Senate Economics Legislation Committee, , 1:22:32 to 1:44:52
Officials provide updates on the Australian Office of Financial Management review and the Investor Front Door program.
Topics: Public service staffing, Workplace culture, Integrity
Speakers: Jenny Wilkinson PSM, Susan McDonald, Mohita Zaheed, Hon Katy Gallagher, Hon Jane Hume, Dave Sharma, Dr Angelia Grant, Interjection, Katrina Di Marco, Speaker 12
Um, thank you, Secretary Minister. I just wanted to ask about this review into the Australian Office of Financial Management that you announced, believe it was yesterday.
>> Um, so, uh, I put in place Yep. Yep. So, I advised the treasur a couple of weeks ago that we were going to do this independent review.
>> So, when did you first start considering a review of the AOFM and what prompted
>> Uh, so I've been in this role since June last year. Um and um uh I've had a series of discussions with the CEO and then through the second half of the year last year was aware of the um significant restructure um that they were undertaking. Um there were some issues raised with Treasury towards the end of last year. Um and that prompted
>> sorry issues raised by whom? It's by
some AOFM staff,
>> existing staff, not just departed staff.
>> Um and uh at that point, um my the head of corporate that I had at that time, Victoria Anderson, uh and the head of um uh fiscal group had discussions with the AOFM. Um there were a series of questions that we put to them about the restructure and the rationale for it and the and the objectives of the uh so that that that was in November. We've continued to be kind of actively engaging with the AOFM and um and um uh and having dis you know and and have had discussions with a range of different people about um the restructure and about the performance. And um the restructure was completed as I recall towards the end of last year. Um and uh when there were some uh ongoing uh issues which were raised with us from a few different quarters, uh I had a discussion with the um with the uh the secretary or the head of the AOFM who um is the accountable authority for the AOFM and um uh discuss with her [laughter] the fact that I thought it would be a good idea to do an independent review to make sure that I could be assured that they had the right skills and capabilities in place to be managing the important role that they do as well as they do.
>> Okay. Were you aware of the quite adverse results of their staff survey >> last year?
>> In so senator in general terms I have been aware of that. I have also been aware that um uh yes no yes. Yes. Yes, I have been aware of that.
>> Okay. And the high staff turnover or high staff departures. I guess that's what you're referring to.
>> And I have been aware of a high staff turn. I mean there there is there is there has been some relatively high staff turnover at the AFM over a period of years. But uh yes. Yes. And that's all of those things um kind of combined um have led me to decide that it was prudent to do an independent to have an independent arms length review of
>> Okay. And I've looked at the terms of reference for the review, but just so I understand um workplace culture, staffing issues, are they within the scope of this review that's being conducted by Mr. Debel? So
the the the terms of reference so for the in the first instance it's critical that I and the government I think are assured that the AOFM has the right skills and organizational leadership to do their job properly. So that's what I'm asking Dr. Dell to do um to the extent that there are other issues that are raised. So you know organizational culture is one of the things which I think go to the effectiveness of an organization. So it's if you like not on it not in and of itself but to the extent that it is relevant uh to the question of their capacity to perform their role well um uh yes it is and we have been but we have been clear uh in the terms of reference particularly given some of the issues that have been raised that if over the course of this review Dr. Debell was to decide that he thought we should that there was there was some uh some ma other matters which go beyond just capability and organizational um um yeah organizational capability that that he of course we would expect that he would raise them with us.
>> Okay. And I saw the terms of reference also suggest I said that you or the report is expected to be made public. Is
that correct? That was my judgment is that I think it's important for the parliament uh and for the Australian community to um be aware of what the outcome of this review is. Yes.
>> So the report will be made public intention. Okay. Um and you did say correct me if I'm wrong.
>> Sorry. Just to be clear, I I would be very careful about, you know, so I I think this I would expect this report to be made public, but as I again I've made clear in the terms of reference, there could be matters raised which are not appropriate to be made public. And I think we need to be clear with individuals that we would protect their confidentiality so that we can have a thorough um uh and you know a good report.
>> Okay. And you you did say the treasurer was consulted about this.
>> No, I informed the treasurer. So the treasurer so
>> that you were intending to.
>> Yeah. Yeah. I informed him that I um I was going to conduct an independent review.
>> Okay. And did he approve the terms of reference or No, >> that's within your Okay. Were any other departments or agencies consulted like the APS-C for instance?
>> So we consulted the APS-C.
>> Okay. All right. Thank you. We we
consulted the APS-C in part to sort of think about what's the appropriate type of review to conduct at the you know in this juncture and whether sort of their the sort of particular structure that they do around capability reviews was the right thing to do. Um and at the end of the day um we took I mean they they provided some useful input into our terms of reference um to help inform those.
>> All right. Thank you. U did they suggest appointing Dr. Debell or was that your
>> No. So that so um um Mr. Di Marco and I had a discussion about who would be the sort of people who would have the skills and experience um to be able to conduct this sort of review and we determined that um Dr. Debel um had the right breadth of skills. I mean combining everything from the fact that when he was the deputy governor at the at the um Reserve Bank he had responsibility for organizational matters. So he's had that experience. Um he is uh obviously of high standing in the general financial community. Um he is on well he chairs the board of South Australian funds management. So he understands that business. Um we needed somebody who had that breadth of skills in order to provide us with that confidence and we thought that he uh had the right breadth of skills.
>> Okay. Thank you. Have I got >> two more minutes? >> Yep. I've just I'm going to change topics and be very quick. Um I just wanted to ask about the investor front door which I understand sits within this group. >> Is that you Mr. Mark? >> Um so I understand this investor front door was officially opened on the 1st of September last year. Um >> has the is the status is as a pilot program at the moment. I understand
>> that's correct Senator. We we've established it as a pilot program.
>> Okay. How many applications have been received since the front door opened on the first?
Yes, assistant secretary for the investor fund. Um senator, thanks for the questions. Um so since we've opened, we've engaged with a number of proponents and way the process works is um we'll kind of sit down with the proponent, understand um what they're looking for, where they're at in their process of, you know, their project. Sometimes it's actually pretty straightforward. what they're looking for is a little bit of support for us to connect them to a special investment vehicle or to understand how the Commonwealth regulatory system works. So that's a couple of meetings, that's a conversation, that's us kind of joining the dots and helping proponents connect. Um for other proponents where they're looking for more of a detail concierge service, so kind of to become one of our pilot projects, that's a little bit more involved. We engage with them. We kind of understand when they're likely to hit the convolut system. As you'll understand, Senator, often projects start at the state level. They go through the state processes. Often there's a state coordinator general or a state kind of investment facilitation function where we will link in with them. So, it's kind of a it's not as straightforward as how many applications we get. We have um engaged with a number of proponents. There's
>> have you got a figure for the number?
Um, look, Senator, so if you're asking for a figure on how many proponents we've spoken to about whether or not we're the right kind of a vehicle, um, the number somewhere between 50 to 100. So, um, some of these are one-on-one meetings, some of these are emails, some of these are conferences and kind of investor delegations. So, it's a bit hard to give you just a specific number. in terms of proponents where we've kind of gone down a more formal path, engaged with them on, you know, we have a EOI process that's on our website that kind of sets out our process. So, there's been about a dozen of those where we've kind of gone down much more of the kind of the formal route. Here's a form, tell us the detailed specifics of your project. But in some cases, you know, the services they're looking for doesn't quite necessarily need them to go down
there. Okay. I might put some more detailed questions in on notice. Just the last question then I'll see. Um, how it's a division, right? >> How many staff how many full-time equivalents working in the division?
>> Um, this week I got a new graduate which I'm very excited about. It's about 45 people in my division.
>> 45 full-time equivalent. Okay.
>> Uh, sorry, 45 humans. That's not FTE because some people do work part-time. um the exact ASL numbers slightly less than that but I've got kind of 45 humans some of whom work part-time.
>> Okay. >> Thank you.
>> Thank you.
>> Thanks Chair.
>> Senator McDonald.
>> I wanted to ask you some questions uh with regard to Australia's net zero transformation treasury modeling and analysis. Um I did ask some questions at the last estimates which remain um unanswered. So, uh, question on notice number 107, 108, and 436. So, um, I'd ask that we return to those shortly if we have time. Specifically, um, I wanted to know what modeling Treasury has done on Australia's taxation base associated with the net zero plan. So in what year does Treasury project that taxation revenue from renewable industries will surpass taxation revenue from fossil fuel industries?
So Senator the modeling was very much focused on whole of economy. We didn't undertake any um revenue or any implications underneath that. Let me just Is that
>> Yes, that's right. Senator Rebecca Castles um assistant secretary of the climate industry modeling branch and we are aware of those questions that we do still have with um ourselves on notice. So we will hopefully get them back to
>> Thank you. So in the uh in the model on page 34 you've projected uh the range of fossil range of exports and you've got green commodities uh crossing over with fossil fuel exports. It looks to be about 2032 2033. It's not entirely clear from the graph. um that's not very far away and I would have expected that that would have been an important part of the modeling was to understand what that impact is on taxation income.
>> So Senator for this modeling we simply tried to look at scenarios that showed different economic pathways to net zero. So two of those pathways are consistent with uh government policy. one is a disorderly pass pathway. As part of that, we didn't go into um the revenue uh implications. We also didn't go into the the fiscal cost. I know we've received questions about that before. We stayed very much at just whole of economy. How do we think the structure of the economy shifts and how does that affect different components? So, we stayed at that level rather than the level that you're asking about.
>> Okay. I understand the answer that you're giving, but given that revenue is so fundamental to the success of the Australian economy and uh what opportunities we've got, options we've got for expenditure uh and given the very short time frame that you've projected, I am surprised there hasn't been modeling done on that. Um, am I best then going to revenue group to talk to them about uh tax revenue specifically from renewables and versus mining?
>> Yes, you are correct, Senator.
>> Okay. those questions uh on notice that I had um also asked for further detail on the modeling that was used to develop this report. Specifically, the split between uh the different renewable energy uh types that you had versus the fossil fuel exports that you were given that the modeling work has been done. I'm just unclear as why you've not been able to answer me more quickly.
>> So we will get straight on to that uh after this senator. Absolutely.
>> Okay. It would have been useful to have had those for today. >> Thank you, Chair.
>> I mean, can I just Yeah. I think one of the issues we're dealing with here is the amount of questions on notice in December. We don't usually have estimates in December to return in February to have another session. So I know there's a couple in my areas that we haven't been able to manage. I've been signing off hundreds of pawns >> in the last month. Um so I think agencies are working really hard but it is unusual that we've had that very close two sessions of estimates as well.
So if I might add, Senator, of the I think around 550 questions that we had, there's 10% that are still outstanding. So the department has worked incredibly hard to get those answers and we do apologize, but we're up to about five about 10% are still outstanding.
>> Thanks. Thanks, Chair. I'll I'll try and be really quick. The AFR had some reports this week that there were options to scale back or replace the 50% capital gains tax discount that are being examined ahead of the budget. Can Treasury confirm whether it's currently undertaking any analysis, any modeling, any policy development on changes to the capital gains tax discount?
I think I mean the treasurer uh indicated um actually I think was on insiders on Sunday that um as part of the oncoming budget he'll consider whether more steps can be taken on tax reform. um that's consistent with the outcomes uh at the conclusion of the economic reform roundt. Um he outlined at that time that the any uh changes or any future changes would be guided by um three key principles. Um Treasury has um clearly been working clearly works with government on on uh tax on the t tax policy and tax reform and and we have provided uh uh advice on tax matters uh as we do all the time uh over the course of um this past year. But um I'm not in a position to um uh speak to any details of the advice that's been provided. um uh that's a matter uh for uh government and I think that if there was a you know a discussion around what advice has or hasn't been provided on this policy or that policy um that would inhibit the sort of the the deliberative processes within government of of determining what future directions of tax policy could be. Um you know um uh the there are a number of um changes in uh tax policy which are already in train um and uh have been announced by government and we're certainly happy uh or revenue group will be very happy to talk through um those changes and and where any of those uh changes are up to. I I'll ask
Revenue Group a couple of those sorts of questions, but um I suppose just specifically on this change that's been well canvased in the financial review. I'm wondering whether an inflation based approach or whether a lower flat discount options that Treasury may have done some analysis on. I'm not going to
speak to the details of any of the advice that
>> I think you cannot you don't have to speak to the details of advice that's given to government but if you're looking at capital gains tax discounts or alternatives to capital gains I would assume that they would be within the
mix. We provide advice on all aspects of the tax system
>> as you'd expect and as would have happened under your government Senator Hume.
>> Well, we weren't looking at slashing the capital gains tax discount and actually neither were you before the election.
>> Treasury provided you advice on the operations of the tax system. And I'd be very surprised if they didn't.
>> That's not the question that I asked though, is it minister?
>> Well, that is the answer uh that the
secretary >> going to provide for the record.
>> Treasury routinely provides advice to government on the operation and performance of the tax system.
>> You're really throwing yourself in front of a bullet that was moving pretty slowly. You probably saw this one coming. Minister,
>> I don't feel threatened um by
>> Well, then why don't you let the secretary answer the questions?
Well, I'm here appearing as a witness as well, Senator Hume, so I can uh also provide information to the committee.
>> I'm wondering if there's been any dis discussion papers or exposure drafts or consultation documents that have gone out on potential changes to capital gains tax
>> that have been publicly released >> by government.
uh well the tax expenditure statement was released in December that goes through uh all of the operation of the tax system and we're not going to get into the specific uh advice or discussions on the work given deliberative nature of the budget
So the answer is no that there are no public discussion papers out there or consultation papers that have been made available to the public on this specific measure.
>> Well, other than the tax expenditure statement which is released annually and has information about the capital gains tax
consultation and it doesn't discuss >> does it? So,
>> uh, but I know I do know there's been a lot of submissions provided to the committee that you supported establishing in the Senate, uh, Senator Hume, um, the select committee on capital gains tax. I noticed they have been got a lot of, um, public submissions, public discussions. >> Well, um, it's only a select committee because you supported it, >> so I'm sure you're reading them as well.
>> Absolutely. So despite the work not being public, um obviously detailed options have already been reported in the financial press and they site sources that are familiar with government deliberations. So I'm wondering where the Treasury can explain how those detailed policy options are being reported to the media if the work hasn't been released publicly.
>> Who knows? The media work in very mysterious ways in this building. they often site.
>> do you think it's the treasur's office
sources? I mean, we we're the treasur's
office that's flying
>> the undifying squabble that's going on about your leader, Senator.
>> I don't have very much time with the secretary minister. So, I'm wondering whether
>> all I'm the point I'm making is journalists, right? >> I know it's it's showed a level of restraint that I'm proud of as well myself for for doing that. But all I'm saying, the point I'm making is journalists write um articles, columns in this building based on a whole range of information, often unsourced.
>> I I would assume it wouldn't come from the public service. That would be a disaster. So therefore,
>> well,
>> if it's unsourced, but it's coming from somebody that is familiar with the government deliberations, it sounds like it's coming from the treasur's office.
>> Ask the journalist.
>> All right. Thanks, Jeff. >> Thank you very much. Uh Senator McKim.