Senate Rural and Regional Affairs and Transport Legislation Committee, , 32:24 to 37:18
The committee examines whether the department's charging model reflects actual or minimum efficient costs for regulatory services and discusses audit recommendations.
Topics: Biosecurity, Export cost recovery, Efficiency dividend
Speakers: Miss Victoria Anderson, Hon Matthew Canavan, Matthew Geysen, Unknown Speaker
it that's a good segue though this issue of your costs because perhaps the most damning finding in this report was I'll quote from the ordering general. Uh although DAP has established a charging model, it could not demonstrate that the prices it sets reflect actual or minimum efficient costs and it charging model was not applied consistently in setting prices. I'm particularly interested in the finding there that the prices don't reflect minimum efficient costs. Do you agree with that conclusion?
>> Uh Senator, what I would say is I think there's an opportunity to demonstrate that we're going down to that level. So if if I take a step back, uh we um track prices at what we call an output level and to be able to meet the expectations with the ANO when it's assessing minimum efficient cost. Uh they they have recommended that you go down to the next level or a business process level. Uh we've now implemented a process where we've got a rolling program of activity based costing is to go and assess at that business process level. It's fair to say though when you do put the effort in to track costs at a more granular level, there are administration costs that come with that as well. So it's it's a balancing act for us to find what that minimum efficient cost is.
>> Yeah. Okay. But you don't disagree that at the moment you can't tell us that the $453 million in costs for 2526 are actually the minimum efficient you could
Well, I Senator I'd say from what I've seen and the processes and the controls that we have around our cost recovery processes, uh the annual reviews that we undertake through those costs, um that in our view we are operating at minimum efficient cost.
>> So you disagree with the order general?
>> I think I think there's more that we can do to demonstrate that.
>> All right. I mean to me this has been a constant complaint in this committee for years reflecting the views of industry that they haven't had a proper oversight here and they question whether or not there's been uh an attempt to cross subsidize and I'll get to that. Uh the auditor general is effectively vindicating industry's views here but I still see in transitions from the department saying there's nothing to see here. We're fine. We're at minimum efficient cost. I mean, what is it going to take for industry to have their view heard if you won't if you just ignore the auditor general?
>> It is definitely not our evidence to say there's nothing to see here. As I said, we've got a cost recovery improvement program. I think it's been one of the things I've heard both on the import and the export side, Senator, most from industry since I've started as secretary. So, I I don't want anyone to think we're taking this lightly. We've agreed with all the ANO recommendations. We've we've started addressing them well before the ANO report uh landed with us in the middle of the year. Uh so, So I agree with you. It's a really important issue to get right. It's a really important issue to demonstrate to industry that they can have trust in the fees that we're providing and we do have a range of processes internally to improve. It is just a tricky you know that that issue of over and under recovery that you've touched on it. It is very difficult um under the current uh guidance that we we follow from finance to be able to absolutely accurate accurately predict because we are just dealing with a demand driven sort of set of situations. So it's not an excuse, but it is a reality of how we how we set these things up. We we are doing our best to be as open and transparent as possible. We talk to industry oversight groups quite regularly about this on the biocurity side. That's chaired by um deputy secretary Saunders. So it it's we're definitely not a closed book and we definitely don't think it's job done. There's a fair bit of work still to do.
You you said secretary you've agreed with the recommendations but on this point recommendation number one of the report from the auditor general is that the department of agricultural fisheries and forestries forestry sorry improve visibility and monitoring of the minimum efficient cost of key business processes required to deliver its outputs daff's response is agreed in principle not fully agreed why haven't you fully agreed with that recommendation
>> I think the recommendation is around improving visibility and monitoring and as Mr. GS said we we agree with that. We don't necessarily agree with the idea that we're overcharging or not charging or doing our best to charge the minimum minimum efficient cost. It's how we demonstrate that. As Mr. Gison said, um there is a balance because if we go down to the level of a certain level of detail, it will add costs for industry because we will be tracking and monitoring at different points uh in the process that will that will ultimately add cost. So we are conscious that in order to demonstrate some of these things, what we don't want to inadvertently do is charge people more for the pleasure. So um so we're we're definitely agreeing in principle, but how we execute that we're giving careful thought to so it doesn't add costs.