Appendix 8: Dairy Adjustment Authority Annual Report

Authority member's review 
Agency overview 
Performance report 
Management and accountability 
Financial statements 

Abbreviations

ANAO—Australian National Audit Office
DSAP—Dairy Structural Adjustment Program
FOI—freedom of information
SDA—Supplementary Dairy Assistance

Authority Member's Review

This is the final report for the Dairy Adjustment Authority which ceased to exist on 31 December 2008. The Department of Agriculture, Fisheries and Forestry assumed the posers and functions of the Authority from 1 January 2009 as required under the Dairy Produce Act 1986.

In the six months to December 2008, the Authority focused on preparing for its closure, including finalising 42 outstanding payments totalling $204,000. As at 31 December 2008, there were five unresolved cases worth less than $15,000. As was outlined in the Authority's 2007-08 annual report, finalisation of these cases was outside the Authority's control.

The Authority received favourable internal audits of the wind-up process and of its expenditure for the five month period July to November 2008.

I would like to thank my predecessor, Authority staff and staff of Dairy Australia for their assistance in winding-down the Authority and in preparing this annual report.

Conall O'Connell
Authority Member and Chief Executive

17 August 2009

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Agency overview

Role and functions

The Dairy Adjustment Authority was established on 3 April 2000 as a statutory authority under the Dairy Produce Act 1986. It was responsible for administering the Dairy Structural Adjustment Program Scheme 2000 and the Supplementary Dairy Assistance Scheme 2001, the two major grants programs under the Dairy Industry Adjustment Program.

The Authority was responsible to the Minister for Agriculture, Fisheries and Forestry and was a prescribed agency under the Financial Management and Accountability Act 1997. The Authority drew its funding from the Dairy Structural Adjustment Fund.

The Authority was closed on 31 December 2008 in accordance with amendments to the Dairy Produce Act 1986 made by the Dairy Adjustment Levy Termination Act 2008.

Organisational structure

The Authority comprised five members until its phase-down to a single Authority member on 30 June 2006 in accordance with the Dairy Produce Act 1986. The term of the Authority member concluded on 30 June 2008, at which time the Secretary of the Australian Government Department of Agriculture, Fisheries and Forestry became the single Authority member. This transition was in accordance with the Dairy Produce Act 1986.

The Melbourne office of the Authority closed on 19 December 2008. It had been operating with three part-time staff since July 2008. All Authority staff were seconded from Dairy Australia Limited—the industry services body—under the Dairy Produce Act 1986.

In addition to implementing governance and compliance requirements, Authority staff were preparing for the wind-up of the Authority, including resolving outstanding payments.

Outcome and output structure

The final scheduled quarterly payments to unitholders were made in April 2008. Between making the final payment to farmers and its formal closure on 31 December 2008, the Authority focused on finalising its 2007–08 reporting obligations and making deceased estate and failed credit payments.

The Authority granted payment rights to the value of $1,628.30 million to 29,946 eligible dairy producers under the Dairy Structural Adjustment Program Scheme. Under the Supplementary Dairy Assistance Scheme, the Authority granted market milk payment rights to the value of $101.75 million to 7,742 eligible dairy producers and discretionary payment rights totalling $18.40 million to 662 eligible dairy producers.

During the period July to December 2008, 42 payments were finalised totalling $203,892, comprising 37 payments worth $202,622 under the Dairy Structural Adjustment Program and five payments worth $1,270 under the Supplementary Dairy Assistance Scheme. As at 31 December 2008 when the Authority was closed, there were four unresolved deceased estates and one payment pending where up-to-date bank accounts had not been provided, worth a total of $14,664.

The Department of Agriculture, Fisheries and Forestry assumed the powers and functions of the Authority from 1 January 2009 as required under the Dairy Produce Act 1986. In this role the department has focused on responding to unitholder enquiries, closing the Dairy Structural Adjustment Fund and ensuring that the Authority's records are appropriately stored.

Other agencies

The Authority was supported by Dairy Australia Limited, Centrelink and the Department of Agriculture, Fisheries and Forestry.

Dairy Australia:

• was the trustee of the Dairy Structural Adjustment Fund until the fund's closure in June 2009
• made payments to unitholders under the direction of the Authority
• provided the Authority with the resources and facilities to carry out its legislative functions.

Centrelink and the Authority exchanged information in relation to the Dairy Exit Program and other Dairy Type Grants under a service level agreement between the two agencies which expired on 31 December 2008.

The department and the Authority operated under a memorandum of understanding which expired when the Authority wound up. Regular meetings were held to discuss implementation of the legislation, policy advice and contact with the office of the Minister, and the wind-up of the Authority. Dairy Australia also attended wind-up meetings between the department and the Authority.

Performance report

The prime objective of the Dairy Adjustment Authority was to administer the Dairy Structural Adjustment Program Scheme 2000 and the Supplementary Dairy Assistance Scheme 2001. The Authority expended $324,056 in operational costs from 1 July 2008 to 31 December 2008. (Note this does not include $11,820.29 for legal services which was billed to the department after the Authority had closed and is not recorded in the Authority's financial statements.)

Total final payments made under both schemes were $1,745 million. The reason for the variance between payment rights granted and actual payments was explained in the 2007–08 annual report after a review undertaken by the Authority supported by the Authority's internal auditors, HLB Mann Judd, and an independent contractor.

Performance against objectives

The Authority's performance against objectives during the year was as follows:

Objective	Target	Outcome
1. From 1 July 2008, the Authority will provide accurate and timely administration of all remaining payments and payment rights under the DSAP and SDA.	1.1. Register of Unit Entitlements updated within 15 working days after all necessary information for a change of circumstance has been obtained and verified.	Target met.
	1.2. Register of Unit Entitlements updated within 15 working days of notification of a decision by the Administrative Appeals Tribunal if the decision relates to entities involved in one enterprise. If a decision relates to entities involved in more than one enterprise, the Register of Unit Entitlements is updated as soon as practicable.	Target met.
2. The Authority receives successful results from audits of expenditure where such audits are undertaken.	2.1. Internal audits of expenditure validate that appropriate risk management strategies are in place.	Target met.
	2.2. Annual independent external audit report is unqualified.	Target met.
3. The Authority exercises its functions in a prudent and cost efficient manner.	3.1. Actual administrative expenditure is within 10% of the budgeted administrative expenditure for the operation of the Authority.	Target met (underspend of $12 881)
	3.2. Management of finances in accordance with risk management and fraud control plans, as required by the Financial Management and Accountability Act 1997.	Target met.

 

Management and accountability

Corporate governance

The Authority was committed to the highest standards of corporate governance. The Authority had in place, until its closure on 31 December 2008, the structures and processes to implement the principles and objectives of corporate governance as set out below.

Authority

The Secretary of the Department of Agriculture, Fisheries and Forestry became the single Authority member from 1 July 2009. Five Authority meetings were held over the period 1 July 2008 to 31 December 2008. The General Manager of the Livestock Industries Branch, Agricultural Productivity Division, represented the secretary at these meetings as provided for under Resolution 2108 made by the Authority member on 21 July 2008. Formal minutes of Authority meetings were maintained as required by the Dairy Adjustment Authority Regulations 2000. In addition, the Authority held four meetings with the department and Dairy Australia to progress the wind-up of the Authority.

Audit Committee

The Authority's Audit Committee had a charter to assist the Authority member with:

• managing key business systems and controls
• monitoring the financial position and reporting of financial statements
• commissioning, reviewing and progressing internal and external audits
• monitoring compliance with legislative requirements
• reviewing risk management systems and controls.

Two meetings were held on 24 July and 21 August 2008. The Audit Committee comprised two members including an independent chair. Dairy Australia and Authority staff also attended these meetings.

Audit Committee meetings were formally structured and held prior to Authority meetings to allow for timely transfer of information. The Authority's internal auditors and the Authority member were invited to attend all Audit Committee meetings.

The Audit Committee meetings focused on finalisation of the 2007–08 financial statements and annual report, internal audit issues and the Authority's budget for 2008–09.

Remuneration

The Authority member was responsible for ensuring that:

• the remuneration paid to staff was commensurate with duties and responsibilities
• staff performance met relevant benchmarks
• policies and systems in place for managing remuneration were appropriate and consistent with the Authority's objectives.

During the year, the Authority member reviewed the level of remuneration paid to staff and made recommendations to Dairy Australia regarding staff remuneration. This was done having regard to the performance of staff against formally agreed performance criteria and goals. The Authority member did not get paid for the period July–December 2008.

Ethical standards

The Authority was committed to high standards of conduct. To this end, the Authority had in place a Code of Conduct and a List of Values that bound the staff. In summary, the Code of Conduct required work practices and behaviours which demonstrated impartiality, legality and confidentiality.

Risk management

The Authority maintained a comprehensive risk management plan. The plan identified potential risks to the effective operation of the Authority or the achievement of objectives and detailed the strategies for management of these risks.

Internal audit

Internal audit was an integral component of the Authority's system of internal control. It provided the mechanism to monitor and report on compliance with the Authority's policies and procedures. Representatives from the Authority's internal auditor attended each meeting of the Audit Committee. Two internal audits took place during July–December 2008. They were:

• a review of transition activities during the wind-up of the Authority
• a review of the Authority's expenditure.

Fraud management

The Authority had in place a comprehensive Fraud Control Plan covering fraud risk assessment and the implementation of appropriate fraud prevention, detection, investigation, reporting and data collection procedures and processes.

The Authority member has certified that, under section 45 of the Financial Management and Accountability Act 1997, the Authority has ensured that:

• fraud risk assessments and fraud control plans were prepared that comply with the Commonwealth Fraud Control guidelines
• appropriate fraud prevention, detection, investigation and report procedures and processes were in place
• annual fraud data was collected that complied with the Commonwealth Fraud Control Guidelines.

Business continuity

The Authority maintained a detailed business continuity plan to ensure that it had in place strategies and treatments to be employed in the event of a major disruption to enable significant functions.

Memorandum of understanding with the Australian Government Department of Agriculture, Fisheries and Forestry

The Authority had a memorandum of understanding with the department which set out agreed performance measures relating to the accuracy and timeliness of payments, satisfactory audit results and the Authority exercising its functions in a prudent and cost-efficient manner.

The memorandum was amended in June 2008 to reflect the priorities of winding-up the Authority. Under the memorandum, the Authority reported quarterly to the department against the performance measures. It was agreed that upon receipt of the first quarterly report for 2008–09, no further quarterly reports were required. The memorandum expired on 31 December 2008 when the Authority ceased to exist.

External scrutiny

As part of the overall accountability framework, the Authority's operations were subject to external scrutiny from parliamentary committees, the Commonwealth Ombudsman and the Federal Privacy Commissioner.

In addition, decisions of the Authority regarding entitlements were subject to independent external review. In this regard, a dairy producer affected by a decision of the Authority could seek a review of the decision by the Administrative Appeals Tribunal. There was a further right of appeal from decisions of the Tribunal to the Federal Court of Australia on questions of law.

There were no appeals against decisions of the Authority to the Administrative Appeals Tribunal during this period and no Tribunal or Federal Court decisions pending.

The Australian National Audit Office audited the Authority's financial statements for the period 1 July 2008 to 31 December 2008. The ANAO provided its services, with a fair value of $24,700, free of charge.

Management of human resources

For July to December 2008, all three Melbourne operational staff, representing the equivalent of one full-time staff member, were seconded to the Authority by Dairy Australia.

Dairy Australia's Human Resources Manager continued to advise the Authority on matters relating to workforce planning, training and development, occupational health and safety and staff remuneration during this period. In addition, Dairy Australia held meetings with Authority staff on a regular basis to clarify issues and provide advice throughout the wind-up process.

Training

No training programs were accessed during the year.

Purchasing

The Authority's purchasing policy was in accordance with Commonwealth purchasing guidelines. The Chief Executive Instructions for the Authority provided guidance and procedures. The Authority did not own tangible assets as these requirements were provided as services through Dairy Australia.

Consultants, competitive tendering and contracting

From 1 July 2008 to 31 December 2008, the Authority had two ongoing consultancy contracts resulting in a total expenditure of $21,510 for the period of this report. The contract with HLB Mann Judd was for the provision of internal audit services. The contract was reported in the Order of the Senate on Departmental and Agency Contracts in 2006–07 and 2007–08. The second contract was with E&M Nolan Holdings Pty Ltd (trading as Managed Business IT Solutions) for hosting the Authority's IT server in a secure operating environment until the Authority was wound up.

The Authority is confident that the Australian Government has received value for money in the execution of consultancy contracts and contracted services arrangements.

Information on expenditure on contracts and consultancies is also available on the AusTender website, www.tenders.gov.au.

Legal Services Directions

In order to comply with the Legal Services Directions, the Authority provides the following information:

• The Authority's expenditure on legal services from 1 July 2008 to 31 December 2008 was $17,601. This expenditure relates to legal advice obtained.
• Of this, $11,820 was billed to the Authority after it had closed and was recovered from the Dairy Structural Adjustment Fund in February 2009. Consequently this expenditure is not recorded in the Authority's financial statements.
• The Authority did not engage counsel during the period 1 July 2008 to 31 December 2008.

Commonwealth Disability Strategy

The Authority abided by the Commonwealth Disability Strategy policies and practices of the Australian Government Department of Agriculture, Fisheries and Forestry for policy development and implementation and Dairy Australia for employment conditions.

Occupational health and safety

The Authority's occupational health and safety policies and procedures were in accordance with those of Dairy Australia, which employed all the Authority staff.

Occupational health and safety information was available to all staff from the Dairy Australia Occupational Health and Safety Committee and through ongoing services including an Employee Assistance Program.

Activities from 1 July 2008 to 31 December 2008 included:

• conducting regular fire alarm checks
• ensuring the Authority's offices were supported by three fire wardens employed by the lessor of building space
• attending Dairy Australia's Occupational Health and Safety Committee meetings.

No incidents were reported to the occupational health and safety officer during this period.

Freedom of information

This statement, correct to 31 December 2008, is published to meet the requirements of section 8 of the Freedom of Information Act 1982.

Section 8 of the Act requires agencies to make available information about their functions, organisation and operations. The information for the Authority is contained in the body of the annual report. The decision-making powers of the Authority related to the granting of payment rights under the Dairy Structural Adjustment Program Scheme 2000 and the Supplementary Dairy Assistance Scheme 2001.

Applications under the Freedom of Information Act

The Authority did not receive any applications under the Freedom of Information Act 1982 during the period 1 July 2008 to 31 December 2008.

How to lodge a request

Applicants are encouraged to contact the FOI Contact Officer with any questions related to applications under the Act by writing to:

FOI Contact Officer
c/o Department of Agriculture, Fisheries and Forestry
GPO Box 858
Canberra ACT 2601
or telephoning 1800 503 603.

Categories of documents held

Freely available documents include the annual report, newsletters, information sheets and application forms.

The Authority maintained files covering administrative, operational and board matters, as well as files containing applications and supporting documentation in relation to the Dairy Structural Adjustment Program Scheme 2000 and the Supplementary Dairy Assistance Scheme 2001. These records have been transferred to the custody of the Department of Agriculture, Fisheries and Forestry.

The Authority also maintained a range of databases containing information associated with the processing of claims. The Authority outsourced the maintenance of a Register of Unit Entitlements used to record entitlements and to make payments to eligible dairy producers. This register was transferred to the Department of Agriculture, Fisheries and Forestry in December 2008. A manual register of entitlements was maintained internally from July 2008 and transferred to the Department in December 2008.

Advertising and market research

The Authority did not use the services of any advertising or market research organisations during the reporting period.

Ecologically sustainable development and environmental performance

The Authority made a conscious effort to minimise waste and the unnecessary use of resources by:

• recycling paper and toner cartridges
• conducting meetings with parties from interstate by telephone where feasible
• programming the photocopier to save energy
• extinguishing office lights when not required.

Financial statements

Financial statements   PDF [706kb]

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