22 September 2004
AUDITOR GENERAL CONCERNED OVER AGENCY SETTING OF FEES AND CHARGES
Concerns over the process by which government agencies set their fees and charges have been outlined in a report from WA Auditor General Des Pearson tabled in State Parliament today.
With almost $1 billion raised in fees and charges by general government agencies and a further
$5 billion by other public sector agencies and corporations last year, a comprehensive government policy is essential to ensure a consistent and transparent approach when setting fees, states Mr Pearson.
However, his examination ‘Setting Fees – The Extent of Cost Recovery’ found that there is insufficient and fragmented policy direction and that this contributes to inappropriate fee setting decisions and limited disclosure of agency pricing policies.
Consequently, says Mr Pearson, accountability to Parliament and the wider community is reduced.
In examining a sample of 14 fees at six agencies that raised over $80 million a year, Mr Pearson found that:
- Four fees exceeded cost recovery by between 10% and 125%.
- Three fees were meeting costs; however, in the subsequent year one of these fees exceeded costs by 45% as it ‘cross-subsidised’ a related fee.
- The extent of cost recovery of two fees was unknown as the costs had not been determined, though it appears that they would exceed costs.
- The extent of cost recovery of three fees could not be determined because their costs were grouped with other services; however, one of these fees was part of a group that was over-recovering costs by 131%.
- The extent of cost recovery of two fees at one agency was unknown, but preliminary costing indicated that one fee was likely to significantly exceed costs whilst the other was likely to under recover costs.
The examination also raised concerns that three of the sampled fees may amount to a tax – the State Solicitor’s Office confirming, with caution, that there was some basis for concern as there must be a reasonable relationship between a fee and the estimated overall cost of service provision.
(Legislative authority conferred on agencies to raise fees and charges does not permit the imposition of a tax, as a tax must be specifically imposed under an Act of Parliament.)
Under scrutiny too was the Department of Treasury and Finance’s review role in the fee setting process, the Auditor General finding:
- Proposed fee increases are generally only questioned by Treasury analysts if significantly above or below CPI, or if there is a particular sensitivity involved.
- Treasury files contain little documentary evidence of assessment (though this issue has recently been addressed).
- There is no explicit requirement for agencies to disclose where fees exceed cost recovery in annual fee submissions to Treasury – the examination revealing that those sampled fees which exceeded cost recovery were reported as achieving “100 per cent” cost recovery, rather than disclosing the extent of over-recovery.
Also contained in the report were the results of an examination of the management of WA Government corporate credit cards at a sample of ten agencies.
The examination found that controls over the use of corporate cards were adequate and the audit testing did not disclose any unauthorised use of corporate cards at the agencies reviewed.
However, minor breaches of corporate card policies and guidelines were found, the breaches typically arising from a failure to clearly state or justify the business nature of purchases.
Ends/.
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