Key budget repair measures not being implemented ahead of 2022 Budget: Auditor General

by | May 9, 2022 | News, NT Politics | 0 comments

The Gunner Government has not properly implemented many key budget repair measures it claimed it has and has no effective way of measuring government savings or whether it can ever get back to a sustainable financial position, a scathing Auditor General’s report has found.

Treasurer and Chief Minister Michael Gunner will release the 2022 Budget on Tuesday, but Auditor General Julie Crisp’s report, which was tabled in Parliament in late March, has cast doubt over any claims that the Gunner Government is finding internal financial efficiencies after pledging to cut spending in late 2018, after its financial crisis was first revealed.

Ms Crisp found that the government has failed to assess whether its targeted budget savings “have been achieved or are likely to be achieved” and that there was no system in place to determine if savings had been “achieved economically, efficiently and effectively at a whole of government level”.

Ms Crisp’s audit of the actions taken by the government in relation to the 2019 Langoulant Budget Repair Report and the subsequent Root and Branch review of departmental spending relies on Treasury’s information provided last June, after the 2021 budget, and found many of the recommendations to improve the financial position of the Territory were listed by the government as having been completed when they were in fact not completed.

Those failures to address key elements of budget repair had nothing to do with emergency spending during the COVID-19 pandemic. Incidentally, Ms Crisp found the government’s internal “implementation strategy” review had been delayed in 2020 due to the pandemic, but had not been revisited to assess whether its goal to “reduce expenditure by around $11.2 billion over 10 years” is being achieved.

According to Ms Crisp’s audit report, the government did not implement proper assessment processes to determine the effectiveness of its ultimate goal of returning the budget to surplus.

“Such assessment would involve determining whether the NTG budget had returned to a sustainable position over the medium term or the extent to which implementation to date has achieved the outcome of returning the NTG budget to a sustainable position,” she wrote.

“In my opinion, additional systems and processes are required to enable the Agency (Treasury) to assess whether the NTG’s objectives, as they pertain to the Final (Budget Repair) Report, are being achieved…”

She recommended that Treasury start properly assessing the work undertaken to repair the financial position of the Territory, which would include developing “financial modelling to demonstrate the milestones that would need to be met to return the budget to surplus by 2028-29”.

Ms Crisp found that the government had listed key recommendations as having been implemented last June when they were not.

That included a failure by the government to provide any evidence to demonstrate how its cap on full-time equivalent positions over three years would “achieve the intended result”.

The cap was set at 21,395 at September 2019, but continued to increase to 22,228 by December 2020 – an increase of 681 FTE employees from 2019 and 791 more employees than March 2020.

Ms Crisp wrote that in February 2021, the staffing caps “were replaced with labour expense caps”.

“The processes to implement this recommendation were ongoing at the time of the audit. The reports demonstrate continued growth in FTE since the Final Report,” she wrote.

Executive-level contracts were down slightly by 26, since the December 2019 cap figure of 524, however, seven of 32 government entities exceeded the executive cap.

“At the time of this audit, no action had been taken in relation to NTG entities that exceeded the ECO cap as the Chief Executive Code of Conduct only came into effect from 1 July 2021,” Ms Crisp wrote.

The Auditor General also found that the public servant pay freeze and measures to prohibit back pay were not fully implemented, despite the government claiming it had completed the recommendations.

“At the date of writing this report, the arrangements in the 2021 Enterprise Agreement do not align with the recommendation,” she wrote.

“Notwithstanding that the budgeted savings have been factored into agencies’ budgets, the ability to realise the identified saving may be impaired. Agency representatives advised that, if the budgeted savings are not realised through negotiations, agencies will have to deliver other savings to ensure they remain within the total expenditure budgets.

“The Final (Budget Repair) Report identified other risks associated with the Northern Territory Public Sector (NTPS) wage policy. No further review was performed on these risks to determine how they might be mitigated or eliminated.”

Bonus payments had also been paid out, Ms Crisp found, despite the April 2019 pay freeze and claims they would not be paid.

The Gunner Government also claimed it had completed a “rolling program of organisational reviews”, implemented a whole of government strategic workforce board and that it had worked with the Commonwealth to improve remote service delivery co-ordination – all of which the Auditor General found had not been achieved.

“As a result it is unclear as to what action has been taken specifically or differently from before to improve remote service delivery coordination,” she wrote.

“The Agency’s June 2021 Quarterly Report status for this recommendation is ‘complete’ which is not consistent with the actual status.”

Hiring two investment commissioners ‘not consistent with recommendations’: Auditor General

When it came to implementing budget repair recommendations for overall NT Government regulatory reforms, the government failed to provide evidence that could demonstrate it had achieved the recommendation, telling the Auditor General that responsibility for those measures had been taken in under the Territory Economic Reconstruction Committee (TERC).

“There was no documentation that disclosed the extent to which the above recommendations have been or will be addressed by the work undertaken in response to the TERC implementation,” she wrote.

While the Langoulant report recommended developing a single-point entry to attract private investment, the Gunner Government opted instead to go with the TERC’s later recommendation to appoint a Territory Investment Commissioner and a Major Projects Commissioner, a move the Auditor General questioned the efficiency of.

Ms Crisp determined that while establishing an Office of Investment Attraction was consistent with a recommendation, “the appointment of two commissioners and support staff in two separate agencies does not appear consistent with the recommendation from the (Budget Repair Report) or the TERC report”.

The government also undertook a “beige tape review” – to examine bureaucratic decision-making processes – but the findings had not been addressed at the time of the most recent audit and seemingly abandoned despite “significant work” being carried out, including paying a consultant to do the work.

Other key measures the government claimed it had implemented but in fact hadn’t, included working with the Commonwealth to secure increased capital investment, adopting a “digital first mindset” for service delivery and commissioning an independent review of federal funding including on Indigenous disadvantage.

Program cost blow-outs were also identified as a major problem for the NT Government in 2019.

Ms Crisp found the government was still not assessing the costs of programs against their outcomes or effectiveness, recommending that a process be developed to capture all project costs and evaluate their usefulness.

Costs to develop the Budget Repair report and implement its recommendations were also not being monitored or reported.

“Consultants have been used to assist with the implementation of some recommendations however as the costs are not monitored at a program level, the total cost incurred to date of responding to the recommendations in the Final Report is unknown,” she wrote.

In April 2019, Mr Gunner said the Root and Branch Review was to save $1.4 billion over 10 years from cutting departmental spending, however the government could not explain if any of the savings were actually met.

“The report resulting from the Root and Branch Review showed that the NTG agency specific savings should total $139.43 million at the conclusion of the 2021 financial year,” she said.

“At the time of the audit there had been no assessment of the outcomes to determine if the targeted savings have been achieved or are likely to be achieved.”

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