The ACTING DEPUTY PRESIDENT ( Senator Pratt ) (18:49): Pursuant to standing orders 38 and 166, I present documents listed on today’s Order of Business at item 17 which were presented to the President, the Deputy President and temporary chairs of committees since the Senate last sat. In accordance with the terms of the standing orders, the publication of the documents was authorised. The list read as follows— (a) Committee reports 1. Joint Standing Committee on Foreign Affairs, Defence and Trade—Report—Review of the Department of Foreign Affairs and Trade annual report 2009-10 (received 21 July 2011) 2. Economics References Committee—Third interim report—State government insurance and the flood levy (received 29 July 2011) 3. Economics Legislation Committee––Report––Exposure draft of the Business Names Registration Bill 2011 and related bills (presented to the President on 15 August 2011, 4.20 pm). (b) Government responses to parliamentary committee reports 1. Legal and Constitutional Affairs References Committee—Report—Australian Law Reform Commission (received 8 July 2011) 2. Education, Employment and Workplace Relations References Committee—Report—Industry Skills Councils (received 25 July 2011) 3. Joint Select Committee on the Parliamentary Budget Office—Report (received 1 August 2011) (c) Government documents 1. Australian Customs and Border Protection Service—Report for 2009-10—Correction (received 14 July 2011) 2. Gene Technology Regulator—Quarterly report for the period 1 January to 31 March 2011 (received 20 July 2011) 3. Defence portfolio—Estimates of proposed expenditure for 2011-12—Portfolio budget statements—Correction (received 8 August 2011) 4. Productivity Commission—Report no. 53—Caring for older Australians (2 volumes) (received 8 August 2011) 5. Productivity Commission––Report no. 54––Disability care and support (received 10 August 2011) (d) Report of the Auditor-General Report no. 1 of 2011-12—Performance audit—The Australian Defence Force’s mechanisms for learning from operational activities: Department of Defence (received 12 July 2011) Ordered that the committee reports be printed. The ACTING DEPUTY PRESIDENT: In accordance with the usual practice and with the concurrence of the Senate I ask that the government responses be incorporated in Hansard. The documents read as follows— GOVERNMENT RESPONSE TO THE SENATE STANDING COMMITTEE ON LEGAL AND CONSTITUTIONAL AFFAIRS REPORT ON ITS INQUIRY INTO THE AUSTRALIAN LAW REFORM COMMISSION The Government has repeatedly put on record its strong support for the work of the Australian Law Reform Commission (ALRC) and agrees with the Senate Committee’s assessment that the ALRC's work is widely respected. Since its establishment in 1973, the ALRC has concluded more than 100 inquiries and has made a substantial contribution to the public debate on issues as diverse as privacy, personal insolvency, the use of genetic information, admiralty law and the operation of the federal justice system. This contribution continues, with the ALRC’s recent work with the New South Wales Law Reform Commission on family violence (ALRC 114: Family Violence – A National Legal Response (2010). The recommendations in this report are helping to shape the Government’s response to this complex issue, including by influencing the landmark Family Law Legislation Amendment (Family Violence and Other Measures) Bill 2011 that is currently before this Parliament. The ALRC is currently going through a period of transition. Reforms made to the Australian Law Reform Commission Act 1996 (the Act) by the Financial Framework Legislation Amendment Act 2010 give the ALRC greater flexibility in the way it goes about its work whilst providing an appropriate governance framework that preserves its independence. The Government believes that the reforms will generate opportunities and ongoing benefits for the Commission, and is committed to working closely with the Commission as it adapts to these changes. Recommendation 1 6.1 The committee recommends that the Australian Government restore the ALRC's budget cuts for the period 2010-11 to 2013-14 as a matter of urgency. Government Response to Recom men dation 1 Not accepted As with other Australian Government agencies, the Commission is required to meet the efficiency dividend. The Commission’s budget was also reduced in the 2009 Mid-Year Economic and Fiscal Outlook, the savings from which are a key component of the Government’s commitment to returning the Budget to surplus and maintaining spending restraint to support long-term stability. The Government is satisfied that the ALRC has sufficient funding to discharge its important statutory function – to conduct inquiries into matters referred to it by the Attorney-General. The ALRC is implementing a range of measures that will provide substantial savings over time, but which will not compromise the delivery of its core work. These measures include relocating to more affordable premises. In the interim, additional financial assistance is being provided to the ALRC through the Attorney-General’s Department to allow the appointment of a second full-time commissioner to assist for the duration of the review of the National Classification Scheme. Terms of reference for this inquiry were released on 24 March 2011. The Government has full confidence in the ability of the President of the ALRC, Professor Rosalind Croucher, to manage the organisation within its appropriation. Recommendation 2 6.2 The committee recommends that the ALRC Act be amended to provide for a minimum of two standing, fixed-term (not inquiry-specific), full-time commissioners. Recommendation 3 6.3 The committee recommends that an additional full-time commissioner be appointed, for each additional inquiry referred to the ALRC, in circumstances where the ALRC already has two or more ongoing inquiries. Government Response to Recommendations 2 and 3 Not accepted A key aspect of the reforms contained in the Financial Framework Legislation Amendment Act 2010 is the removal of mandated numbers of commissioners. The purpose of this reform is to allow the ALRC to use its appropriation more flexibly in responding to the work it has on hand. This revised structure takes into account the varied, and often highly technical, subject matters of inquiries. As outlined in relation to Recommendation 1, the Government has appointed a second full time Commissioner, Professor Terry Flew, for the duration of the inquiry into the National Classification System. Professor Flew’s expertise in media and communications will be a great asset to the Commission for this review. The Government anticipates that the second Commissioner position will continue to be filled beyond the inquiry into the National Classification System. In keeping with the Government’s desire for greater flexibility, the Government would look to fill the position in a way that best suits the ALRC’s program of work at the time of any appointment. The Attorney-General is committed to ensuring that consultation with the ALRC on its capacity to take on new work continues to occur before new references are given. Recommendation 4 6.4 The committee recommends that the ALRC's public information and education services program be resumed immediately. Government Response It is a matter for the President to determine the best use the ALRC’s resources to undertake inquiries into matters referred to it by the Attorney-General. Recommendation 5 6.5 The committee recommends that the ALRC be provided with all necessary resources to enable it to continue to travel to undertake face-to-face consultations as part of its inquiry processes. Government Response It is a matter for the President to determine the best use the ALRC’s resources to undertake inquiries into matters referred to it by the Attorney-General. While the Government agrees that there is value in face-to-face consultations, the ALRC’s innovative use of online consultation practices demonstrates the variety of ways in which a law reform body can reach stakeholders. Conclusion As it approaches 40 years at the forefront of law reform in this country, the Government believes the ALRC is well equipped to respond to new challenges and opportunities. The Government has an ambitious law reform agenda and is confident the ALRC will make a significant contribution to that agenda. AUSTRALIAN GOVERNMENT RESPONSE TO THE SENATE EDUCATION, EMPLOYMENT AND WORKPLACE RELATIONS REFERENCES COMMITTEE ' S REPORT OF THE INQUIRY INTO INDUSTRY SKILLS COUNCILS JUNE 2011 The Australian Government has a continuing commitment to investing in the economy's productive capacity through better and more targeted skills and training, measures to boost participation, and improving the private sector's opportunities to invest in infrastructure. Through the Building Australia's Future Workforce package, announced as part of the 2011-2012 Budget, the Government has invested in a new approach to deliver the skilled workers the economy needs. The package has four components: placing industry at the heart of the training system modernising apprenticeships skills to support increased participation reform of the national training system. The package strengthens and extends the role of industry in the national Vocational Education and Training (VET) system. The involvement of industry in the Australian VET system has been a defining feature of vocational education and training in Australia for almost two decades, and has given rise to its high international standing. Primarily, industry engagement is realised by representation of industry bodies on, and industry direct input to, the various formal committees and councils that guide the policy agenda for the national training system. This high level of engagement at all levels of decision making ensures that industry plays a leading role in driving training policies, priorities and delivery. The core of industry's leadership of VET in Australia is also realised through its active involvement in the development of industry-validated Training Packages. Through a network of Industry Skills Councils (ISCs), industry has a direct say in determining relevant skills needs for the industry and defining the competencies required in the workplace. Since ISCs were established in 2005, their role and responsibilities in the national VET system has been expanded and strengthened. ISCs are recognised and accepted as key organisations underpinning the effectiveness of the national VET system and key sources of advice regarding workforce skills and training needs. The Building Australia's Future Workforce package reflects the significant role of ISCs in the national VET system. ISCs will be key contributors to the implementation of the Building Australia's Future Workforce package through participation and collaboration in all four of the package's components, for example, in the National Workforce and Productivity Agency, National Workforce Development Fund, Language, Literacy and Numeracy Programs and Apprenticeship reform. Background National Vocational Education and Training (VET) System For more than 15 years, Australia's Commonwealth and state and territory governments have worked with industry to develop a national training system that provides the basis for high quality and nationally recognised training. Under Australia's Constitution, primary responsibility for schooling and vocational education resides with the state and territory governments. In general, the Australian Government takes a national leadership role and works collaboratively with the states and territories, industry and the community to advance national consistency, coherence, quality and effectiveness of education and training in all sectors across Australia. It focuses on the development of national and international priorities, policies and strategies for education, while the states and territories are responsible for regulation and delivery within their borders. National Skills Framework The national VET system is underpinned by the National Skills Framework. The National Skills Framework provides the basis for high quality, flexible, nationally consistent vocational education and training which meets industry needs and which employers can trust. The framework has three components: 1. Australian Qualifications Framework (commonly known as the AQF) —establishes the appropriate level of qualifications according to broad vocational competency levels. 2. Training Packages — establish the competency outcomes from nationally recognised training. 3. Australian Quality Training Framework — sets the national standards for the registration and audit of training organisations and accreditation of courses. Industry Skills Councils (ISCs) ISCs, and a new national industry training advisory body for the automotive industry-Auto Skills Australia, are privately registered companies run by industry-based boards of directors (employer and employee representatives). Their funding is provided substantially by the Australian Government through the Department of Education, Employment and Workplace Relations (DEEWR). ISCs and Auto Skills Australia are independent of government, employer and employee bodies, regulators and licensing bodies, and Registered Training Organisations (ISCs and Auto Skills Australia cannot be Registered Training Organisations). ISCs bring together industries, peak bodies, enterprises, unions, training organisations and governments through a national system of industry advisory arrangements and structures based on industry-led boards of directors and committees. Thus ISCs are uniquely placed in the Australian VET system to: develop nationally agreed qualifications; provide independent advice on workforce and skills needs; assist enterprises with workforce development and training needs. The Senate Report of the Inquiry into ISCs reflects the overwhelming message of the 119 submissions to the Inquiry that: the role and work of the ISCs was valued by VET stakeholders; ISCs were operating well; they were viewed as fundamental to the effective operation of the national VET system. The Report's recommendations reinforce the message of the submissions and suggest some improvements in the operation and management of the ISCs. These have been considered by the Government and some have already been acted upon in the context of developing a new Funding Agreement between DEEWR and ISCs which is expected to be executed by the end of June 2011 and cover the period 1 July 2011 — 30 June 2014. Following is the Australian Government response to each recommendation. Recommendation 1 The committee recommends that all 11 ISCs review their activities to ensure that their primary focus is directed at training package oversight and strategy, and that this work remain separated from the work of RTOs in product development and training delivery. Australian Government Response This recommendation is supported and reflects current arrangements. The following comments are offered in relation to: The committee is strongly of the view that ISCs should use their government funding to pursue their core activities.' The Australian Government provides core funding to the 11 ISCs and Auto Skills Australia to: provide industry intelligence and advice to government and enterprises on workforce development and skills needs; actively support the development, implementation and continuous improvement of high quality training and workforce development products and services, including Training Packages; provide independent skills and training advice to enterprises, including matching identified training needs with appropriate training solutions. Since their inception in 2005, ISCs have built on their role in the key area of developing and maintaining Training Packages and have grown into their strengthened role in workforce development under the Government's Skilling Australia for the Future policy announced in November 2007. The success of ISCs and recognition of the value of the ISCs contribution to the effectiveness of the national VET system has led to increased demands and expectations in relation to the range and volume of services that ISCs could provide under the core Funding Agreement. The core Funding Agreement provides a strong framework that enables DEEWR to monitor and manage the ISCs' performance of their key roles and responsibilities and to ensure expenditure of government funding accords with these. However, the Australian Government recognises that the funding provided under the core Funding Agreement does not and cannot cover the range of all of the possible activities that ISCs could undertake as contributors to the national VET system. The scope of what ISCs can do is limited by the funding they receive under the core Funding Agreement and their related capacity. ISCs' Annual Business Plans provide a mechanism that enables DEEWR to ensure that funds provided through DEEWR-ISCs core Funding Agreements are spent in accordance with the purpose of these Agreements and Government priorities. Under the Funding Agreement ISCs, must provide an Annual Business Plan for DEEWR approval. The following comments are offered in relation to: '...The production of training materials should only be considered where there is a demonstrated. unmet need and any conflict of interest is avoided.' ISCs are the only bodies that have a mandate to develop and maintain Training Packages. A Training Package is an integrated set of nationally endorsed units of competency, Australian Qualification Framework qualifications and assessment guidelines designed for a specific industry, an industry sector or enterprise. Training materials are the materials or resources that are developed to support the delivery of and/or assessment of Training Package qualifications. ISCs do not have an exclusive mandate to develop training materials; these materials may be developed by other organisations. While ISCs are allowed, and may, under the core Funding Agreement develop training materials, given the limitations of the funding available, the associated capacity constraints and the number of demands on these resources, ISCs have to carefully prioritise their activities and, as a consequence, the majority of ISCs do not develop training materials. ISCs as independent companies are able to develop training materials from sources other than funds provided under the core Funding Agreement. Some ISCs do have a commercial `arm' of their organisation with which DEEWR has no contractual relationship. Identification and management of Conflicts of Interest is addressed under the Corporations Act 2001 and in the core Funding Agreement. Management of Conflict of Interest is addressed in more detail in the response to Recommendation 6. Recommendation 2 The committee recommends that the ISC CEOs Forum examine the prospect of developing a template for environmental scans to foster greater consistency in the timing and reporting, and to encourage better utility of the scans for affected stakeholders. Australian Government Response This recommendation is supported and reflects current arrangements. The requirement for ISCs to produce an annual Environmental Scan (E-Scan) was first introduced in 2008 by the National Quality Council (NQC) - a Committee of the Ministerial Council for Tertiary Education and Employment responsible, until 1 July 2011, when the National Standards Council becomes operational, for the Training Package Development and Endorsement Policy. The NQC's Training Package Development and Endorsement Policy provides the policy framework for the timing, style and focus of the E-Scan. DEEWR has provided the ISCs with a template and guidelines to assist with the development of E-Scans. The guidelines and templates are regularly reviewed in consultation with Skills Australia and with the ISCs' CEOs. The guidelines and template for the E-Scans are updated in response to the feedback and in alignment with the NQC's Training Package Development and Endorsement Policy. The focus of E-Scans, as described in the Training Package Development and Endorsement Policy, is to provide a national high level snap shot of current and emerging skills needs based on industry intelligence. Thus the E-Scans do not purport to, and cannot provide an enterprise, jurisdiction or region with a detailed workforce and skills development plan. The requirement to deliver an annual E-Scan is also a requirement of DEEWR-ISCs Funding Agreement, which stipulates its delivery date for each ISC as the end of February each year. The productivity and participation focus of the Government has increased the need for a more systematic approach to workforce development and for matching skills and training delivery with the current and future needs of industry, sectors and regions. As a consequence, the expectations of E-Scans have increased over the last few years. A new independent agency, the National Workforce and Productivity Agency, will be established under the Building Australia's Future Workforce package. Its role will include the development of sectoral skills and workforce development plans in conjunction with ISCs and industry. The provision of independent advice on sectoral and regional skills needs to support workforce planning and productivity, including small business, will be critical to this particular role. In the context of the new Agency's roles and activities, the role and content of E-Scans may need to be reviewed, taking into account that ISCs are not research, or data gathering and analysis agencies and may have a limited capacity to develop E-Scans that may be needed in the future. While the evolving and growing expectations of E-Scans and ISCs' role in this regard are acknowledged, the E-Scans, as a requirement of the Training Package Development and Endorsement policy, remain for now as specified by this policy. The Senate Committee also recommends that the ISCs CEOs' Forum develops a template and mechanism to achieve greater consistency in the timing and reporting of E-Scans. However, given that these considerations are covered by current policy and that the CEOs' Forum is an informal body, the CEOs' Forum may not be the most appropriate body to consider the changes to the template and to E-Scans generally. Its advice and views on E-Scans may be sought in the future in the context of current policy review, when undertaken. Recommendation 3 The committee recommends that the government develops standard contracts with clauses detailing accountability and reporting requirements for all paid works undertaken by ISCs under contract to government agencies. These standard clauses should be incorporated into contracts between DEEWR and each ISC. Australian Government Response This recommendation is supported and reflects current arrangements. DEEWR funded projects are contracted utilising DEEWR standard Funding Agreement templates. The templates meet the requirements of the Financial Management and Accountability Regulations, Commonwealth Grant Guidelines and the DEEWR Procurement Manual and, as such, provide a sound accountability and reporting framework. The ISC core Funding Agreement incorporates the standard DEEWR contractual requirements and clauses and the same template is used for all DEEWR core Funding Agreements with ISCs. Each DEEWR core Funding Agreement with an ISC details: the project deliverables; timeframes: progress and financial reporting; acquittal of funds and payments linked to the successful completion of contract requirements; and key performance indicators and performance measures. A key reporting requirement in the core Funding Agreement relates to financial accountability. It includes Annual Audited Financial Statements and a Final Audited Financial Statement and Acquittal of Funds. The payment of instalments under the core Funding Agreement is linked to DEEWR's acceptance of satisfactory progress against requirements and deliverables described in the Agreement. DEEWR is able to withhold payments until satisfied with the quality and content of the reportable item. Thus ISC core Funding Agreements provide a strong and consistent reporting framework and mechanisms to ensure that ISCs are accountable for the expenditure of funds and the delivery of the project outcomes. The existing DEEWR standard Funding Agreement and relevant clauses provide sufficient mechanisms and frameworks to ensure that legal and fiduciary requirements are followed and met. In recognition of the importance of accountability and reporting requirements, DEEWR in the new Funding Agreement with ISCs for 2011-2014 has further strengthened reporting requirements using the existing standard clauses. While Government funding provided via the Funding Agreement is the main source of ISCs revenue as independent companies, ISCs also access funding from other sources. which may include other Australian Government Departments as well as state and territory governments. Contracts of all Australian Government Departments and Agencies are required to comply with the Financial Management and Accountability Act 1997 and promote the efficient, effective and ethical use of Commonwealth resources, including contractual accountability and reporting requirements. Within the boundaries of the legislative requirements, it is ultimately up to each Government Agency or organisation to determine the terms and conditions under which their financial support is provided. Recommendation 4 The committee recommends that future contracts between DEEWR and ISCs require the holding of sufficient funds to comply with statutory obligations of directors under relevant corporate legislation, and prohibit the ownership by ISCs of physical assets, such as real estate, that are not directly related to the effective performance of their role. Australian Government Response This recommendation is supported and reflects current arrangements. The following comments are offered in relation to: DEEWR and Industry Skills Councils require the holding of sufficient funds to comply with statutory obligations of directors under relevant corporate legislation....' The requirements of Australian Securities and Investments Commission (ASIC) and the current core Funding Agreement meet this recommendation. ISCs are independent companies registered with ASIC and they are subject to the Corporations Act 2001 (Act). Under the Act, directors of a corporation must ensure that the corporation is trading solvently. A necessary corollary of solvency is to ensure that the corporation has sufficient reserves to meet existing statutory obligation. Additionally, the core ISC Funding Agreement requires that ISCs comply with all statutory obligations including the obligation to trade solvently. There is no need to duplicate ASIC requirements or to include additional clauses in the Funding Agreement to address the requirement to trade solvently. The following comments are offered in relation to: `.... prohibit the ownership by Industry Skills Councils of physical assets, such as real estate....' Under the terms of the current Funding Agreement, ISCs could acquire physical assets as long as the asset was under $100,000 and as long as the asset was used for the purposes of the DEEWR-ISC Funding Agreement. Any purchase involving funds of $100,000 or over requires DEEWR's approval. This constraint clearly would not allow ISCs under the current funding arrangements to purchase any real estate from the core government funds. As ISCs are independent legal entities, DEEWR is not in a position to prevent them from purchasing real estate with funds from sources other than those provided by DEEWR. Recommendation 5 The committee recommends that DEEWR's contract with each ISC requires that directors receive no remuneration but that reasonable costs incurred for travel, accommodation and incidentals expenses incurred while exercising the role of director be reimbursed. Australian Government Response The Australian Government does not support this recommendation. The payment of remuneration for directors is an internal issue for each ISC. The governance arrangements of ISCs reflect their status as independent, not-for-profit companies. ISCs are incorporated as public companies that operate under the Corporations Act 2001. As such, each ISC operates under the rules of its constitution, is managed by a bi-partite (employers and unions) board of directors and is accountable to ASIC for the observance of its obligations under statute and common law. Acceptance of this recommendation would potentially interfere with ISCs' internal corporate governance and potentially result in ISCs being unable to attract suitable directors especially from small business. Recommendation 6 The committee recommends that any new contracts between DEEWR and the ISCs from June 2011 explicitly require ISC board directors to declare any simultaneous membership of RTO boards, regardless of whether there is a potential for any conflict of interest. Australian Government Response This recommendation is supported and reflects current arrangements. ISCs are subject to the Corporations Act 2001 (Act). The core ISC Funding Agreement requires that ISCs comply with all statutory obligations; this includes the obligations and responsibilities of directors. Under company law, directors must not allow a conflict of interest to compromise their position. Directors must not place themselves in a position where there is a real or substantial possibility of a conflict of interest. Sections 182 and 183 of the Corporations Act 2011 deal with improper use of information and improper use of position. These Sections identify that it is a director's obligation not to place his or her own interests or those of persons with whom a director is linked, ahead of that of the corporation. This applies not only to use of the position of a director, but also to the use of information that comes to the director. The need to identify and manage circumstances where a real or perceived conflict of interest might occur is also included as a standard clause in the core DEEWR-ISC Funding Agreement. Under the terms of the core Funding Agreement, ISCs are required to ensure that to the best of their knowledge after making diligent inquires, no conflict of interest exists or is likely to arise in the performance of the obligations under the Agreement. In the event that a conflict of interest arises or is likely to arise during the term of the Agreement, ISCs are required to immediately inform DEEWR in writing of that conflict of interest and the steps proposed to resolve or deal with the conflict. There is no need to duplicate the Conflict of Interest requirements of the Corporations Act 2001 or the core Funding Agreement to address the concern that directors may also be on Registered Training Organisations' boards. Recommendation 7 The committee recommends that DEEWR include a clause in its new contracts with ISCs permitting the renegotiation of industry coverage and potential splitting of ISCs during the term of the contracts, were this considered desirable and necessary to better fulfil the role of the ISCs concerned. Australian Government Response The Australian Government does not support this recommendation. In making this recommendation, the Senate Committee noted that most stakeholders who submitted their views to the Inquiry were satisfied with ISCs' effectiveness; however, there were a few stakeholders, albeit a minority, who expressed some criticism in relation to the current industry coverage of ISCs. Realignment of an ISC's industry or sectoral coverage is not contingent on the inclusion of clauses in the core Funding Agreement; rather, it is a matter for Government to determine. The review and renegotiation of the sectoral coverage of ISCs can occur any time, through a variation of contract based on the Minister's decision. Recommendation 8 The committee recommends that contracts between DEEWR and the ISCs be standardised and made publicly available on the DEEWR website. Australian Government Response The Australian Government agrees in part with this recommendation and notes that the recommendation is already partially satisfied. The following comments are offered in regard to: The committee recommends that contracts between DEEWR and Industry Skills Councils be standardised. ' DEEWR-ISC core Funding Agreements are already standardised. ISCs also enter into other individual contracts with DEEWR and standard contract templates are utilised for such contracts, which is a DEEWR requirement. ISCs may also enter into contracts with other entities, including other Commonwealth Government Departments, and it is ultimately up to each government agency or organisation to determine the terms and conditions under which their funding is provided. The following comments are offered in regard to: `....and made publicly available on the DEEWR website.' The publication of the de-identified Funding Agreements on DEEWR website is not supported as it would go further than reporting requirements of the Commonwealth Grant Guidelines and the Government sees no reason for treating contractual information relating to its agreements with Industry Skills Councils differently to that of other grant recipients. In compliance with the Commonwealth Grant Guidelines (CGGs), DEEWR publishes on its website information on individual grants, including the individual ISCs' Funding Agreements. DEEWR's grant reporting includes information regarding the grant's purpose, recipient, program title, value as well as the commencement date and duration of the grants. The Grants Register is publically available on the DEEWR website at: httd://www.deewr.gov.au/department/Pades/Grants.aspx Recommendation 9 The committee recommends that ISCs more regularly review their consultation practices and devise practical strategies to address concerns expressed by business, in particular small businesses. Recommendation 10 The committee further recommends that DEEWR identify best practice consultation principles and seek ways to incorporate these into its next contract with the ISCs. Australian Government Response Recommendation 9 and Recommen dation 10 The Australian Government supports these recommendations. Industry engagement and involvement in the VET system underpins its strength. The ISCs provide a key point of contact for industry engagement and collaboration. ISCs, have over time, established extensive and effective industry networks and have articulated stakeholder engagement plans. Nevertheless, the capacity of ISCs to grow, review and refine their stakeholder networks, and review their consultation practices, is critical to the continued relevance and quality of industry advice and implicitly to the strength of the national VET system. The following comments are offered in regard to: Recommendation 9 The committee recommends the Industry Skills Councils more regularly review their consultation practices and devise practical strategies to address concerns expressed by business, in particular small business.' The next Funding Agreement 2011-2014, to commence on 1 July 2011, has addressed this important stakeholder engagement issue by including a requirement that, as part of their Annual Business Plans, ISCs provide a Stakeholder Engagement and Communication Plan. This requirement will ensure annual reviews and revisions of Stakeholder Engagement and Communication Plan. The plan will be expected to include practical strategies to address stakeholders concerns and pay particular attention to consultation with small business and, where appropriate, with regional and rural stakeholders. The following comments are offered in regard to: Recommendation 10 The committee further recommends that DEEWR identify best practice consultation principles and seek ways to incorporate these into its next contract with the Industry Skills Councils.' DEEWR is aware of some stakeholders' concerns regarding consultation practices and the ISCs' consultation practices are and will continue to be closely monitored by DEEWR. Additionally, DEEWR will identify best practice consultation principles in consultation with the ISCs and other stakeholders. Consideration of this issue may also be included in a review of ISCs which is anticipated to be undertaken during the term of the next Funding Agreement 2011-2014. Once established, these principles could be included in the Funding Agreement at any time. GOVERNMENT RESPONSE TO THE JOINT SELECT COMMITTEE ON THE PARLIAMENTARY BUDGET OFFICE INQUIRY INTO THE PROPOSED PARLIAMENTARY BUDGET OFFICE PBO Committee Recommendations Recommendation 1 The committee recommends that the Australian Government establish a Parliamentary Budget Office dedicated to serving the Australian Parliament. Response Agreed. The Government announced in the 2011-12 Budget that it will provide $24.9 million over four years to establish a Parliamentary Budget Office (PBO). Recommendation 2 The committee recommends that the Government establish the mandate of the Parliamentary Budget Office as to inform the Parliament by providing independent, non - partisan and policy neutral analysis on the full Budget cycle, fiscal policy and the financial implications of proposals. Response Agreed. Recommendation 3 The committee recommends that the Government empower the Parliamentary Budget Office to undertake the following functions, consistent with its mandate: prepare responses to the requests of individual Senators and Members, regardless of party or Government status, and parliamentary committees, including the preparation of costings in relation to proposed policies and bills outside the caretaker period; make formal contributions to committee inquiries; initiate its own work in anticipation of the interests of its clients; and prepare costings of election commitments during the caretaker period. Response Agreed. The Government considers that the proposed functions are consistent with the mandate outlined in Recommendation 2. The details of some of these functions, such as arrangements relating to the provision of election policy costings by the PBO, will be outlined as part of the suite of legislative and other measures required to establish and operationalise the PBO. Recommendation 4 The committee recommends that the Government amend the Charter of Budget Honesty Act 1998 (Cwlth) to enable the leaders of parliamentary parties with a minimum number of parliamentary members to access the election costings provisions of the Act. The minimum number of parliamentary members should be consistent with similar requirements set out in the Parliamentary Allowances Act 1952 (Cwlth) and the Parliamentary Entitlements Act 1990 (Cwlth), which is currently five members or more. Response Agreed. Potential interactions between the Charter of Budget Honesty Act 1998, including the proposed amendments, and the operations of the PBO, will be taken into consideration as part of the development of the suite of legislative and other measures required to establish and operationalise the PBO. Recommendation 5 The committee recommends that the Government amend the Charter of Budget Honesty Act 1998 (Cwlth) to enable the costing of election commitments in the period starting from the issue of the writ for the election and ending when the election result is clear or, if there is a change of Government, until the new Government is appointed. Response Agreed. See response to recommendation 4. Recommendation 6 The committee recommends that the Government empower the Parliamentary Budget Office (PBO) to provide election costings on request, in relation to publicly announced policies, starting from the issue of the writ for the election and ending when the election result is clear or, if there is a change of Government, until the new Government is appointed. Apart from the conditions for who can make a request for costings, the caretaker period costings service of the PBO is to be consistent with that of the Charter of Budget Honesty Act 1998 (Cwlth). Response Agreed. See response to Recommendation 4. Recommendation 7 The committee recommends that the election costing service of the Parliamentary Budget Office be limited to requests from nominated parliamentary party representatives and Independent Members originally elected and seeking re-election, as Independent Members, without the endorsement of a registered political party. Response Agreed. Recommendation 8 The committee recommends that the election costing service of the Parliamentary Budget Office be limited to requests from nominated parliamentary party representatives and Indepen dent Members (as defined in recommendation 7), in relation to their own policies. Response Agreed. Recommendation 9 The committee recommends that individual election commitments are not able to be costed by both the Parliamentary Budget Office (PBO) and the Departments of the Treasury and of Finance and Deregulation, and that to avoid duplication, the PBO and Treasury and Finance confer prior to the preparation of each costing request. Response Agreed. Protocols will be developed to address potential duplication as part of the suite of legislative and other measures required to establish and operationalise the PBO. Recommendation 10 The committee recommends that the position of Parliamentary Budget Officer be established as an independent officer of the Parliament through dedicated legislation. Response Agreed-in-principle. The Government will establish the position of Parliamentary Budget Officer as an independent officer of the Parliament as part of the legislation required to establish and operationalise the PBO. Recommendation 11 The committee recommends that the legislation establishing the Parliamentary Budget Officer include provisions to establish the Parliamentary Budget Office to support the work of the Officer. Response Agreed. Recommendation 12 The committee recommends that the legislation establishing the office of Parliamentary Budget Officer include the Officer ' s: mandate, functions, maintaining confidentiality of information provisions, parliamentary oversight, reporting requirements, appointment, dismissal, remuneration determination arrangements, and term of office. Response Agreed. Recommendation 13 The committee recommends that the Parliamentary Budget Officer access information from Government departments through a negotiated memorandum of understanding with the Departments of the Treasury and of Finance and Deregulation and other departments or organisations as necessary. Response Agreed. Recommendation 14 The committee recommends that the Parliamentary Budget Officer be empowered to use the formal processes provided through the Freedom of Information Act 1982 (Cwlth) without cost to the Parliamentary Budget Officer, in the event that particular information is not provided by a Government department in accordance with any established memorandum of understanding, and the PBO is not satisfied by the rationale of the department for declining to disclose information. Response Agreed-in-principle. The Government considers that the memoranda of understanding (MOUs) referred to in Recommendation 13 will be the most effective way to support the objectives of the PBO and hence will be the primary mechanism through which the Parliamentary Budget Officer will access data and information from those departments. The Government will consider the application of the Freedom of Information Act 1982 in the event that particular information is not provided by a Government department in accordance with the MOU. The MOUs, which will be negotiated with the Parliamentary Budget Officer once an appointment has been made, will address interactions with the FOI Act. Recommendation 15 The committee recommends that the legislation establishing the office of Parliamentary Budget Officer include specific provisions to maintain the confidentiality of the sensitive information held within the Parliamentary Budget Office. Response Agreed. Recommendation 16 The committee recommends that wherever possible, in the interest of transparency and accountability the work of the Parliamentary Budget Office be made publicly available. Response Agreed. Recommendation 17 The committee recommends that responses by the Parliamentary Budget Office to requests from individual parliamentarians, outside the caretaker period for general elections, be provided in confidence, where it has been specifically directed by the client to do so. Response Agreed. Recommendation 18 The committee recommends that where possible, the work that has gone into the preparation of a response to a client request be made available to be included in the public reports of the Parliamentary Budget Officer. This may involve negotiating, with relevant Senators and Members for the public release of work prepared on their behalf, while withholding information about the original request, such as the identity of the parliamentarian and other substantive information requested, to remain in confidence. Response Agreed. Recommendation 19 The committee recommends that the Parliamentary Budget Officer be empowered to make public statements, in particular where they consider that their work has been misrepresented in the public domain. Response Agreed-in-principle. The Government considers it appropriate for the Parliamentary Budget Officer to make public statements in instances where he/she considers that the PBO's work has been misrepresented in the public domain. Recommendation 20 The committee recommends that the reporting provisions under the establishing legislation require the Parliamentary Budget Officer to formulate an annual work program, draft budget estimates and an annual report in line with the Financial Management and Accountability Act 1997 (Cwlth) and the Commonwealth Authorities and Companies Act 1997 (Cwlth). Response Agreed. The PBO will operate under the Financial Management and Accountability Act 1997 given its status under the Parliamentary Service Act 1999. Recommendation 21 The committee recommends that, with the exception of term of office provisions, the appointment, dismissal and remuneration determination processes of the Parliamentary Budget Officer be in line with similar provisions contained in the Auditor-General Act 1997 (Cwlth). Response Agreed. Recommendation 22 The committee recommends that the term of office of the Parliamentary Budget Officer be for a period of four years, with the option of renewing the appointment. Response Agreed. Recommendation 23 The committee recommends that the Joint Committee of Public Accounts and Audit (JCPAA) have oversight of the Parliamentary Budget Officer and their office in regard to the annual work program, draft budget estimates, and annual report, in line with similar provisions in the Auditor-General Act 1997 (Cwlth). This includes a formal role for the JCPAA in endorsing the workload protocols applicable to the Parliamentary Budget Office. Response Agreed. Recommendation 24 The committee recommends that an independent body be engaged to undertake an operational evaluation of the Parliamentary Budget Office, completed within nine months after the result of a Federal election is notified. On completion, the evaluation report should be tabled in the Parliament and referred to the Joint Committee of Public Accounts and Audit for possible review. Response Agreed. Recommendation 25 The committee recommends that the proposal to engage an independent body for the purpose of undertaking the operational evaluation of the Parliamentary Budget Office be referred to the Joint Committee of Public Accounts and Audit for consideration and endorsement. Response Agreed. Recommendation 26 The committee recommends that the Office of the Parliamentary Budget Officer be provided with ongoing funding of no less than $6 million per annum with consideration being given to additional resourcing for election years. Response Agreed-in-principle. The Government allocated $24.9 million over four years in the 2011-12 Budget for the establishment of the PBO. Consideration of additional resourcing for election years will be subject to the usual budgetary processes and will be informed, in part, by any review undertaken by the Joint Committee of Public Accounts and Audit (see Recommendation 27). Recommendation 27 The committee recommends that the annual draft budget of the Office of the Parliamentary Budget Officer be considered by the Joint Committee of Public Accounts and Audit, and that this committee explicitly review the adequacy of additional funding provided for election years. Response Agreed. The Government will consider any recommendations of the Joint Committee of Public Accounts and Audit concerning the PBO, noting that resourcing for the PBO will be subject to the usual budgetary processes. Recommendation 28 The committee recommends that the Australian Government explore locating the Parliamentary Budget Office within close proximity to Parliament House or co-locating it with an established organisation for the purpose of gaining administrative efficiencies. Response Agreed-in-principle. The Government considers that the physical location of the PBO is an operational matter for consideration by the Parliamentary Budget Officer to determine in order to effectively fulfil the PBO's mandate. Ordered that committee reports and government responses to committee reports be listed on the Notice Paper for further consideration.