AUSTIN, Dr Nick, Acting Chief Executive Officer, Australian Centre for International Agricultural Research BENFIELD, Mr Sean, Senior Executive Director, Financial Statements Audit Services Group, Australian National Audit Office BIRRER, Mr Chris, Deputy Chief Executive Officer, Payments and Integrity Group, Services Australia CALLINAN, Samantha, Acting General Manager, Corporate, Australian Centre for International Agricultural Research CRASWELL, Ms Lesa, Group Executive Director, Systems Assurance and Data Analytics Group, Australian National Audit Office DIAMOND, Ms Angela, Chief Financial Officer, Services Australia HICKS, Mr David, First Assistant Secretary and Chief Financial Officer, Department of Health, Disability and Ageing [by video link] JAGO, Ms Carla, Acting Deputy Auditor-General, Australian National Audit Office McLIESH, Dr Caralee, PSM, Auditor-General, Australian National Audit Office RYAN, Ms Annie, Chief Operating Officer, Australian Pesticides and Veterinary Medicines Authority SHANNON, Ms Robyn, Deputy Chief Executive Officer, Program Design Group, Services Australia TURNBULL, Mr Stuart, General Manager, Families and Participation Division, Services Australia WALMSLEY, Mr Julian, Acting National Manager, Financial Systems, Policy and Reporting, Services Australia Committee met at 0 9 : 33 CHAIR ( Mr Burns ): I declare open this public hearing of the Joint Committee of Public Accounts and Audit for the inquiry into Commonwealth financial statements for 2023-24 and 2024-25. I thank the witnesses for being here today. As this hearing is a formal proceeding of the parliament, the giving of false or misleading evidence is a serious matter and may be regarded as a contempt of the parliament. The evidence given today will be recorded by Hansard and attracts parliamentary privilege. I remind all present today that as chair I will ensure that proceedings are conducted in an orderly, respectful and courteous way. I further remind committee members that public officials should not be asked to give opinions on matters of policy and should be given reasonable opportunity to refer questions to superior officers or to a minister. However, this does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Witnesses are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and accompanied by a statement setting out the basis for the claim. Does anyone have any brief opening remarks before we move to a round of questions? Dr McLiesh : I've provided an opening statement for circulation, and I can highlight a few points from that if that suits you and the committee. The ANAO prepares a report annually on the outcomes of financial statements audits conducted across the Australian government sector. In 2024-25, the report covered the audits of 243 entities, including the consolidated financial statements, so it's a significant undertaking for both the ANAO and entities across the public sector. I want to thank entities and the ANAO team for the considerable effort in preparing the statements and the audits. The reports provide a point-in-time view of key financial statements, risks, governance arrangements and internal controls across Commonwealth entities, and they also highlight deficiencies or what we term as audit findings that create business risk or affect an entity's ability to produce high-quality financial statements. Across the last year, we have observed continued improvement in the maturity and the quality of entities' financial statement preparation. The number and significance of audit findings reduced relative to the previous year. We observed fewer misstatements, errors or omissions in entity financial statements, and the timeliness of financial reporting improved. Despite the overall decrease in findings, we also continued to observe persistent areas that require improvement. Weaknesses in IT controls remain the largest area of audit findings in both years; 45 per cent of findings in 2024-25 relate to the IT control environment, which is up on 43 per cent in the previous year. Weaknesses in IT controls can expose entities to an increased possibility of unauthorised access to systems or to data or data leakage, and they can pose significant business risks to security and to the integrity of entity operations. Addressing these fundamental IT findings is essential in an environment where entities are increasingly relying on technology, including artificial intelligence, in their operations. The latest report also continued to identify legislative breaches, with findings on legislative noncompliance increasing in the last year to 21, compared with 15 in 2023-24. These legislative breaches range widely in nature—for example, from breaches of section 83 of the Constitution, where payments were made without a valid appropriation, to incorrect remuneration payments that resulted in noncompliance with determinations of the Remuneration Tribunal. We will continue to monitor these and other themes in findings through the 2025-26 financial statements audit cycle, which is well underway now, and our broader audit work program, including our performance audits and performance statement audits, with a strong focus on assessing entity risk and how entities are responding to what is a very complex and challenging environment. Thank you, and we look forward to assisting the committee in its inquiry. CHAIR: Thank you very much, and thank you to your team for all the work. Let's dive in and go through each of the different agencies and try to do a little bit for everyone. And let's start with the breaches of section 83 of the Constitution. I'll start with the Auditor-General first, and then I'll go to each agency. For the purposes of the Hansard, can you describe the sorts of breaches of section 83 that you've identified, the nature of them and how they vary? Dr McLiesh : I'll start, and I'll see if others want to contribute as well. In the last year, 11 material entities disclosed breaches or potential breaches of section 83 of the Constitution, which provides that money cannot be withdrawn from the Consolidated Revenue Fund except under appropriation that's made by law. That was an increase on the previous year. That increase is both a positive and a negative. It is positive in the sense that more disclosure can indicate that entities are considering whether they are in potential breach of section 83 as they prepare their financial statements. We have seen, and we'll likely hear more about it this morning, processes that have been put in place to provide assurance over lawfulness, and these processes are identifying more potential breaches of section 83. So there's a positive element to the growth in findings on section 83 breaches. On the other hand, ideally entities would have controls in place when establishing and administering the programs and payments to mitigate that risk in the first place. We do see a wide range of breaches in terms of the nature of the breaches and the value of those. Some may be related to longstanding issues of misalignment between IT systems and the law that have developed over many years. Some may be related to an inadvertent administrative error and how delegations are followed in an agency. Payments could be made in good faith. We see some payments that are based on incomplete or inaccurate information from recipients of those payments, and that can result in a potential breach of section 83. Also, breaches could be a result of fraud or of bad faith. There really is a wide range of potential breaches that are covered in our findings. I think it's important to see whether agencies are acting on the findings, that they take lawfulness seriously and that they put steps in place to remediate those findings. We'll hear more from some of the entities shortly on the steps that are being taken. Carla, is there anything that you would add to that? Ms Jago : I will add that the majority of the section 83 breaches we see relate to legislation that entities administer—the vast majority. There is the Australian Centre for International Agricultural Research that we've got here today. Theirs was a little bit different because it's around employee entitlement payments and whether they're departmental or administered—and we can cover, when we get to that, what 'departmental' and 'administered' mean—but the vast majority of the section 83 breaches relate to legislation administered by entities. CHAIR: Thank you. Maybe I'll start with Health and then we'll go to the Centre for International Agricultural Research, on the basis of that advice. Let's start with the department of health. The 2023-24 audit basically said that Health didn't have any centralised process to assess whether you were complying with the legislation. Do you want to talk through, for the purpose of the committee, what you did to change that. Mr Hicks : Sure. The 2023-24 audit was asking the question of whether we had a centralised and consistent oversight and review process, and the department didn't. We had risk management and assessment activity go on across the programs but not in a consistently oversighted manner. Where we run into— CHAIR: Sorry, do you mind saying that again, Mr Hicks? Mr Hicks : It wasn't an absence of review and oversight entirely. Instead, it was a centralised and consistent approach to that oversight and a consistent assessment of the risk level across each of the programs. There are a few things that we did— CHAIR: What did that mean in practice? Was it that there were policies but no-one was actually keeping an eye on them? Mr Hicks : It was more a case that program A might have a different risk consideration to what program B might have because consideration was made at the program level and then we weren't bringing that together and assessing holistically and consistently across all of those programs. That says that some programs were doing it really well but a bunch of them won't have been. That meant an inconsistent approach, I think, to how we identified potential section 83 breaches and potential legal nonconformance in program payments. CHAIR: Which agencies were doing it well? Which broad program did it well? Mr Hicks : I don't know offhand. I can come back with a set of the good ones if that would help. CHAIR: That would be useful. Were there any that you identified that needed reform? Mr Hicks : Again, I don't remember specific programs that were positive or negative on that front, but I can run that to ground. CHAIR: Maybe the Auditor-General might have any programs that are worth identifying as the good examples in the department of health. Obviously, it wasn't centralised, but do you have any examples of programs managing that well? Ms Jago : I don't know if I can give program-specific examples, but, when the issue was raised back in 2023-24, it was because some noncompliance had been identified very late in the financial statement audit process, and that related to the Pharmaceutical Benefits Scheme payments under the National Health Act. That's what really brought to our attention this inconsistent approach between different program areas. Mr Hicks—or, potentially, Services Australia—might be able to talk a little bit more to this. One of the things that we understand then happened was a much more structured engagement between the department of health and Services Australia and then a more structured recording of and follow-up of potential legislative compliance matters by the department of health once the new processes were in place. CHAIR: That makes sense, but I'm curious as to why the evidence given to the committee was that we had some programs that were doing it well. Mr Hicks : I think the easiest way to answer that would be to come back on where the processes were different across programs. But the one that Ms Jago mentioned is obviously the big driver of this. Is it worth stepping through what we did? CHAIR: Please. Mr Hicks : We looked at our internal processes for assessing risk and drove those processes from the centre. One of the challenges with these programs, particularly where we execute the payments through a third party, is that you've got finance, legals and the program area within the department, and finance, legals and the program area within Services Australia, and ensuring that they operated in sync as it related to legislative compliance was the real piece that we needed to resolve. So we set up that centralised review and oversight process and applied that across programs. We strengthened the guidance internally on identifying section 83 breaches and what the reporting obligations and possible remediation actions were. You can resolve a section 83 breach through amendments to legislation and amendments to the enabling systems or the processes around those systems as well. We did a stocktake of all of our programs and assessed the legislative compliance risk across those. That was driven from the centre again so that we took a more consistent approach to that, and we kicked in the formal governance and reporting arrangements. We have a formal requirement for our legal area to report to the CFO now on legislative compliance matters. There's a formalised relationship between the legal areas of Health and Services Australia. We've got this strategic business committee, which deals on programs administered by Services Australia on the department's behalf, and that has representatives both from the enabling areas—corporate, legal and finance within Services Australia—and from the department and the program areas. We formally escalate any potential legislative noncompliance up through our financial statements subcommittee and internal audit committee as well. We've also built targeted legislative compliance questions into the assurance activity that we undertake here. We have an assurance census that we run through our exec at the end of March through our branch heads and at the end of the financial year through our division heads and also through deputies, where they need to answer specific legislative compliance questions on the way through. CHAIR: Thank you for that. That sounds like a pretty comprehensive set of reforms. The department of health identified a number of section 83 breaches in the 2024-25 financial statements. Can you go through the different types? Obviously, there were some identified in aged-care subsidies, home care, crediting of unspent funds, supply of complex authority required drugs, the exemption process for authority required prescriptions, and private health insurance rebates. Can you go through the nature what that actually meant? What was the scale of these sorts of breaches and how serious were they? Mr Hicks : They're all serious. There's no materiality threshold on section 83 breaches, so we do take them all seriously. There's a fair variety there. The list looks relatively long, not least of all because of the additional work that we put in through particularly the stocktake process to more readily identify them. A lot of the programs we're looking at are long since established, so, if they did have legal conformance issues, then we expected this exercise to bring them up. We have a couple of programs. For example, in relation to aged-care subsidies and fees, we had overpayments of $368 million. That was really in relation to a quarterly arrears review process that was inconsistent with the legislation. The legislation required, I think, near enough to real-time reconciliation. I can't remember whether it was next day or weekly, but, whatever it was, it wasn't quarterly like the process that was being delivered. Essentially what we do is make payments, and then there'll be this reconciliation process on a quarterly basis, and that would true up any payments in either direction. The net result was right for the provider, but running that process quarterly was inconsistent with the legislation. So we had a process issue there, and— CHAIR: Was that $368 million that you identified not done in accordance with the legislation? Forgive me, Mr Hicks, but can you explain to me what's set out in the legislation and why the quarterly payments don't marry up to that? Mr Hicks : I'm just conscious that Ms Sitou has her hand up. I don't know if that is to weigh in on this. Ms SITOU: I can wait until after you've responded to the chair, but, yes, I do have a follow-up question. Mr Hicks : Sorry, I couldn't hear anybody during the introductions. CHAIR: No, you're all good. Carry on. Mr Hicks : This was a process that had been in place for a number of years. The design and build process, where requirements are defined by the department and implemented by the payment agency, doesn't strongly align to this crosschecking as to whether it aligns to the legislation. It is a pretty innocuous and practical-sounding process approach, where a quarterly review and then truing up at the end of that quarter makes a lot of practical sense. Well, that the checking process, in order to ensure that that piece aligned to the legislation, appears not to have occurred. CHAIR: What's the difference between the $368 million of payments that were not compliant and the rest of the payments that were compliant? Mr Hicks : These are payments that were still due to those providers, but they were payments that would have been encompassed in this quarterly reconciliation instead of according to the actual timeline that those reconciliations should have been done in. The net result was still that the right amount landed with the providers, but a certain amount was captured in this true-up that should have been done on a different time scale. The right result for the recipient, because it doesn't align to the timeframes of reconciliation that were in the legislation, meant that we have still breached section 83. CHAIR: Right, so it's basically that we didn't pay the invoice on time? Mr Hicks : This relates to overpayments. It's more paying ahead of time. CHAIR: Could you expand on that? Mr Hicks : I'm trying to work out how to describe the 'ons' and 'offs' that go into a reconciliation process and how they would have run through this. Can I just think about how I could neatly describe that and come back to you? Would that be okay? CHAIR: I'm someone who often doesn't describe things that neatly, so you don't need to wrap it up in a bow. You do this quarterly reconciliation, and you realise there's $368 million that doesn't line up; it doesn't comply with the legislation. My question was: does it just mean that you didn't pay in time? You said, 'No, it's overpayment.' What do you mean by that? Are we paying people for stuff that they didn't invoice us for, or they did invoice but it doesn't line up to the services, or we paid— Mr Hicks : No; it's neither of those. These are still services that were performed, and they're still in line with what was invoiced. It's just the reconciliation that brought them into line. It may be that they were overpaid this quarter, and then it was trued up in the following quarter—aligned to services that were subsequently invoiced. Then, in that following quarter, perhaps they were short, so another true-up occurred. CHAIR: So we paid for services that were inevitably going to be invoiced next year in this financial year—is it that kind of thing? Mr Hicks : Not even in different financial years. It's just at any point that's before or after that reconciliation occurs. CHAIR: Three hundred and sixty-eight million dollars seems like quite a large amount. Was it spread out across a number of different providers? Mr Hicks : It was over a number of providers and over a number of periods. Each time a reconciliation shows that there's an overpayment in the cycle, even if it's resolved in the subsequent cycle or resolved as part of that true-up process, it still shows as an overpayment. And it doesn't net off against any underpayments as a result of that reconciliation as well. It's a gross number that's spread over a number of providers over a number of years. CHAIR: I don't understand how it works, though. Isn't there a set invoicing or a set payment system for a provider? You are doing X amount of services, therefore you send us whatever it is—the invoice or the service fee—and then, in accordance with departmental policy, the invoice will be funded within a certain period of time. Mr Hicks : These relate to subsidies that are paid in advance of services being provided. So the reconciliation matches what has been paid to what is subsequently being incurred. CHAIR: Why were they paid in advance? Mr Hicks : That's the nature of the program. CHAIR: Which program? Mr Hicks : Aged Care subsidies. If you can just give me a moment, I'll dig out the specific name of the program. It might take a moment as I dig through, so I can come back to you if that's helpful. CHAIR: I'll hand over to Sal. Ms SITOU: Mr Hicks, I'm not sure if this is a question for you or the ANAO or the Auditor-General. Was this breach something that was identified by Services Australia, or is this something that was picked up by the Auditor-General's team? Ms Jago : The Department of Health identified this issue. If it helps, on that previous line of questioning, the way I'd describe it is as an actual overpayment at the time that the payment was made, usually due to a change in circumstances. If there are future payments, then those future payments can be offset against that amount owing. If there aren't future payments, then that amount would need to be recovered. So it is a true overpayment at the time that payment is made. CHAIR: I'll come back to the evidence Ms Jago just gave, but do you want to keep going? Ms SITOU: Yes. You said, Mr Hicks, that these programs had been running for some time. Presumably, the breaches there had been in place for some time, or had there been a new process brought in and therefore that's when the breaches started to occur? Mr Hicks : I don't have at hand when this breach kicked in or whether there was a change. Ms Jago : My understanding is it was first identified in the year 2022-23—I'm not sure if it was by the department of health or Services Australia. One of those two agencies identified it then, but I believe it had been occurring for quite some time before that. Ms SITOU: So it was identified within the department in 2022-23 and then again in 2024-25, or had it been rectified by that stage? Mr Hicks : It was identified in 2022-23. That was initially, but it takes a period to review the nature of the breach and formalise that, so we reported it in 2023-24. Ms SITOU: How was it picked up? These processes were in train. I'm interested in the fact that the process had been going for a number of years and seemingly had been in breach for a number of years. Where is there a review mechanism to pick up these breaches for processes that have been running for a long time? Mr Hicks : That's what we've implemented—that review mechanism—across our programs. We're conscious that—and this goes to the nature of the initial finding—the method for detection was insufficient and inconsistent across our programs. So what we're talking about now is the implementation of oversight, stronger guidance and governance between the two agencies, to hit this on three fronts: firstly, when designing and implementing new programs; secondly, when incorporating changes to programs, whether they're legislative or system driven or process changes; and, thirdly, when reviewing existing programs. Ms SITOU: Is the review of existing programs done at a set time? Would you do that every four years? When would that review occur? Mr Hicks : We've taken the initial stocktake, which was a deep-dive review, and then we used the ongoing assurance program and governance to remain across where changes might have occurred that impact existing programs, but we're also assessing and building into the implementation process on new programs. So it's ongoing. Ms SITOU: How do you review how any legislative changes might impact many of the areas that you look after? Given the complexity of the area that you look after, how do you do that piecework? Mr Hicks : In the design and build process, we've built in legislative compliance-checking requirements. Also, we use the governance that we've built with Services Australia to assess programs as they go on, whether they're ongoing or in a state of change or build. CHAIR: If anyone else wants to jump in, feel free to. I've got a couple more questions on this, and then we'll try and move on to another department. Apologies for all of the love directed towards the department of health. On the back of Ms Jago's statement, in relation to overpayments, were there any payments that were made that needed to be recovered as part of that $368 million, Mr Hicks? Mr Hicks : As I understand it there were, and they were. CHAIR: They were repaid? Mr Hicks : That's right. CHAIR: What was the nature of those overpayments? Mr Hicks : They'd be payments where somebody exited the program. CHAIR: And they just hadn't notified the department, or how did that work? Mr Hicks : It happened during that period between payment and reconciliation. That quarterly review is what captures those. CHAIR: I understand what captured the overpayment, but what happened that led to the overpayment? Why was the payment made in the first place? Was it just a scheduled, ongoing service provider that things tick along for and there are automatic payments, or was there a decision made to pay a service that then ceased being a service? Mr Hicks : My understanding is that the entitlement for an upcoming period is based on the previous period. So, where circumstances changed during that upcoming period after that entitlement had been paid, that's where the reconciliation kicked in and assessed the match between what was paid and whether it aligned to the entitlement. CHAIR: Ms Jago, is there anything else you want to add to that? Ms Jago : I don't think so. CHAIR: Thank you, Mr Hicks. Sorry for all of the focus. In the last 10 minutes or so, we'll try and move to another agency. In relation to the Centre for International Agricultural Research, during the 2024-25 financial statements quarter, the Auditor-General found a significant legislative breach was identified relating to the management of employment costs associated with reclassifications between departmental and administered appropriations. Do you mind going through what the Auditor-General found? Samantha Callinan : This situation occurred in about September 2024. There was an internal restructure in ACIAR. As part of this restructure, there were four positions which were reviewed in terms of their role classification. We classify roles as belonging to either departmental appropriation or administered appropriation. In this particular instance, the nature of the role changed to such an extent that they needed to be reclassified to administered. As part of that process, what then should have happened was our paying those particular elements out of the departmental, with the administered appropriation funding the salary components for those positions going forward. It's what we call an on-charging expense. In this particular circumstance, what had happened was the individuals who were involved had just transferred the whole of those roles directly from departmental and into administered, but some of those components that had been moved into the administered appropriation, to come out of that funding source, should have stayed in departmental and been managed through that departmental process and on-charging arrangement. CHAIR: Can you explain the difference between the departmental and administrative positions? Samantha Callinan : Yes. We follow the Department of Foreign Affairs and Trade's direct-delivery-of-aid test to assess positions. Administered positions are positions where over 50 per cent of their efforts are involved in the direct delivery of development work and administered related funding sources—dealing, to a much larger extent, in engagement with partner donors and the development and implementation of programs. Most of their work is coming directly out of and supporting that administered expenditure, which is a significant bulk of the broader expenditure for ACIAR. CHAIR: That seems like a pretty clear definition. What were the four positions that were moved from departmental to administered? Samantha Callinan : I don't have them quite clear—this was identified, including some of the processes around some of the decisions. These positions remained in departmental at the end of the financial year, but it included our director of capacity development. They look at the scholarship program and the implementation of the scholarship program of overseas students coming back to Australia, and there was a position within that team that directly managed those particular elements and some work with our multilateral and strategic partnership positions as well. CHAIR: So the four positions were in the scholarship program. Samantha Callinan : Two of them were in the scholarship program, and the other two were in our multilateral and strategic partnership program. CHAIR: And what was the nature of those two? Samantha Callinan : Working with some of our international partners and donors in terms of delivery of funding to those partners for agricultural research. CHAIR: Which partners? Samantha Callinan : It's a range of partners often linked to the World Bank Group. CABI is one of the partners. I don't have a list of all of the partners they work with. CHAIR: So two people were working in the scholarship program. What were their jobs? Samantha Callinan : One was the director of the capacity development team, and the other one was, I think, the senior program officer within the capacity development team. CHAIR: Essentially, what were their jobs? Samantha Callinan : Their jobs are to largely manage a lot of our learning and capacity development programs run through developing countries overseas. They primarily manage the John Allwright Fellowship program, whereby scholars apply from overseas to come to do agricultural research study here in Australia. CHAIR: Why were they put in administered positions, not departmental positions? Samantha Callinan : When the assessment was done of the positions, it was assessed at that particular point that over 50 per cent of their time was in the direct delivery of that particular development program. So, in accordance with the requirements for the direct-delivery-of-aid test, it could be moved from that. I believe that was part of the restructure. Dr Austin : I might come in on that. The issue in terms of the breach was not the movement. It was the fact that their entitlements weren't similarly adjusted to the administered rather than departmental. CHAIR: Do you want to expand on that? What wasn't adjusted? Dr Austin : When the restructuring occurred, the decision was made to assess those roles as being primarily focused on the delivery of aid. Therefore, their salaries were appropriately funded through the administered line. They had been working with ACIAR prior to that and had accrued entitlements. They weren't appropriately adjusted to the administered. They were in departmental. CHAIR: So all of the departmental entitlements that they accrued weren't transferred over to the administered appropriations. Is that what you're saying? Samantha Callinan : It's a somewhat confusing process. In this instance, they were all transferred over, but some of those provisions had previously been funded out of departmental and should stay in departmental. Because they'd been fully uplifted as a whole costing and put in administered—that's what the section 83 breach arose from. We then took the decision to transfer them back once the issue was identified. CHAIR: So they were working with the departmental roles; they were designated as service delivery and therefore, under the guidelines, put in the administered appropriations; and their entitlements were transferred from departmental appropriations to administered appropriations. However, given the nature of those entitlements, they should have remained in the departmental appropriations. Samantha Callinan : And just the salary component is covered through administered. Correct. CHAIR: Were there any changes in salary or entitlements as part of that process? Samantha Callinan : No. CHAIR: They were exactly the same? Samantha Callinan : Yes. CHAIR: Has it happened again? Samantha Callinan : No. CHAIR: I'm nervous about time. There are so many questions and not enough time to do them. If I can come back to the department of health on a different topic, what AI program specifically is the department using to make decisions around service delivery? Mr Hicks : We'll be discussing AI at 11.30. We'll have our digital team along for that, but the opening statement on that is that we don't use AI for decision-making. CHAIR: Great. Sorry. We'll come back to that at 11.30. I got ahead of myself. Mr Hicks : Can I clarify while I've got the— CHAIR: While you've got the conch? Mr Hicks : Yes! Thank you. I described the aged-care subsidies as being paid in advance. They're paid monthly in arrears but based on the prior quarter's review amount. It's those monthly payments that are then assessed at the end of the quarter as to whether they align to the entitlement. I wanted to clear that up. I incorrectly described them as paid in advance incorrectly. CHAIR: This may be the last question to the Australian Pesticides and Veterinary Medicines Authority. On the 2024-25 order relating to the non-collection of levies on disposals of unregistered products held under permit, can you just expand on what that finding was and what it related to? Ms Ryan : I'll start by explaining—because I think it'll help me explain the issue—how we are funded. We're primarily funded through cost recovery for the cost to regulate the vet medicines and agricultural chemical industries. We do that by charging fees and levies plus a small amount of appropriation. Applicants who wish to register veterinary medicines or ag chemicals pay fees to apply for those registrations, and they then pay levies on an annual basis based on the disposals of those registered products based on the wholesale value of their sales. We also allow the sale and use of unregistered products. These are ones that aren't on our register but have permits in place for their use. Those can arise for issues such as emergency use of chemicals or for minor or research purposes. According to our collection of levy act, we had not been collecting levies from those permit holders when they were disposing or when those products were sold but were required to under that legislation. CHAIR: What products were they? Ms Ryan : They were products held under permit for either emergency or minor use. They would have been unregistered products. There is a range of products held under permit. CHAIR: Which ones were they? Ms Ryan : I don't know exactly which ones. I can take that on notice. I don't have a list of the ones that weren't paying— CHAIR: You mentioned the fact that some of them were used for research or emergency uses; clearly you've got some idea of what they are. What sort of products are they? Ms Ryan : I've got a couple of examples. One is a product called Cydectin, which is used by the Wombat Protection Society of Australia. It is a pour-on cattle treatment for the management of mange, but it was used under permit for a different purpose than it was registered for. It was used by the Wombat Protection Society of Australia to treat mange in wombats. That was a use that was not in accordance with the registration but was approved under permit in that situation. CHAIR: What about some of the research based products? What are some other products? Ms Ryan : I don't have an example of one of those. I'm going to have to take that on notice. Often universities will take out permits over products that may never have been registered and they want to undertake some research testing of those products. They will often dispose of them—throw them away, in other words—after using them in tests. According to our legislation, even if they're throwing them away it's a form of disposal, and we should be collecting levies on those. CHAIR: So you're meant to be collecting levies. What's the estimated total value that should have been paid as levies? Ms Ryan : We do now collect levies. We've put a process in place to identify and then collect those levies. For the 2024-25 financial year, the amount was $102,000—quite a small amount when compared to the full extent of levies that we collect on registered products. It's less than one per cent. That's an annual estimate—well, the actual amount in 2024-25. We can estimate, I suppose, what they could have been in previous years based on that estimate. CHAIR: Given we're running out of time and we've got more witnesses to get through, can you please provide to the committee the list of products that were under permit and for which levies should have been paid but were not, and, if possible, what the levies would have amounted to for those products. Ms Ryan : Yes, we can do that. CHAIR: Very quickly, what was the reason as to why levies weren't being paid? Were they not being asked for? Or what was the— Ms Ryan : It was before my time, but I understand that there was some difficulty for those permit holders in identifying the disposals of those products. Quite often there is no relationship between the permit holder, for example, a state government or an industry representative organisation who might take out an emergency permit for use in an emergency situation, and the manufacturer of those products. It is very difficult for the data to be found about those disposals. I can only assume that because of that difficulty we weren't seeking the information from the permit holders in order to charge them those levies. CHAIR: Thank you all for giving evidence today. If you've taken any questions on notice or been asked to provide additional information, can you please forward your responses to the secretariat by Wednesday 13 May 2026, and if the committee has further questions, they'll be sent to you in writing through the secretariat..