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Report on Ministerial Portfolios May 1993

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Report on Ministerial Portfolios May 1993 Auditor-General's Office REPORT ON MINISTERIAL PORTFOLIOS IVIAY 1993 A u li i t i u ^ in the Public Interest VICTORIA AUDITOR-GENERAL OF VICTORIA REPORT ON MINISTERIAL PORTFOLIOS, MAY 1993 Ordered by the Legislative Assembly to be printed MELBOURNE LV. NORTH GOVERNMENT PRINTER 1993 No. 18 Auditing in the Public Interest AUDIT VICTORIA May 1993 The Honourable the Speaker Legislative Assembly Parliament House Melbourne, Vic. 3002 Sir Under the authority of section 48 of the Audit Act 1958, I transmit my Report on Ministerial Portfolios. The Report also contains a section on the Parliament of Victoria and a follow-up review on the Alfred Hospital. This Report completes the cycle of my auditing activities in relation to the 1991-92 financial year, and reflects ministerial portfolios and responsibilities operative at the end of March 1993. Yours faithfully C.A. BARAGWANATH Auditor-General VICTORIAN AUDITOR-GENERAL'S OFFICE evel 14, 222 Exhibition St, Melbourne Vic. 3000 Telephone: 651 6012 Fax: 651 6050 CONTENTS PARTI EXECUTIVE SUMMARY 1 1.1 Foreword 3 1.2 Executive summary 5 PART 2 PARLIAMENT OF VICTORIA 19 2.1 Parliament of Victoria 21 State Parliament Refreshment Rooms 23 PART 3 AUDIT OF MINISTERIAL PORTFOLIOS 25 3.1 Agriculture 27 Victorian Egg Marketing Board Performance of the egg products division 29 3.2 Arts, Sport and Tourism 33 Department of Arts, Sport and Tourism Management of the Racing Industry Development Funds 36 Victorian Gaming Commission Early revenue results from gaming 44 Totalizator Agency Board Losses, thefts and irregularities 46 Tourism Victoria Irregularities in expenditure by the former Victorian Tourism Commission 47 3.3 Business and Employment 53 Victorian WorkCover Authority Management of authorised agents 55 3.4 Conservation and Natural Resources 63 state Swimming Centre Committee of Management Status of legal proceedings 65 Melbourne Water Corporation Corporatisation of Melbourne Water 67 • Outsourcing of Information Technology Services 68 • Recent significant sewer collapses 84 Braeside Industrial Park Estate 90 • Thefts and losses 92 Rural Water Corporation Formation of the new Corporation 94 Thefts and losses 95 3.5 Education 101 Department of Education Asset management in State schools 103 • Integrated education for children with disabilities 107 • Losses, thefts and other irregularities 108 3.6 Energy and Minerals 117 Energy Authorities Thefts and losses 119 Report on Ministerial Portfolios, May 1993. CONTENTS 3.7 Finance ''21 Department of Finance Management of Government Vehicle Fleet 123 • Management of State Supply Sen/ice 137 3.8 Health and Community Services 1^5 Department of Health and Community Services Schools Dental Health Sen/ice 147 • Management of the Kindergarten Program 166 • Losses, thefts and irregularities 175 3.9 Justice 179 Estate Agents Board Review of the Board's operations 183 State Electoral Office Review of operations 193 Residential Tenancies Fund Financial management of the Residential Tenancies Fund 203 Office of the Chief Commissioner of Police Police fees and charges 214 3.10 Planning and Development 223 Department of Planning and Development Maintenance of rental housing properties 225 • Public rental property vacancy levels 232 • Financial operations of the Home Opportunity Loan Scheme 237 3.11 Premier arnd Cabinet 245 3.12 Transport 249 Public Transport Corporation Update of 1992-93 budget position 253 • Light rail vehicles 255 'Met Ticket equipment 262 • Losses, thefts and irregularities 263 Port of Geelong Authority Review of asset utilisation 264 Port of Melbourne Authority Review of the management of floating plant 274 Roads Corporation Management of road and bridge maintenance 276 3.13 Treasurer 301 Tattersall Sweep Consultation Absence of line of accountability to the Pariiament 303 Transport Accident Commission Continued strengthening of financial position 304 • Major government decisions impacting on the Commission 305 PART 4 ALFRED HOSPITAL FOLLOW-UP REVIEW 311 4.1 Alfred Hospital follow-up review Follow-up review of the 1990 special audit report 316 • Strategic action since the 1990 special audit report 317 • Medical care 318 -Budget position 335 • Inter-hospital comparisons 336 • Under-utilised bed capacity 338 - Property management 339 • Catering 342 INDEX 347 Vi Report on Ministerial Portfolios, May 1993 PART1 Executive Summary Report on Ministerial Portfolios, May 1993, ^ FOREWORD In recent years there has been progress, albeit slow, in introducing measures throughout the public sector designed to ensure that Victoria's communal resources are used in the most economical, efficient and effective manner possible. Over the past decade there have been repeated references in Reports of Auditors-General to inadequacies in management Information systems, basic accounting records and internal control systems. There has been a prompt response to those audit recommendations where the potential for significant resource savings has been identified. However, many of the outcomes referred to in this present Report may not have arisen if government agencies had responded more positively and effectively in the past to audit representations, particularly those relating to inadequacies in information and control systems. Clearly, it is the responsibility of an organisation's management to establish an appropriate internal control framework and to implement a monitoring system to ensure that the framework continues to provide the required checks and balances. From my experience, it would appear that management needs stimulus or encouragement to be more pro-active in establishing and monitoring key controls rather than merely reacting when control deficiencies produce adverse consequences of the type detailed in this Report. A legislative requirement for public sector management to report publicly on the internal control framework operating within their organisations would provide the necessary stimulus and lead to a significant improvement in the quality of such controls. I believe that the discipline of reporting would not only improve public sector resource management, stewardship and accountability, but would ultimately lessen the incidence of critical audit comment. I am sure that Parliament would prefer a situation to be reached where, in future, I could report that an adequate internal control framework was in existence in all government agencies, that management was closely monitoring the effectiveness of the framework, and that as a consequence there had been a significant improvement in resource management in the public sector. Report on Ministerial Portfolios, May 1993. CIO EXECUTIVE SUMMARY 1.2.1 Key findings arising from the audit reviews are highlighted at the beginning of each individual section of this Report. Major findings are summarised below. 1.2.2 With the election of a new administration in October 1992, I have decided to temporarily suspend the practice of including a status report on matters raised in previous years. I have advised the current administration of my intention to resume this practice next year. j- AGRICULTURE Page 27 • Following over 2 years of operating losses by the Victorian Egg Marketing Board's products division, measures taken by the Board to improve its performance are steadily taking effect. Paras 3.1.2 to 3.1.13 ARTS, SPORT AND TOURISM Page 33 • Initiatives have been taken by the Racecourses Licences Board (Racing Division) to address the reduction in avaitalDle development funds for racing following a levelling out of growth in totalizator commission since 1989-90. Paras 3.2.26 to 3.2.28 • Prompt action is necessary to establish a satisfactory accountability framework for the Cranbourne training complex. Paras 3.2.36 to 3.2.42 • After only 7 months of operations, electronic gaming machines have turned over $1.2 billion and contributed more than $45 million to the Consolidated Fund. Paras 3.2.47 to 3.2.56 BUSINESS AND EMPLOYMENT Page 53 The processes established by the former Accident Compensation Commission to review the performance of its authorised agents in managing WorkCare (and now WorkCover) claims were not effective in assessing whether the subjective assessments and decisions made by agents were soundly based. Paras 3.3.8 to 3.3.15 Report on Ministerial Portfolios, May 1993. EXECUTIVE SUMMARY CONSERVATION AND NATURAL RESOURCES Page 63 • Faced in 1990 with an urgent need to substantially upgrade its information technology capability, Melbourne Water took the initiative and entered into an outsourcing arrangement with its IT executives under a management buy-out. Paras 3.4.33 to 3.4.39 • While Melbourne Water has achieved major benefits to date in terms of better quality and more efficient IT services, an absence of competitive forces and shortcomings in cost management have necessitated corrective action. Paras 3.4.58 to 3.4.83 • Other public bodies contemplating or already pursuing placement of IT services with the private sector can derive benefit from Melbourne Water's outsourcing experiences. Paras 3.4.92 to 3.4.98 • Three significant sewer collapses in suburban streets of Melbourne resulted in outlays of around $13 million by Melbourne Water and caused major temporary pollution to the Maribyrnong River and bayside beaches. Paras 3.4.99 to 3.4.113 • The delay and subsequent breakdown in negotiations on the Braeside Park joint venture project has precluded early disposal by Melbourne Water of 122 hectares of surplus land. Paras 3.4.123 to 3.4.129 J" EDUCATION Page 101 • A large proportion of asset registers in schools and administrative centres, controlling assets with a total value in excess of $200 million, were found to be inadequate. Contributing factors included the level of information system support provided by the Department of Education and a lack of commitment by those responsible for maintaining asset registers in accordance with departmental directives. Paras 3.5.9 to 3.5.13 • Internal review of integrated education for children with disabilities concurs with audit findings concerning the overall management of the Integration Program. The Department of Education is taking action to improve the management of the Program. Paras 3.5.33 to 3.5.37 Report on Ministerial Portfolios, May 1993.
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