Senate Finance and Public Administration Legislation Committee, , 1:45:03 to 1:51:09
Review of the Senate Department's financial position, including an operating deficit, leave liabilities, and high demand for legislative drafting services.
Topics: Government spending, Efficiency dividend
Speakers: Mr Henry Pike, Hon James McGrath, John Begley, Senator Karen Grogan, Unknown Speaker
>> Uh Senator McGrath, do you have further questions? [clears throat]
>> I've got just a couple quick blocks.
>> Okay. I will just draw everyone's attention to the fact that we are running considerably behind schedule just for those waiting to appear. >> Senator McGrath,
>> thank you. Uh Clark, the annual report records an operating deficit. I read correctly of $310,000 for 2526 compared with a profit of just over $1 million in the previous financial year. Is that is that correct?
>> I think that's correct. Yes, sir. Thank you.
>> What are you able to expand on the principal reasons for the deterioration in the department's financial position?
Um I I suppose I can uh Senator a thing that um I've drawn attention to throughout my time as as Clark is the fact that the um >> the the levels of legislative and committee activity um tend to run in a relatively predictable way through the parliamentary cycle. So in the the first year of um of a parliament is is usually it it takes a little while for the activity to to ramp up. We've had some exceptions. Um four years ago the Senate decided it would start on the 2nd of July. So activity ramped up a bit bit more quickly, but this year was a little bit more um typical. This this past year a little bit more typical. So it takes a little while for business to ramp up. second year is usually the busiest and the third year is often um slightly less expensive in that the um there's a um hiatus in some legislative and committee activity as we go to the election. So um the 202425 result um which is that surplus reflects the fact that legislative activity slowed down committee activity slowed down from March and April um as we went to the election period. Um last year 24 uh sorry 25 26 we thought we were on track for um a break even position and then quite late in the period we were asked to re uh recalculate how we um calculate our leave liabilities. >> Yes. >> And there was some bond rate movement. So what we thought was going to be
>> Could you expand on that please?
>> I probably can't but I could ask John to expand.
>> Sorry. Yes,
>> Senator. Um, I guess trying to explain it in in easy ter the the way that the liability is presented shows a discounted cost. So, it's not the actual real nominal cost. It's been discounted using various factors such as bond rates and those sorts of things. So, it's meant to represent the time value of money. Um, so the amount that we have to um report based on probabilities of people taking the leave or achieving their long service leave balance because after 10 years you acrew it. the discount factors in there and also a growth rate for salary. So those sort of things at the end of the year tend to be a sort of a lastm minute adjustment at the end of the financial statements and this year because of the movements in bond rates and the like um and a change to the calculation basis pushed us over the year. So it's not a it's not even a cash deficit it's just a accounting deficit in the books.
>> I told you I probably
>> we're pretty much on track otherwise.
>> Okay. So, so the the first year um first year of [clears throat] new parliament often um more activity than the last year of the previous parliament. So that explains the uh difference between the surplus the prior year and the almost break even but not quite position that we achieved in 2526.
You you also mention that in the report refers to the timing of recruitment as a factor in managing expenditure. were any positions deliberately left vacant or recruitment processes delayed for budgety reasons?
Um not not really Senator other than um over the election period the previous year where um we did have some vacancies and and we thought well um filling them now whilst the the parliament is not here is not necessarily um the um best value for money approach.
>> Do you anticipate an operating deficit for the 26 27 financial year? Uh, it's
possible, Senator. Um, at the moment we're um thinking that we're probably tracking towards a deficit of um $900,000 million. Um, but we've got a little bit of time to see how we can uh
to to ensure the continuation of the very good services provided by the department. Will will you be will the will you be seeking additional resources from the
government? I I think we may have to Senator one one of the things that um we were talking earlier about legislative drafting for instance and we were pretty aware that um the 25 26 demand for legislative drafting services was was probably going to be lower than the the high watermark levels that had been seen in the the previous year which I've I've already mentioned. um a and I took the view that seeking additional resources in relation to that where the um likelihood was that the demand would be lower would not be a a good approach. But uh the first few weeks of first few sitting weeks of um this financial year have demonstrated a a relatively large u demand for legislative drafting services. So we may have to revisit that