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As well as criticising the performance of the prime minister’s department, the auditor-general’s midterm review has a warning about unethical behaviour in the public sector. By Karen Middleton.

Auditor-general takes PM&C to task

The Department of the Prime Minister and Cabinet (PM&C) is the worst-performing government agency, particularly in Indigenous affairs, according to the auditor-general.

On October 7, Auditor Grant Hehir published his midterm review without fanfare, a day after the federal budget slashed his funding by $14 million.

It found PM&C’s Indigenous programs had the highest proportion of negative conclusions from performance audits.

In terms of financial audits, the prime minister’s portfolio had the most findings, overwhelmingly in Indigenous-related entities.

“Given the priority successive governments have given to Indigenous policy, these findings are disappointing,” Hehir writes.

Across the government, the auditor-general found information technology control consistently has the highest number of financial audit findings raised, most commonly around weak security.

In light of the government’s focus on cybersecurity, Hehir also labels this “disappointing”.

While he says the response to Covid-19 shows the public service is learning quickly from its failures, the praise is qualified.

“There are also too many cases where entities have not learned from the past,” Hehir writes, citing his audits of the Community Sport Infrastructure Program and the management of offshore detention. “It concerns me when entities’ responses to audit reports try to publicly diminish the value of the report.”

The Australian National Audit Office (ANAO) has put the government under pressure this year, with damning findings about the “sports rorts” program and on the purchase of hugely overpriced land around the new Western Sydney airport.

Before the budget, Hehir wrote to Prime Minister Scott Morrison seeking a $6 million funding boost to meet his audit schedule. Instead, he received the $14 million cut.

In unusually passionate language, Hehir’s midterm review advocates greater financial and operational independence.

“To be effective, public auditors cannot see their future as either individually or organisationally tied to the perceptions of, or reactions to, their work by government,” Hehir writes.

He says auditors-general should have fixed, preferably non-renewable terms; have complete discretion over what and how they audit; have parliament set their budgets with a limited role for government; and be free from government administrative direction.

Hehir says the ANAO’s work on ethics has been its weakest, requiring the most nuanced approach.

The public sector’s approach to procurement has sometimes been unethical, he says, “regularly” falling short of regulatory expectations with too many entities complying only with the letter of the rules and not their intent.

And he issues a warning, flagging that ethics will be a priority in the second half of his term.

“I think a reluctance on my part to make findings on the ethics of particular actions is unsustainable,” he says.

This article was first published in the print edition of The Saturday Paper on Oct 17, 2020 as "In plain review".

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Karen Middleton is The Saturday Paper’s chief political correspondent.