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Annual Report - Departmental Overview


The Departmental Overview provides information on the Department’s role and function, management and accountability arrangements, people management, finance, purchasing and resource management operations.


The Department of Health and Ageing is responsible for achieving the Government’s priorities for population health, medicines and medical services, aged care and population ageing, primary care, rural health, hearing services, Indigenous health, private health, health system capacity and quality, acute care and health and medical research.

The Department operates under the Financial Management and Accountability Act 1997 and thePublic Service Act 1999. The Department also administers a large number of Acts which are listed in Appendix 6 - Freedom of Information.

The Department’s vision, as outlined in the 2003-05 Department of Health and Ageing Corporate Plan, is:

Better health and healthier ageing for all Australians through a world class system which:
  • meets people’s needs, throughout their life;
  • is responsive, affordable and sustainable;
  • provides accessible, high quality service including preventative, curative, rehabilitative maintenance and palliative care; and
  • seeks to prevent disease and promote health.


Jane Halton - Secretary

As Secretary for the Department of Health and Ageing, Ms Halton is ultimately responsible for the efficient administration of the Department and for the corporate and strategic directions for the Department and Portfolio. She also provides the most senior policy counsel on major and sensitive policy issues to the Ministerial team. She chairs the Department’s Executive Committee.

Image of the Executive Team (left to right): Professor John Horvath,Chief Medical Officer; Mary Murnane, Deputy Secretary; Jane Halton, Departmental Secretary; and Philip Davies, Deputy Secretary.

Executive Team (left to right): Professor John Horvath, Chief Medical Officer; Mary Murnane, Deputy Secretary; Jane Halton, Departmental Secretary; and Philip Davies, Deputy Secretary.

Mary Murnane - Deputy Secretary

Ms Murnane’s responsibilities encompass ageing and aged care, population health including drug policy, food policy and regulation, communicable diseases, health protection and biosecurity, Aboriginal and Torres Strait Islander health services and infrastructure and research. Ms Murnane oversees the Department’s Ageing and Aged Care Division, Population Health Division, the Office for Aboriginal and Torres Strait Islander Health, the Department’s State and Territory Offices in New South Wales, Tasmania, Queensland and the Northern Territory and Portfolio interests in the National Health and Medical Research Council. Ms Murnane chairs the Departmental Audit Committee and the Policy Outcomes Committee.

Philip Davies - Deputy Secretary

Mr Davies has responsibility for issues relating to medical and pharmaceutical benefits, acute care, health financing, workforce, quality, e-Health and private health insurance. He oversees the Department’s Primary Care, Medical and Pharmaceutical Services, Health Services Improvement and Acute Care Divisions together with the Department’s State and Territory Offices in the Australian Capital Territory, South Australia, Victoria and Western Australia. Mr Davies chairs the Business Management Committee.

Professor John Horvath AO - Chief Medical Officer

Professor Horvath provides support to the Minister and the Department across the full range of professional health issues, including health and medical research, public health, medical workforce, quality of care, evidencebased medicine and an outcomes-focused health system. He also has responsibility for the continuous development of professional relationships between the Department and the medical profession, medical colleges and universities.

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The Organisational Structure

The Department’s structure is based around the key sectors of Australia’s health and ageing system, as well as a number of cross-portfolio functions.

Health and Ageing Sector

  • Acute Care Division;
  • Ageing and Aged Care Division;
  • Medical and Pharmaceutical Services Division;
  • Population Health Division; and
  • Primary Care Division.

Cross Portfolio

  • E-Health Implementation Group;
  • Health Services Improvement Division;
  • Office for Aboriginal and Torres Strait Islander Health; and
  • Portfolio Strategies Division.
Business Group and the Audit and Fraud Control Branch also support the operations of the Department.

In addition, the National Health and Medical Research Council and the Therapeutic Goods Administration group of regulators form part of the Department.

State and Territory Offices

The Department also operates offices in each State and Territory. The role of the Department’s State and Territory Offices is very significant. They represent the Department’s interests at state and territory level and are able to ensure appropriate integration of services on the ground with those of State and Territory government agencies. The State and Territory Offices also work in cooperation with other Australian Government agencies.

State and Territory staff work in partnership with local stakeholders to ensure services provided through departmental programs are responsive to diverse local needs and conditions. State and Territory Offices are well positioned to assist in identifying policy links as well as overlaps and gaps between programs.

Changes to the Department

The Department engaged a consultant in December 2004 to review the support provided by the Information and Communications Division to the HealthConnect project and other e-Health initiatives.

Following the review and consultation with key Departmental and external stakeholders, the Information and Communications Division was disbanded, with its ongoing work transferred to other areas in the Department, including the newly-established E-Health Implementation Group, Business Group, Health Services Improvement Division and Portfolio Strategies Division.

Following the 2004 Federal Election, and subsequent machinery of government changes, the Health Insurance Commission, Australian Hearing, Health Services Australia and CRS Australia were transferred from the Department of Health and Ageing to the Department of Human Services (part of the Finance and Administration portfolio), effective 26 October 2004.

The full year audited 2004-05 financial statements for CRS Australia are contained in the Department of Human Services annual report. However, the financial statements for CRS Australia for the period to 26 October 2004 have been consolidated into the Department of Health and Ageing’s financial statements, contained in Section 3 of this report.

Under the machinery of government changes, the Department has assumed responsibility for some functions and associated resources previously administered by the Aboriginal and Torres Strait Islander Commission.


  • Secretary - Jane Halton
  • Chief Medical Officer - Prof John Horvath
  • Deputy Secretary - Mary Murnane
  • Deputy Secretary - Philip Davies

Health and Ageing Sector Divisons
Cross Portfolio Divisions
Population Health
Andrew Stuart
Primary Care
Acute Care
Rosemary Huxtable A/g
Ageing and Aged Care
Nick Mersiades
Medical and Pharmaceutical Services
Judy Blazow
Portfolio Strategies David Webster Office for Aboriginal and Torres Strait Islander Health Alison LarkinsA/g Health Services Improvement
Magaret Lyons

Biosecurity and Disease Control Lesley Podesta

General Practice Programs Leo Kennedy Private Health Insurance Linda Addison Quality Outcomes
Gail Finlay
Pharmaceutical Access and Quality
Allan Rennie
Jamie Clout
Program Planning and Development Mark Thomann Safety and Quality
Dermot Casey
Drug Strategy Jenny Hefford Primary Care Programs Megan Morris Acute Care Strategies Alex Rankin Policy and Evaluation Alice Creelman A/g Pharmaceutical Benefits
Joan Corbett
Parliamentary and Portfolio Agencies Shirley Browne A/g Health and Community Strategies
Joy Savage
Health Workforce
Brett Lennon
Strategic Planning
Rachel Balmanno A/g
Budget and Performance Lisa McGlynn Acute Care Development Yael Cass Residential Program Management Stephen Dellar Pharmaceutical Policy Taskforce Principal Advisor
Dr Ruth Lopert
Policy and International Cath Halbert Workforce Information and Policy
Joy McLaughlin A/g
Rural Health
and Pallative Care
Angela Reddy A/g
Food and
Healthy Living
Sarah Major
Primary Care Policy
Judy Daniel
Principal Adviser Medical Indemnity Charles Maskell-Knight Community Care
Mary McDonald
Medicare Benefits Samantha Robertson A/g Economic and
Statistical Analysis

Julie Roediger
Medical Officer Vacant Health Priorities and Suicide
Marian Kroon A/g
Targeted Prevention Programs Carolyn Smith   Diagnostic and Technology Chris Sheedy Office for
an Ageing Australia
Fiona Lynch
Office of Hearing Services
Tony Kingdon
TGA Transition Unit
Richard Eccles
  HSID Taskforce
Jan Bennett
  Senior Medical Advisor
Dr Bernie Towler
Aged Care Clinical Advisor
Dr Joanne Ramadge
Senior Medical Advisors
Dr Jane Cook
Dr John Primrose
Safety and
Quality Review

Beth SlatyerA/g
  E-Health Policy
Irene Krauss A/g
      Pricing Review Implementation Unit Liz Cain        
      Financial and Economic Modelling and Analysis Group Dr David Cullen   Outposted Advisor (WHO and

Cath Patterson
      Aged Care Redevelopment Project
Neville Tomkins

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State and Territory Offices
New South Wales - Sue Kerr

Western Australia - Michael OKane

Victoria - Raelene Thompson South Australia - Jan Feneley
Queensland - Vicki Murphy A/g Tasmania - Lisa Wardlaw-Kelly
Australian Capital Territory - Peta Fitzgibbon Northern Territory - Helen Brown

Cross Portfolio Divisions  
E-Health Implementation Group
Dr Brian Richards
Business Group
Alan Law
Audit and Fraud Control Branch
Phillip Jones
General Counsel Wynne Hannon NHMRC
Prof Alan Pettigrew
TGA group of regulators
Terry Slater
E-Health Implementation Group
Tam Shepherd A/g
Stephen Sheehan
    Centre for Health, Advice, Policy and Ethics
Cathy Clutton A/g
Principal Medical Advisor
Dr John McEwen
Trans Tasman and Business Management
Ngaire Bryan A/g
  Corporate Support
Christine B King A/g
    Centre for Research Management and Policy
Suzanne Northcott
Drug Safety and Evaluation
Dr Leonie Hunt
Financial Services Group
Michel Lok
Program Management Improvement
Tatiana Utkin
    Centre for Corporate Operations
Nhan Vo-Van
Medical Officers
Dr Andrew Pengilley
Dr Neil Mitchell
Dr Phillip Chipman
Dr James McGinness
Dr Grahame Dickson
Legal Services
Terry Lee
Judy Develin A/g
    Centre for Compliance and Evaluation
Dr Clive Morris
Non Prescription Medicines
Pio Cesarin
Joint Agency Establishment Group
Christianna Cobbold A/g
  Technology Group
Eija Seittenranta
      Office of Complementary Medicines
Dr David Briggs
Trans Tasman Group - Principal Scientific Advisor
Dr Fiona Cumming
  Communications Meredith Fairweather A/g       Office of Devices, Blood and Tissues
Rita Maclachlan
Office of Chemical Safety
Dr Margaret Hartley
  Legal Services Mark Gladman A/g       Senior Medical Advisor
Dr Graeme Harris
Gene Technology Regulator
Dr Sue Meek
          Principal Scientific Advisor
Prof Albert Farrugia

Policy and Compliance
Elizabeth Flynn

          Adverse Drug Reaction Unit Dr Kerri Mackay A/g Evaluation
Jonathan Benyei A/g
          TGA Laboratories
Dr Larry Kelly

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Ministerial Team

In 2004-05, the Department was responsible to the Minister for Health and Ageing, the Minister for Ageing and the Parliamentary Secretary to the Minister for Health and Ageing.

As at 30 June 2005, the Hon Tony Abbott MP, as senior Minister and member of Cabinet, held overarching policy responsibility for all issues pertaining to health and ageing. He was appointed Minister for Health and Ageing on 7 October 2003.

The Hon Julie Bishop MP, Minister for Ageing had responsibility for all matters relating to ageing, as well as other areas including hearing services and human cloning and stem cell research. She was appointed Minister for Ageing on 7 October 2003.

The Hon Christopher Pyne MP, Parliamentary Secretary to the Minister for Health and Ageing, assisted Minister Abbott by assuming responsibility for matters relating to the Therapeutic Goods Administration group of regulators and other population health issues. He was appointed Parliamentary Secretary to the Minister for Health and Ageing on 26 October 2004.

Refer to Appendix 7 for a full description of Ministerial responsibilities.

Outcome Structure

The Department, along with portfolio agencies, delivered its services in 2004-05 through the following nine outcomes set by the Australian Government. The first three outcomes reflect the core business of the portfolio. The other six outcomes reflect key priorities for which dedicated resources were provided; most of the six outcomes also drew heavily on resources from the first three outcomes.

Outcome Contributing Divisions and Agencies

Outcome 1: Population Health and Safety

To promote and protect the health of all Australians and minimise the incidence of preventable mortality, illness, injury and disability.

Population Health Division
Therapeutic Goods Administration group of regulators
Portfolio Strategies Division
Primary Care Division
Business Group
Australian Radiation Protection and Nuclear Safety Agency*
Food Standards Australia New Zealand*

Outcome 2: Access to Medicare

Access through Medicare to cost-effective medical services, medicines and acute health care for all Australians.

Medical and Pharmaceutical Services Division
Acute Care Division
Primary Care Division
Professional Services Review*

Outcome 3: Enhanced Quality of Life for Older Australians

Support for healthy ageing for older Australians and quality and cost-effective care for frail older people and support for their carers.

Ageing and Aged Care Division
Aged Care Payments Redevelopment
Aged Care Standards and Accreditation Agency Ltd*

Outcome 4: Quality Health Care

Improved quality, integration and effectiveness of health care.

Primary Care Division
Acute Care Division
Health Services Improvement Division
E-Health Implementation Group
General Practice Education and Training Ltd*
National Blood Authority*

Outcome 5: Rural Health

Improved health outcomes for Australians living in regional, rural and remote locations.

Health Services Improvement Division

Outcome 6: Hearing Services

To reduce the consequences of hearing loss for eligible clients and the incidence of hearing loss in the broader community.

Medical and Pharmaceutical Services Division

Outcome 7: Aboriginal and Torres Strait Islander Health

Improved health status for Aboriginal and Torres Strait Islander peoples.

Office for Aboriginal and Torres Strait Islander Health

All other divisions also have a responsibility to meet the needs of Indigenous Australians.

Outcome 8: Choice Through Private Health

A viable private health industry to improve the choice of health services for Australians.

Acute Care Division
Private Health Insurance Administration Council*
Private Health Insurance Ombudsman*

Outcome 9: Health Investment

Knowledge, information and training for developing better strategies to improve the health of Australians.

Health Services Improvement Division
National Health and Medical Research Council
Portfolio Strategies Division
E-Health Implementation Group
Australian Institute of Health and Welfare* National Institute of Clinical Studies Ltd*

*Refer to Appendix 9 - Portfolio Governance, for a description of portfolio agencies and their key achievements for 2004-05.

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The Portfolio outcome structure was revised during 2004-05 to commence in 2005-06. Further information relating to the revised outcome structure can be found in the 2005-06 Health and Ageing Portfolio Budget Statements.


The Department of Health and Ageing’s governance framework provides the structure for informed decision making, efficient and effective program management, risk management and accountability. The Department adheres to the Australian Public Service (APS) Values and APS Code of Conduct and operates to the highest ethical standards with a culture of continuous improvement.

Governance Structure

The Department’s governance structure consists of the Executive Committee and three primary governance committees as illustrated in the following diagram.

Executive Committee
Policy Outcomes Committee
Business Management Committee
Focus on Departmental policy including strategic direction, priorities and integration
Focus on corporate management and support processes
Audit Committee
Focus on Departmental audit and fraud control

Executive Committee

The primary responsibilities of the Executive Committee are to provide leadership, strategic guidance and formalise executive level decisionmaking for the delivery of its responsibilities under the Health and Ageing portfolio and internal management of the Department.

Policy Outcomes Committee

The Policy Outcomes Committee (POC) is responsible for driving strategic policy directions, establishing priorities for the health and ageing portfolio and determining strategies to address these. POC seeks to:
  • drive a whole-of-portfolio approach to addressing health and ageing policy issues;
  • identify emerging issues and enable effective and timely responses; and
  • ensure systems are in place to deliver best value for money to the Australian Government.
In 2004-05, POC focused on:
  • developing more strategic and integrated approaches to the prevention of lifestyle related chronic disease, particularly in assessing the cost effectiveness of interventions;
  • better equipping the Department to identify research priorities and encouraging more effective use of research; and
  • developing predictive tools and methodologies to assist in identifying emerging issues.

Business Management Committee

The Business Management Committee (BMC) is responsible for providing strategic guidance and oversight of corporate change in the Department. This includes:
  • providing guidance and monitoring of governance, planning, budgeting and risk management; and
  • prioritising and recommending change management projects to the Executive.
In 2004-05, BMC:
  • oversighted the implementation of a whole-of- program approach to business planning and budgeting to improve alignment with internal and external reporting processes;
  • endorsed a new People Strategy (2004-2007) that will address the nine areas of people management identified by the Australian National Audit Office;
  • endorsed the Financial Strategy (2004-2007) - Investing in Our Future - to improve performance in four key areas: financial viability; organisational reform; investment in people; and continual improvement of business systems and processes; and
  • endorsed the Program Management Improvement Strategy (2004-2007) to improve program management within the Department.

Audit Committee

The Audit Committee is responsible for overseeing internal audit and fraud control activities within the Department. This includes:
  • enhancing the Department's control framework;
  • improving the objectivity and reliability of externally published financial information; and
  • assisting the Secretary to comply with all legislative and other obligations.

Discussion relating to the Audit Committee’s achievements in 2004-05 can be found in the Internal Scrutiny section of this Overview.

Risk Management

The Risk and Security Steering Committee (RSSC) reports to the Executive Committee and is responsible for:
  • ensuring that the Department has appropriate risk management, security, and business continuity frameworks in place; and
  • monitoring, encouraging and supporting compliance with the Department’s risk,security, and business continuity frameworks.
The RSSC oversights the implementation of the Department’s risk management framework, which identifies risks associated with achieving organisational objectives at both the enterprise and operational levels across the Department. Risk management is embedded in everyday business and decision making through, for example, business planning and program management processes.

A key achievement for 2004-05 was the development of a comprehensive risk management framework which included a Risk Management Policy, the Chief Executive Instructions, a Procedural and a Risk Assessment Toolkit and Risk Management Awareness Strategy. The risk management framework was integrated into the Department’s business planning process for 2005-06.

Ethical Standards - Application of the APS Values and Code of Conduct

The Department of Health and Ageing is committed to maintaining high ethical standards. All staff are provided with copies of the APS Values and Code of Conduct on commencement with the Department and are made aware of their responsibilities under the Public Service Act 1999.

The APS Values and Code of Conduct are also posted on the departmental intranet site, along with supporting advice about their application in the departmental context. The APS Values are further reinforced at the orientation sessions conducted for all newly engaged departmental staff and further specified or inherent in a wide range of departmental training programs.

Managers are encouraged to use the Values and Code of Conduct in their decision making processes with individual employees, as necessary.

The Code of Conduct is also applied to guide staff on their responsibilities to and relationships with colleagues and the public, and is an integral part of departmental performance management arrangements.

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In 2004-05 a number of important changes were made to the people management practices within the Department. These changes were introduced in response to issues raised by staff, both via the 2004 staff survey and through staff and union representatives.

Capability Map

Central to these changes was the introduction of a new capability framework - the Capability Map. The Capability Map was designed to provide a much clearer sense of how the Department expects staff to undertake their work and provides staff with a comprehensive statement of what is expected of them at each level from APS Level 1 to Executive Level (EL) 2. The Capability Map forms the core of the Department’s approach to the Performance Development Scheme and is the basis for all of the people management activities as they link to the Department’s People Strategy 2004-2007.

Performance Development Scheme

The Department’s new Capability Map has improved and renewed the focus on the Performance Development Scheme (PDS) and will promote alignment between individual effort, learning and development opportunities and the work of the Department. A new, shorter PDS form, 4 point rating scale and new guidelines were developed in 2004-05 and will come into effect at the commencement of the new PDS cycle early in 2005-06.

Recruitment and Selection

The Department has designed and piloted a new approach to recruitment and selection.

The Capability Map has become the basis for staff selections for Gazetted vacancies for APS 1 to EL 2 positions. The new process came into effect for all Central Office positions gazetted from 26 May 2005, with State and Territory Offices to follow early in the new financial year.

The Department will monitor the new approach under the Capability Map and will undertake further evaluation after it has been in operation for 12 to 18 months.

Workplace Planning, Staff Retention and Turnover

During 2004-05, the Department continued to strengthen and progress an integrated approach to building a consolidated and effective workforce plan. To assist developing the capability of the workforce the Department has been gathering information, including an overview of the Department’s workforce diversity performance, to support a changed employment agenda.

An integral component of workforce planning is workforce participation. The Department continued its commitment to the National Staff Participation Forum (NSPF) in 2004-05. This is the peak consultation body in the Department which meets to discuss organisation-wide matters such as the implementation of certified agreements and related policies. The NSPF consists of staff, union and management representatives and is complemented by other staff forums at the divisional and state and territory level. Through these forums, consultation can take place promptly on issues such as business planning, workplace change, employment, accommodation and relocation issues.

Staff Training and Development

Alignment to the New Capability Map

The Department remains committed to developing the capabilities of its staff. A comprehensive suite of learning and development programs and IT courses was available to all staff in 2004-05, irrespective of their location. The Department’s Learning and Development strategy is underpinned by the capabilities in the Capability Map and the learning and development program has been realigned to fully support it.

Major Capability Investment Undertaken

As part of the drive to improve financial performance across the organisation, the Department has implemented comprehensive financial management training for staff in the areas of financial services and financial management. Nationally recognised and accredited financial training (at the Certificate and Diploma level) has been provided to both staff and managers employed in the finance function across the Department. In April 2005, 29 staff formed the first group of graduates from the Diploma in Government (Financial Management) program. During 2005-06, the Department’s financial capability will be supplemented by a similar number of graduates from both the Certificate and Diploma programs.

The Department continued to invest in the Health and Ageing Postgraduate Studies Program (HAPS) in 2004-05. The HAPS program allows staff to undertake graduate certificate, graduate diploma or master degree studies in public health. In 2004-05, 159 students undertook subjects in the HAPS program. Since its inception in 1997-98, 143 staff have completed an award under the HAPS program.

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The Certified Agreement and Australian Workplace Agreements

The Certified Agreement

The Department’s fourth comprehensive Certified Agreement came into effect on 8 September 2004 and will expire on 8 July 2007. This agreement covers all staff below the Senior Executive Service (SES) level and is a principles based agreement with the majority of detail on the operation of conditions held in supporting guidelines. The main features of the agreement are:
  • pay increases of 3.5 per cent on certification, 3.8 per cent in August 2005 and 3.9 per cent in August 2006;
  • where monitoring indicates prolonged excessive working hours, the Department will actively investigate drivers and seek to implement strategies to address workload issues;
  • introduction of on-line time recording for staff which allows for departmental reporting, local area reporting and automatic flagging and prompting when flex limits are being approached;
  • further improvement to the Performance Development Scheme including the introduction of a new four point rating scale, simplified forms and guidelines and commitment to provide training to managers on assessing performance; and
  • staff may ‘purchase’ an additional six months leave without pay, accrued over a two-year period, to be taken in a single block (staff require five years qualifying service).

Australian Workplace Agreements

The Department routinely offers Australian Workplace Agreements (AWAs) to all SES staff, Medical Officers Class 3-6, and Executive Level 2 staff. They are also offered to staff at other classifications where there is a need to provide a greater level of flexibility in remuneration or conditions than is available under the Certified Agreement. The Certified Agreement provides for new staff members to make an AWA on commencement.

AWAs are being used increasingly to respond to pressures in our workforce planning resulting from market forces, departmental priorities, performance and technical skills or particular expertise needs. Through the use of AWAs, the Department has the flexibility to retain and attract highly talented staff, particularly where specialist skills and knowledge are in demand in both the wider Australian Public Service and private sector. Further details about AWAs and performance-based payments are set out in Appendix 10 - Staffing Information.

Productivity Gains

Productivity gains are linked to the majority of the Department’s people management strategies. The People Strategy 2004-2007 details the program of work and areas of focus for the Department over the next 2 years. Within each of the key activity areas of the People Strategy, there are specific performance targets, derived from:
  • the Department's staff survey;
  • the Department’s People Branch data;
  • Comcare statistics;
  • the State of the Service report; and
  • the Australian Public Service Remuneration Survey report.
In addition, a range of productivity gains were identified through the certified agreement process. The Certified Agreement also delivers further productivity gains that are long term in nature. It is expected that productivity gains will be achieved through:
  • the Capability Map;
  • on-line timesheets;
  • enhancements to the Performance Development Scheme;
  • the new recruitment and selection process;
  • renewed alignment of learning and development;
  • ongoing commitment to occupational health and safety; and
  • encouragement of optimal health and wellbeing for staff (consistent with the organisation’s leadership role in the health and ageing sector).


Financial Management

The Department continues to focus on improving financial management performance in four key areas:
  • development, maintenance and enhancement of the Department’s financial and management frameworks to facilitate appropriate levels of departmental governance, financial responsibility and managerial performance;
  • development and delivery of best value for money corporate services and tools to facilitate and support program managers in the effective and efficient achievement of the Department’s outcomes;
  • improving the capacity of the Department’s workforce to effectively deliver the departmental objectives; and
  • establishment and maintenance of longterm strategies for ongoing improvement in the way the Department does business.
The Department’s financial accountability responsibilities are set out in section 44 of the Financial Management and Accountability Act 1997 and are based on efficient, effective and ethical use of allocated resources. In practice, the Department meets its accountability responsibilities by applying governance arrangements, systems, controls and processes that:
  • enable it to pursue the Government’s goals in the areas of health and ageing; and
  • provide a financial control framework that supports efficient processing and recording of financial transactions (including the production of audited financial statements).
During the financial year, a number of enhancements to the financial management systems and accompanying processes led to better utilisation of the Department’s considerable investment in its financial and human resource management systems. Key initiatives include:
  • financial reporting improvements that have ensured compliance with the Government’s Budget Estimates and Framework Review (BEFR) recommendations and improved standard monthly reporting to Executives through improved Information Technology (IT) capabilities;
  • development of a new strategic and integrated IT solution for the effective management of external committees, with an implementation date of 1 July 2005; and
  • revision of the Department’s Procedural Rules, designed to increase knowledge, compliance, consistency and efficiency of administrative processes and decision-making.
The Department’s financial management framework was subject to examination by the Australian National Audit Office (ANAO) Performance Audit Branch during 2004-05, as part of a broader ongoing agency-wide audit. The audit focused upon the support provided to the Department’s Secretary, Executive and managers to make informed decisions on the use of Commonwealth resources. Areas for improvement were noted by the ANAO and the Department intends to address issues raised in the report in the coming year.



The Department complies with the Government’s purchasing policies as articulated in the Commonwealth Procurement Guidelines (CPGs). The governance framework includes Chief Executive Instructions (CEIs) which outline the mandatory requirements, and associated Procedural Rules which expand on the CEIs by setting out operational guidelines. Together the CEIs and Procedural Rules provide a financial accountability framework that promote the effective, efficient and ethical use of the Department’s resources.

Implementation of the Revised Procurement Framework

As part of implementing the changes to procurement practice arising from revisions to the CPGs, the Department changed a number of its procurement administrative arrangements. These changes include:
  • a revision of all procurement related documentation (including the CEIs, Procedural Rules, policy manuals, templates and training materials);
  • the development of an intranet-based ‘procurement toolkit’ designed to assist staff with the procurement process;
  • the delivery of classroom based training and broader ‘awareness’ promotion to improve staff understanding of the changes to the CPGs; and
  • the introduction of a purpose built tender room which increases the Department’s capacity to deal with high volume tender responses whilst maintaining the security and probity of the tender process.

Purchasing Profile

The majority of the Department’s purchases are made as a result of calling for quotations or tenders. However, substantial use is also made of panels of qualified suppliers engaged under standing offer arrangements. Panels improve the efficiency of the procurement process. Examples of services for which panels have been used in the Department include financial, accounting and audit services, publication production, warehousing and distribution and program evaluation services.

The Department reports the details of purchasing arrangements on the Australian Government tender system, AusTender, and publishes lists of contracts in compliance with the Senate Order on Departmental and Agency Contracts. Additionally, the Department maintains an annual procurement plan which contains details of proposed significant purchases on AusTender.

Competitive Tendering and Contracting

The Department manages contracts for the provision of information technology infrastructure services, office services, and warehousing and distribution. During 2004-05, the Department exercised its option to extend the contract with its warehousing and distribution service provider for an additional two year period.

As part of the Department’s Information Technology infrastructure services contract, during 2004-05, the Department’s IT infrastructure including mainframe, midrange, network and desktop environments was refreshed, providing significant risk reduction and improved service for staff in terms of reliability and availability.

The contracts with the office services, and warehousing and distribution service providers delivered the following outcomes to the Department during 2004-05:
  • streamlined delivery of office services with the ability to incorporate additional contracted services including various components of physical security, and vehicle fleet management; and
  • improved warehousing and distribution service demonstrating benefits and cost savings to the Department.
A review of the office services contract will take place in 2005-06, and the decision on the outcomes of this review will be included in the 2005-06 Annual Report.

Exempt Contracts

A small number of contracts have been exempted from publishing in the Purchasing and Disposal Gazette on the basis that publishing contract details would disclose exempt matters under the Freedom of Information Act 1982. In 2004-05, four contracts were exempted from publishing in the Purchasing and Disposal Gazette. The total value of these contracts was $4,055,257.

Assets Management

Asset holdings are reviewed annually to ensure cost-effectiveness and wholeof- life asset utilisation. The stocktake of assets in May 2005 confirmed the location and condition of each asset. Asset management policies and procedures are subject to the CEIs and are detailed in the associated Procedural Rules. The Procedural Rules include policies for the treatment of inventory, fixed assets, software, fit-out, valuations and depreciation and also contain the Department’s financial statement accounting policy for assets.

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In 2004-05, the Audit and Fraud Control Branch was responsible for liaison between the Australian National Audit Office (ANAO) and the Department, and for providing coordinated departmental responses to preliminary audit findings and recommendations prior to the Auditor-General presenting his reports in Parliament.

The Audit and Fraud Control Branch was also responsible for the coordination of arrangements between the Department and the Joint Committee of Public Accounts and Audit (JCPAA) and the Commonwealth Ombudsman’s Office. Details of ANAO reports, and JCPAA and Ombudsman matters affecting the Department are below.

Australian National Audit Office

During 2004-05, the ANAO tabled in Parliament a number of reports on audits involving the Department. Included were audits specific to the Department, audits of other individual agencies that involved consultation with the Department, cross-agency audits where the Department was involved, and other audits where the Department was not directly involved but where recommendations were targeted at all agencies.

Audits Specific to the Department

  • Regulation of Non-Prescription Medicinal Products (Audit Report No.18 of 2004-2005)
The objective of this audit was to assess the Therapeutic Goods Administration’s regulation of non-prescription medicinal products. In particular, it addressed the systems, procedures and resource management processes used to confirm new manufacturers comply with requirements for the manufacture of non-prescription medicinal products; monitor manufacturers and medicinesto ensure requirements continue to be met; and manage non-compliance.

The audit made 26 recommendations to the Department addressing a range of administrative and management issues within the broad categories of risk management, documentation and record keeping, and establishment of clear procedures for various administrative actions. All of the recommendations raised in the audit report have been agreed to by the Department.

The Department has put in place strategies to address the ANAO recommendations.
  • Helping Carers - The National Respite for Carers Program (Audit Report No.58 of 2004-2005)
The objective of this audit was to assess the effectiveness of the Department’s administration of the National Respite for Carers Program. The assessment was made against the following criteria: does the Department effectively plan program delivery; has the Department established appropriate systems/processes to guide program administration; and does the Department effectively monitor program delivery. Against these criteria, the report made six recommendations for improving the National Respite for Carers Program. The Department has agreed to each of the recommendations.

The Department is implementing a number of reforms and initiatives for the program which address many of the matters raised in the audit report. These reforms and initiatives have been acknowledged in the audit report.

Audits of Other Individual Agencies That Involved Consultation With the Department

  • Administration of Health Care Cards (Audit Report No.54 of 2004-2005) - an audit of the Health Insurance Commission, the Department of Health and Ageing, Centrelink and the Department of Family and Community Services.

Cross-agency Audits Where the Department Was Involved

  • Management of Internal Audit on Commonwealth Agencies (Audit Report No.3 of 2004-2005);
  • Superannuation Payments for Independent Contractors working for the Australian Government (Audit Report No.13 of 2004-2005);
  • Financial Management of Special Appropriations (Audit Report No.15 of 2004-2005);
  • Measuring the Efficiency and Effectiveness of E-Government (Audit Report No.26 of 2004-2005);
  • Legal Services Arrangements in the Australian Public Service (Audit Report No.52 of 2004-2005); and
  • Workforce Planning (Audit Report No.55 of 2004-2005).

Other Audits Where the Department Was Not Directly Involved But Where Recommendations Were Targeted at All Agencies

  • Management of Business Support Service Contracts (Audit Report No.37 of 2004-2005);
  • Administration of Security Incidents, including the Conduct of Security Investigations (Audit Report No.41 of 2004-2005);
  • Administration of Fringe Benefits Tax (Audit Report No.49 of 2004-2005); and
  • Purchasing Procedures and Practices (Audit Report No.57 of 2004-2005).
In line with arrangements applying to all Australian Government agencies, the Department’s Audit Committee maintains scrutiny over the implementation of recommendations from ANAO reports, where they are applicable to the Department. Formal reports are provided to the Audit Committee twice yearly. Following the Departmental Audit Committee’s consideration of the progress in implementing ANAO recommendations, a summary report is provided to the JCPAA.

Details of the above ANAO reports, including responses to the recommendations where theDepartment was involved in the audit, can be found at the ANAO website.

Other enquiries regarding the reports should be directed to the Assistant Secretary, Audit and and Fraud Control Branch, in the Department.

Joint Committee of Public Accounts and Audit (JCPAA)

On 5 April 2005, the JCPAA conducted a public hearing in relation to its review of the Auditor- General’s Audit Report No. 18, 2004-2005, Regulation of Non-prescription Medicinal Products (Therapeutic Goods Administration). The Department attended the public hearing and gave evidence. As at 30 June 2005, the JCPAA had not yet reported on its inquiry.

Other Parliamentary Scrutiny

The Department appeared before the Senate Community Affairs Legislation Committee (Senate Estimates) on two occasions during the year for a total of three days. The Department also gave evidence and/or made submission to a number of Parliamentary Committees including:
  • Senate Community Affairs References and Legislation Committee;
  • Provisions of the Private Health Insurance Incentives Amendment Bill 2004
  • Inquiry into the National Health Amendment (Prostheses) Bill 2004
  • Inquiry into Hepatitis C and the Blood Supply in Australia
  • Quality and Equity in Aged Care
  • The Cancer Journey: Informing Choice
  • Senate Legal and Constitutional References Committee;
  • The Real Big Brother: Inquiry into the Privacy Act 1988
  • Senate Select Committee on the Free Trade Agreement between Australia and the United States of America;
  • Senate Select Committee on Mental Health;
  • House of Representatives Standing Committee on Science and Innovation;
  • Inquiry into Pathways to Technological Innovation
  • House of Representatives Standing Committee on Health and Ageing;
  • Long Term Strategies Addressing the Ageing of the Australian Population over the next 40 Years
  • Inquiry into Health Funding
  • Joint Standing Committee of Public Accounts and Audit;
  • Review of Auditor-General’s Reports 2004-05: Regulation of Non-prescription Medicinal Products; and
  • Joint Standing Committee on Treaties;
  • Amendments to Annex III [2005] ATS 9, and additional Annex VI [2005] ATNIF 5, to the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade
  • Mutual Recognition Agreement on Conformity Assessment in Relation to Medicines Good Manufacturing Practice Inspection and Certification between the Government of Australia and the Government of Canada.
In addition, the Department had a significant workload of Parliamentary Questions with a combined total of 244 questions received on notice from the House of Representatives and the Senate, and a total of 489 questions from the two Senate Estimates Hearings - this included the supplementary written questions on notice taken in lieu of the November hearing, which did not occur due to the Federal election.

Judicial Decisions and Decisions of Administrative Tribunals that have had, or may have, a Significant Impact on the Operations of the Department

In 2004-05, the Department was involved in 24 matters before the Administrative Appeals Tribunal, four matters before the Federal Court, three matters in State and Territory Supreme Courts, one matter before the Federal Magistrates Court, one matter before the Australian Industrial Relations Commission, one matter before the Administrative Decisions Tribunal, one matter before the Court of Appeal of Supreme Court of Victoria, and one matter before the Professional Services Review Tribunal. The majority of cases arose out of the Ageing and Aged Care Division.

None of the matters completed or in progress had, or are expected to have, a significant impact on the operations of the Department.


During 2004-05, the Department of Health and Ageing received notification that of the complaints relating to the Department that had been lodged with the Commonwealth Ombudsman’s Office, 26 per cent were taken to the investigation stage. Of the 36 contacts the Department had with the Ombudsman’s Office, two resulted in an adverse finding for the Department in respect of administrative issues.

Although there was an increase in the number of complaints lodged compared to 2003-04, the number of formal investigations decreased, as did the number of conclusions that noted the Department’s defective administrative procedures. The seven complaints carried over from 2003-04 have all since been closed.

Information on the role of the Commonwealth Ombudsman can be obtained from the Ombudsman’s website.

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Primary responsibility for internal scrutiny within the Department rests with the Audit and Fraud Control Branch, under the broad direction of the Department’s Audit Committee.

In 2004-05, the Audit and Fraud Control Branch promoted and improved the Department’s corporate governance through the conduct of audits and investigations, and the provision of high quality independent advice and assistance. Key activities in 2004-05 included:
  • undertaking a Department-wide audit risk assessment to guide the development of the Audit and Fraud Control work program for 2004-05;
  • in line with the approved work program, conducting a range of audits and reviews relating to compliance with Departmental control frameworks, grants and contract management, IT management and departmental expenditure and procurement activities;
  • the implementation of a control self assessment package to assist managers survey the operation of their area to ensure that they and their staff understand the compliance framework they work within, and against which they are required to report; and
  • the provision of fraud prevention and investigation services.

Audit Committee

The Department’s Audit Committee met five times during 2004-05. Membership includes an independent member appointed from outside the Department and a representative from the Australian National Audit Office who attends each meeting as a ‘participating observer’.

In accordance with its charter, approved by the Secretary of the Department, the Audit Committee approves the strategic direction of the Audit and Fraud Control Branch. The Audit Committee also:
  • assesses the performance of the Audit and Fraud Control Branch;
  • considers the outcomes of audits and reviews undertaken by the Audit and Fraud Control Branch, including the appropriateness of subsequent follow-up action by managers;
  • provides advice to the Secretary on the signing of the Department’s financial statements; and
  • assesses the outcomes of external reviews of departmental programs, including any follow-up action.

Key achievements for the committee in 2004-05 include:
  • the successful development and implementation of a control self assessment package throughout the Department, which is now an important element of the Department's corporate governance processes; and
  • the overseeing of a significant reduction in outstanding Auditor General report recommendations across the Department. Over recent years, the Audit Committee has overseen a reduction in findings arising from the annual audit of the Department's financial statements from one Category A and twelve Category B findings in 2001, to two Category B findings in 2004.

Fraud Minimisation Strategies

As part of its responsibilities to protect the public interest, the Department pursues a fraud control program that complies with the Commonwealth Fraud Control Guidelines. In this program:
  • fraud risk assessments and fraud control plans are prepared in compliance with the Commonwealth Fraud Control Guidelines;
  • appropriate fraud prevention, detection, investigation and reporting procedures and processes are in place; and
  • annual fraud data are collected and reported in line with the Commonwealth Fraud Control Guidelines.
Forty eight fraud allegations were investigated during the year. While some of these investigations are continuing, outcomes of completed investigations included a number of matters being referred to the Australian Federal Police, State Police or Departmental employees with powers authorised under the Public Service Act 1999.

Produced by the Portfolio Strategies Division, Australian Government Department of Health and Ageing.
URL: http://www.health.gov.au/internet/annrpt/publishing.nsf/Content/departmental-overview-1
If you would like to know more or give us your comments contact: annrep@health.gov.au