Senate Rural and Regional Affairs and Transport Legislation Committee, , 24:35 to 29:31
Discussion continues on the department's response to the Auditor-General's report concerning the risk of under or over recovery of costs.
Topics: Biosecurity, Government spending, Integrity
Speakers: Miss Victoria Anderson, Hon Matthew Canavan, Matthew Geysen, Senator Ross Cadell, Unknown Speaker
>> So, I might add a start with a couple of comments and and Mr. Grayson can add, but we do welcome the ANOS's report, Senator. It's um it's been very valuable. We have accepted the need to continue to strengthen our uh cost recovery administration and have taken steps to address most of the findings already. The um the audit covered a period several years ago. Um and obviously that's given us a chance to to improve since then. Um so the report does not suggest the department is failing to deliver regulatory services and and does but does point as you said to opportunities to improve how costs are measured, documented, governed and reflected in charges.
>> Can I just come back to my question? I'm not sure it's fair to say several years ago. I think it went up to 2425. It's not that long ago. Um, so why wasn't the department managing the risk of under or over recovery?
>> Uh, Senator, what I'd say is I think the the ANO was encouraging us to to increase the level of oversight of that risk. So, we do look at uh cost recovery on a monthly basis. It gets reported uh through our reven uh relevant governance channels. Um and what the ANAO has suggested is that we formally embed that risk for example in divisional business plans. Um so taking it to a level below what we we previously had managing it as an enterprise risk down to to lower levels of the business.
>> So the over recovery that's occurred in each of the last three years um how much of that has been paid by farmers?
I I don't think we would have that breakdown senator because the cost that is applied to the importer sometimes that may be a farmer but mostly it's a business importing could be food it could be other products that we inspect um at the border so it will be a range of different
>> and some of it will be well it's in the
farmers >> yes some of it will be
>> and so are you how do you propose to to to make good here given you've overcharged are they going to get a subsidy going forward to to uh or rebate to reflect overcharging.
>> So we we don't um obviously a surplus usually will go into our a cash reserves and then manage a deficit position going forward. So we manage that over a number of years. Um Mr. You guys may want to correct me if I get this wrong, but I I think our our goal is not to over recover of course, but we also
>> but there has been over recovery of some
>> there has been and under recover under recovery prior to that since the last
few years there's been and and obviously the the problem for the individual businesses they're not necessarily the same ones who have been under and over recovered. Uh but for the last few years uh it looks like 3513 there's something close to $50 million just in the last few years of over recovery. Are any of these businesses going to get a refund?
>> No they they won't the the charges were correctly applied according to the policy. Senator as we sort of described the the individual services were not overcharged. It's our estimate of how much
>> but they is over recovery that there isn't it meant to be cost recovery if you've charged them more than their than your costs that's overcharged isn't it?
I think it's the difference between an individual cost which is not over recovery but in our estimates of the aggregate
>> but any of these businesses in this supply chain if they overcharge their customers they'll have to give them the money back be under law why isn't the same laws apply to the the the government
>> senator as far as I'm aware there's nothing under the charging framework that permits that if we were to go down that path we need [cough]
>> so [clears throat] you're a law unto yourselves
>> no Senator we have a cost recovery maturity program at the moment that we've established this year and as uh Mr. Gison said there's a range of different oversight mechanisms that we want to apply into the system. So we we're you know there's no perfect science for cost recovery. We are always acting with imperfect information based on last year's volumes for example. So so there will be fluctuations from year to year. I think if you looked at a longer period you would find that we were underreovering as well. So I think we can't sort of select a particular set of years and saying we're overcharging uh and and another set of years and say well that's fine because we under undercharge. So I think we look at this as a system and um we're taking a systems response in terms of responding to the auditors. It does not mean individuals have been charged more than the cost of issuing a certificate for example or or something like that. um it just means we've we've not 100% accurately estimated how much the delivery of those services will cost in any given financial year. What we hope is that over over time there are robust systems to show that we've delivered the services and um delivered them adequately and I think um that there [clears throat] is no system that is going to mean we hit zero dollar balance on any cost recovery program at the end of the financial year because we are acting on last year's information to set
the prices for the following year. Just