ANAO considers that, as an extension of the entitlements advice already provided by Finance, it would be of assistance to Parliamentarians for the entitlements handbooks issued by the Department to be revised to include guidance on the use of Commonwealth resources by MOP(S) Act staff during an election period.

ANAO analysis showed a significant increase in total travel expenditure by MOP(S) Act staff during both the 1998 and 2001 general elections. Those increases related primarily to travel by personal staff, including those employed in the Government Members' Secretariat (GMS) and the Cabinet Policy Unit (CPU).⁶ Where monitored, expenditure increases of the nature observed by ANAO would normally be expected to result in more intensive examination of the basis of the payment of public money. However, no inquiries were undertaken by Finance to examine the additional expenditure or, more broadly, the pattern of expenditure during the election period, in order to verify that travel was being undertaken for electorate or official business.

ANAO considers that there are a number of administrative improvements which Finance can initiate to strengthen its management of employment-related payments and services for MOP(S) Act staff. ANAO made 13 recommendations in four major areas, relating to: personnel administration; authorisations and certifications; the control framework for payments; and payments and services provided to MOP(S) Act staff during election periods. Finance agreed with 12 of the ANAO recommendations, and agreed with qualification to the other recommendation. Finance's more detailed responses to the recommendations are shown in the body of the full report immediately after each recommendation.

Agency responses

The proposed audit report was issued to Finance and PM&C. PM&C provided factual and contextual comments that were incorporated into the final audit report. Finance's full response to the proposed audit report can be found at Appendix 1 to the audit report. Finance advised ANAO that the following was its summary response:

Finance contributes to an efficiently functioning Parliament by providing a range of support services to parliamentarians and their staff. The nature of parliamentarians' roles as elected representatives places unique demands on them and their staff. The underpinning administrative systems, while meeting proper levels of accountability, should not unnecessarily inhibit parliamentarians from fulfilling their important roles as elected representatives of the Australian people.

Finance has a continuous improvement approach to its administration of parliamentary entitlements and our next steps in that process will have regard to the recommendations contained in this audit report. The audit covered a four-year period and Finance welcomes the recognition in the report that it has made a range of improvements to the administration of entitlements over that period. In addition, a major Business Improvement Program has been initiated this year within the Ministerial and Parliamentary Services Group of the Department. This Program aims to introduce even more robust business systems to reduce manual processing, streamline transaction processing and further enhance services to parliamentarians and their staff by providing more services on-line.

Footnotes

1 Under the Members of Parliament Staff (Commonwealth) Certified Agreement 2003-2006, electorate and personal staff covered by the CA may enter into an AWA.

2 Section 32 of the MOP(S) Act provides that a Parliamentarian may, in writing, authorise another person to exercise, on his or her behalf, a power conferred by Parts III or IV of the Act. A person may be authorised to: engage staff; approve staff leave, travel, overtime, incremental advancements and/or temporary transfer (higher duties); recommend studies assistance; and/or terminate the employment of a staff member. This authority is usually provided to one or more of the Parliamentarian's staff, but may be conferred on other persons.

3 See ANAO Audit Report No.5 2001–02, Parliamentarians' Entitlements: 1999–2000, Canberra, 7 August 2001, p.68 for the full text of the Senate resolution.

4 Finance advised ANAO that the Department had also developed a new database for storing authorisations with scanned signatures, which came into effect on 1 July 2003.

5 Available data for 1998–99 only identified the pay period in which payments were made, rather than the period in which the overtime was actually worked. It is reasonable to expect that the bulk of claims relating to overtime worked in the 1998 election period would have been paid in the pay periods immediately prior to and following the election.

6 Travel expenditure by personal staff in October 2001 was 216 per cent above the average monthly expenditure for 2001–02. September 1998 costs were 202 per cent over average monthly expenditure for 1998–99.