Year In Review

Secretary Mike Taylor Reports

I have much pleasure in delivering my first report as Secretary.

One of my first tasks on arriving at the department was to identify, with my executive team, our top priorities for the year. Our list went to the very heart of what our department is about-assisting regions to manage their own futures and fostering a safe, secure and sustainable transport system.

We set ourselves some real challenges. And, I'm pleased to report, we've achieved significant results.

Infrastructure planning and investment bearing fruits

We are implementing AusLink- a revolutionary approach to the planning and funding of Australia's national road and railway infrastructure. This $12.7 billion, five-year plan is about creating one national road and rail transport network linking cities, ports, airports and freight terminals. New legislation was put in place and bilateral agreements were signed with a number of states and territories.

AusLink will benefit future generations by supporting economic growth and development and the mobility of people and freight.

Efforts to improve transport security increased

The September 11 attacks and the Madrid and London bombings have firmly focused public attention on transport security. We are delivering a more secure aviation and maritime transport system regulated and monitored on a risk-based approach.

We implemented a major new regulatory regime for aviation and maritime security and an intergovernmental agreement on surface transport security. We've taken on responsibility to regulate security for Australia's 56 offshore oil and gas platforms, and supported a government review into security and policing at Australian airports by UK security expert Sir John Wheeler.

Regional programmes expanded

We worked to build stronger regional and rural communities. Community partnerships were developed to help manage the Sustainable Regions and Regional Partnership programmes. Extra funding of
$31 million was provided to Sustainable Regions to support two new regions and 438 new projects were implemented as part of Regional Partnerships.

These programmes enable worthwhile projects to be developed and funded based on local community priorities.

Indigenous partnerships strengthened

One of the responsibilities of the DOTARS Secretary is sponsorship of the Council of Australian Governments (COAG) East Kimberley Indigenous Trial - it is a real privilege to work in partnership with Indigenous groups to help them build self-reliant communities.

This year the COAG trial partnership focused on community activities and increased use of local resources to meet priorities. Eleven shared responsibility agreements were created to help address youth and women's issues, improve environmental health and provide community infrastructure.

Farewell

Following his retirement from the ministry, we farewelled Australia's Deputy Prime Minister and longest serving Transport Minister, the Hon John Anderson MP, along with his Parliamentary Secretary, the Hon John Cobb MP, who became Minister for Citizenship and Multicultural Affairs.

Mr Anderson served as our minister from 1998 and presided over many major achievements in the transport and regional services portfolio. We thank him for all his contributions and wish him and his family well in their new life.

We also welcomed our new Minister for Transport and Regional Services, the Hon Warren Truss MP. In my previous role as Secretary of the Department of Agriculture, Fisheries and Forestry, I had the privilege of working closely with Minister Truss and look forward to continuing our working relationship.

A number of changes also occurred within the deputy secretary ranks, with Lynelle Briggs taking up an appointment as Public Service Commissioner as foreshadowed in the department's last report.

More recently, Deputy Secretary Peter Yuile left us to be Executive Director of the Australian Quarantine and Inspection Service. I wish Peter every success in his new role-I know how challenging it is-and thank him for his invaluable support during the year.

In their place, we welcomed two new deputy secretaries, Mike Mrdak and Susan Page. Their combined skills make an excellent team and provide strong leadership support.

In short

I have very much enjoyed my first year in the department - my predecessor, Ken Matthews, left a strong legacy on which to build - and I look forward to the challenges ahead and working with our staff around Australia.

The individual and collective commitment of staff to delivering results to our customers has been integral to our many successes. I would like to thank staff for their diligence and professionalism throughout the year.

Michael J Taylor
SECRETARY

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Transport Security and Safety

In light of the global security environment and major incidents like the 2004 Madrid train bombings, security and safety issues continued to dominate much of our work.

New capability for security investigation

A new investigative capability was established within our department with the setting up in November 2004 of the Office of the Inspector of Transport Security and the appointment of Mr Mick Palmer AO as Inspector of Transport Security.

Mr Palmer, a highly regarded former federal police commissioner, will investigate major transport security incidents at the request of the minister, independently from the department's Office of Transport Security. Draft legislation is currently with the parliament to enable him to conduct investigations into major accidents on the same 'no blame' basis that has proved so successful in transport safety investigations (page 32).

Aviation and maritime security tightened further

In March 2005 a new enhanced aviation security regime came into force. The department developed guidance materials and worked closely with industry to ensure a smooth transition to the new arrangements. This included assessing and approving transport security programmes for 186 airports, 170 airline operators and over 900 air cargo agents.

A major review of security and policing at Australian airports was announced in June 2005. The review is being conducted by UK security expert Sir John Wheeler, who ran a similar review in the UK focusing on Heathrow Airport. The department established a review secretariat and supported the inquiry until its completion in September 2005 (see Stop press page 51 ).

Pending the completion of the review, we continued to implement a $48 million package-Securing our Regional Skies-to strengthen security in regional aviation. The package includes metal detection equipment and training for 140 airports, installation of hardened cockpit doors in passenger aircraft with 30 or more seats and a trial of closed circuit television (page 58-60).

New background checking requirements were introduced for around 130 000 people working in aviation and maritime security zones (page 50). We also took on responsibility for regulating security at Australia's offshore oil and gas platforms, to ensure that this critical national infrastructure is more secure against the threat of terrorism and unlawful acts (page 50).

International and national leadership on security issues continued

The government has put in place a number of initiatives to enhance transport security in South East Asia and the Pacific. The department conducted workshops and seminars throughout the region and established transport security liaison offices in Indonesia and the Philippines (see case study page 57 ).

In June an intergovernmental agreement to enhance security of the surface transport system (eg. public trains, trams and buses) was signed by all states and the ACT. The NT was in caretaker mode, but is expected to sign in the near future. Under the auspices of the Transport Security Working Group, we also funded and organised a forum on mass land transport passenger security, which was attended by
150 key stakeholders.

Transport safety enhanced

After consulting with industry, our minister obtained in-principle support from the Australian Transport (Ministers) Council for a new long-term national approach to emergency towage for ships. Pending finalisation of a long-term approach, and following a competitive tender process, interim arrangements were developed to maintain emergency towage capability (page 84).

In aviation, we released for public comment a draft report on the benefits of introducing a drug and alcohol testing regime for safety sensitive personnel in conjunction with the Civil Aviation Safety Authority.

As a result of increased funding for aviation safety investigations set out in the May 2004 Budget, we were able to significantly improve the numbers and timeliness of aviation accident investigations and to start work on a new and improved investigation database. We also set up a new rail investigation field team in Adelaide, to cover the key east-west rail link.

Our safety research and education activities were highly successful and our aviation and road safety research reports were well received by stakeholders. We undertook a successful safety awareness campaign for the commercial fishing industry, and are also coordinating Australian Government involvement in a road safety education programme for novice drivers in partnership with NSW and Victorian governments and industry bodies. Our safety website, www.atsb.gov.au, received a record 16 million hits.

New airspace arrangements phased in

Implementation of the National Airspace System continued to enhance the safety of our airspace, improve access, simplify operations and reduce costs. New procedures for aerodromes without air traffic control towers will be implemented in November 2005, and planning is well underway for implementing new classes of Special Use Airspace in 2006.

Work is under way to establish an office of airspace management within the department to streamline the policy, design, regulation and management of airspace. We expect to complete this process in 2005-06.

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Transport and Regional Infrastructure

AusLink white paper turning into concrete, steel and bitumen

Last year the government launched Australia's first national transport infrastructure plan - the $12.7 billion, five year AusLink plan.

This year the government spent around $2.2 billion on Australian land transport infrastructure, including the Westlink M7 (which links the M5 and the M2 in NSW), Melbourne's Craigieburn bypass, the upgrade of the Pacific Highway and many other projects.

Key legislation was passed, to bring six separate infrastructure programmes-including the Roads to Recovery, Black Spot and former National Highways programmes-into a single legal framework, thereby facilitating a strategic approach to managing these programmes.

Bilateral agreements on future AusLink projects have now been signed with most states and territories. Negotiations are continuing with other states.

Work has begun on the next five-year AusLink plan for government consideration, with four pilot studies underway as part of 24 studies of key road and rail corridors to be completed by mid 2007 (page 65).

Ports and export infrastructure in the spotlight

During the year, we continued to support the government in its efforts to secure greater access for Australian airlines and exporters to key international markets, including the important European and Asian markets (page 93).

We supported work by the Prime Minister's Exports and Infrastructure Taskforce, which examined physical and regulatory bottlenecks in Australia's export infrastructure and how they may impede Australia's export performance.

Following discussion of the taskforce's report at the Council of Australian Governments (COAG) meeting in June 2005, COAG agreed in principle to hasten the long-term planning being undertaken by AusLink, to extend AusLink planning and coordination to ports and associated shipping channels, and to establish one-stop-shops in each state and territory for project facilitation and approvals. The taskforce also recommended that the government support the establishment of arrangements to coordinate logistics chains of national importance.

For a copy of the taskforce report, visit www.infrastructure.gov.au

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Regional Services

Local government supported to deliver essential services

Australia's 703 local governments received more than $1.55 billion in 2004-05 to deliver essential services like health, community, recreational, cultural and environmental and to provide and maintain infrastructure, including roads. This amount is set to exceed $1.6 billion for the first time ever in 2005-06 (page 139).

SA councils received extra funding of $4.25 million - the first of three planned instalments from additional funding of $26.25 million to address particular local road needs (page 143).

We continued to consult local and state governments about the Hawker report on local government, which recommended sweeping reforms to local government relationships and funding, and assisted the Australian Government to finalise its response to the report (tabled on 22 June 2005).

Regional grants programmes expanded

Regional and remote communities were assisted to improve their economic, social and environmental well-being, with grants approved for 438 projects under the Regional Partnerships Programme and 60 projects under the Sustainable Regions Programme.

Projects funded have continued to attract strong community support, with private sector and other partners contributing an average of $3 for every $1 spent by the Australian Government.

The department has been tasked with delivering 40 regionally-based election commitments including:

• the Rural Medical Infrastructure Fund (RMIF)-this fund is helping smaller communities set up medical centres by providing up to $200 000 towards the cost of each centre
• Bank@Post-this project is extending banking services to more than 200 regional communities through Australia Post outlets
• six regional icons projects to create jobs and ancillary business opportunities and to increase local identity and pride, and
• two new Sustainable Regions (page 121).

As at 30 June 2005, on behalf of the government the department had made initial payments totalling $25 million towards 22 commitments. Bank@Post facilities had been installed in 20 licensed post offices, and the RMIF became operational on 1 July 2005.

Territory infrastructure and governance improving

In the Indian Ocean Territories, $16.0 million was spent on capital works. We completed work on an all weather seaport, a sport/recreation facility on Christmas Island and a state of the art power station on Home Island in the Cocos (Keeling) Islands (page 135).

Norfolk Island celebrated 25 years of self-government, an occasion marked with a commitment by the Australian Government to continue the transfer of Crown leases to freehold title so Norfolk Islanders can own the land on which they live.

A commitment was made to establish an environmental trust fund in honour of the island's late Minister for Land and the Environment, Ivens (Toon) Buffet. The trust will help Norfolk Islanders improve environmental and land management and will be funded from revenue received from the transfer of Crown leases.

In the ACT, the minister set up a consultative committee to advise government on the future of the Aboriginal tent embassy site, which has attracted a broad range of protesters and campers since it was first set up as part of Indigenous land rights protests in 1972.

The committee comprises representatives of the local Indigenous communities, the National Indigenous Council and the original protestors who created the site. It is expected to report to government later in 2005 after a nation-wide consultation process with the Indigenous and broader Australian community.

Indigenous partnerships strengthened

Tangible outcomes were delivered for Indigenous communities in the remote East Kimberley, as part of our ongoing sponsorship of a COAG pilot programme.

A series of community safety/grog workshops were facilitated, as a result of which all communities have put in place plans to deal with these issues.

In partnership with the communities, eleven shared responsibility agreements were created to support youth and women's activities, improve environmental health and provide infrastructure such as airstrip lights and community sport and recreational facilities.

Disaster mitigation programmes expanded

In response to the devastating bushfires of 2002-03, a new three-year $15 million bushfire mitigation programme was implemented to enhance and maintain Australia's fire trail networks (page 148).

A total of $32.3 million was spent on natural disaster mitigation research, community education and structural works including not only fire trails but also flood warning systems, levees and national aerial firefighting (page 144).

Relief and recovery funding continued to be provided for natural disasters. Throughout 2004-05 the department was notified of 29 eligible disaster events including nine bushfires, eight floods, and 12 other events. Changes to disaster relief arrangements are currently being reviewed in consultation with states and territories (page 152).

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Management

New challenges

In response to changing demands from government, transport security staffing numbers more than doubled from 108 to 240. Our graduate intake increased from 15 to 31. Overall staff numbers increased 28 per cent from 901 to 1154.

This has resulted in increased demand for accommodation. This is being addressed through a refit of national office accommodation as well as other offices including Melbourne, Darwin and Sydney over 2005-06.

New training programmes were put in place over 2004-05 to build and enhance the department's workforce capabilities with attention to core areas such as effective writing, procurement and contract management and working in the public service. The specific needs of transport security auditors and safety investigators are also receiving attention (see case study page 36 ).

We are working to strengthen our capabilities in 2005-06 by increasing our graduate intake and reviewing our long-term workforce planning (page 166).

Left: Staffing growth has put pressure on accommodation throughout Australia. In our national office (left) this is being partly addressed by a refit to make better use of space. (Photo Liz O'Donnell DOTARS).

Industry fees reduced

In line with government policy, we reviewed departmental cost recovery arrangements against Department of Finance and Administration's guidelines. We released three cost recovery statements covering

• noise amelioration for Sydney and Adelaide airports (page 101)
• vehicle safety standards (page 44), and
• arrangements associated with airport leases, trade permits, statistics, and the Australian Transport Safety Bureau.

In almost every case we found that our cost recovery arrangements complied with the guidelines or with specific government decisions not to recover certain costs due to legal considerations.

The government annouced a reduction in the fees paid by the mainstream vehicle industry to address a potential for ongoing over-recovery of revenue against the cost of the related regulatory activity. These arrangements are subject to a follow-up review in two years.

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Financial Performance

Parliament provides the department with two types of funding: departmental and administered. We use departmental funds to produce goods and services (outputs) at a quantity, quality and price endorsed by government. We also administer funds, assets and liabilities on behalf of the parliament, which controls how we use them and requires us to account for them separately.

Departmental finances

In 2004-05, the department reported an operating surplus of $45.2 million - significantly higher than that projected at the time of the 2005-06 Budget. This result largely reflected a reduction in the provision for asbestos-related disease claims that saw revenue increase by $31.6 million and the liability reduce accordingly.

Other issues which affected our performance and position included continued growth in revenues and expenses associated with the transport security output (up $30.0 million over the last two years) and the government decision to reclassify resources for services to the Indian Ocean Territories (IOTs) foreshadowed in our last annual report. The IOTs decision saw:

• expenses of $100.1 million and revenues of $77.6 million in 2004-05 classified as administered (previously departmental)
• net assets worth $204.6 million moved from departmental to administered, and
• $85.2 million returned to the Official Public Account (see our financial statements note 12C).

Taking into account these changes, a net asset position in the order of $63 million would have been expected. Our actual net asset position was $65.6 million, reflecting our ongoing efforts to maintain and improve the strength of our balance sheet.

Table 2.1 - Summary of departmental financial performance and position^a

^aHistorical data reflect the respective year's financial statements as signed off by the Australian National Audit Office at the time. As such, it may not reflect current accounting policies or comparative figures published in later statements.

Administered finances - accuracy of estimates improves despite significant changes

At the beginning of 2004-05, the Australian Government made $3.8 billion available for grants, subsidies and other administered expenses. A further $179.3 million became available during the additional estimates update, mainly for:

• AusLink programmes including the National Network ($73 million) and Roads To Recovery programmes ($30 million)
• Local Government Financial Assistance Grants ($20.3 million), and
• expansion of the Regional Partnerships ($12.6 million) and Services to the IOTs ($6.4 million) programmes.

Subsequent to the Additional Estimates update, the estimates were revised down by $75.6 million. This mainly reflected the decision to move $160.5 million from 2004-05 to the forward years (including
$103.0 million for the Scoresby Freeway project), and to make available extra funds for rail infrastructure ($100.0 million) and the upgrade of the Eyre Peninsula rail system ($15.0 million).

Expenses totalling $3.9 million were paid during the year as required by government. While many small programmes underspent by more than 10 per cent, only two programmes reported an underspend greater than $5 million. If the provision for natural disaster relief is excluded, our estimate of expenses in 2004-05 was 99.7 per cent accurate, up from 99 per cent last year.

Table 2.2 - Administered programmes reporting underspends of more than $5 million

While most taxation revenues fell, overall taxation revenue collected on behalf of government rose by $4.5 million in 2004-05. This result reflected increased revenue from airport noise levies at Sydney and Adelaide airports ($6.0 million).

Non-taxation revenues fell $4.3 million overall, reflecting a fall in dividends received ($13.3 million) and Dairy Regional Assistance Programme reimbursements ($5.5 million). The transfer of IOTs from departmental to administered partially offset this trend, increasing revenue by $14.4 million.

The transfer of IOTs resources from departmental to administered also had a substantial impact on our administered balance sheet, increasing net assets by $204.6 million. Other issues which also affected our financial position included:

• the government decision to transfer the Albury Wodonga Development Corporation out of the portfolio in December 2004 - this decision reduced net assets by $99.8 million
• a drop in the value of the guarantee to cover borrowings by the Maritime Industry Finance Company (MIFCo) Ltd-as MIFCo repaid its borrowings, our liability dropped $38.1 million, and
• the decision to make a provision for potential future costs associated with the removal of asbestos from buildings on the IOTs ($10.7 million).

As at 30 June 2005, administered assets exceeded quantifiable liabilities by a ratio of 14:1, up from 11:1 in 2003-04. Figure 2A below illustrates the mix of assets we administered at 30 June 2005. For more information, see our audited financial statements.

Figure 2A - Value of administered assets held at 30 June 2005

Table 2.3 - Summary of administered financial performance and position^a

^aHistorical data reflect the respective year's financial statements as signed off by the Australian National Audit Office at the time. As such, it may not reflect current accounting policies or comparative figures published in later statements.

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Environmental Performance

Natural and cultural heritage protected. We began work on a formal heritage strategy to identify and assess the heritage values of all our assets and prepare plans to protect them. The department, through the Kingston and Arthur's Vale Historic Area Management Board, also assists in protecting the cultural and heritage values of this pre-eminent site on Norfolk Island. Right: Heritage management strategies are already in place for federal airports (Photo courtesy of and © Archerfield Airport)
Human settlements made more sustainable. We worked with the Australian Greenhouse Office to build a power station on Home Island in the Cocos (Keeling) Islands which combines automated diesel power with four wind turbines. We are looking at a range of options to put the area's water supply onto a more sustainable footing (page 138). Right: The new power station will generate 10 per cent of Home Island's power needs from renewable sources, reduce emissions and save $60 000 a year in fuel costs. (Photo courtesy of and © Karenn Singer)
Land use managed. We administered funding to more than 160 major construction projects in 2004-05. No breaches of environmental laws were reported for any of these projects, or for any other activity for which we were responsible. Funds have also been set aside for removal of asbestos from buildings in the IOTs. Right: Also in the IOTs, we collect a levy from Phosphate Resources Ltd towards the costs of minesite rehabilitation on Christmas Island. (Photo DOTARS)
Emissions reduced. In consultation with industry, the government introduced tighter emission standards for light motor vehicles from 1 January 2005 and incentives for heavy vehicle operators to reduce emissions from 1 July 2005 (page 76). Right: Our research suggests that, while cleaner fuels and engines have dramatically reduced levels of airborne lead and other pollutants, emissions may have accounted for 900 to 2000 premature deaths in 2000, mainly in urban areas. (Photo www.shutterstock.com)
Coasts and oceans protected. An in-principle agreement was reached with states and territories for a long term national approach to emergency towage around the Australian coastline. We also put in place a new programme to ensure current capabilities are maintained in the meantime. Right: While the IOTs were amongst the first to experience the tsunami on 26 December, no casualties or damage to property were reported (see case study page 134). (Photo DOTARS)
'Think globally, act locally'. We introduced an environmental management system in our national office in line with the international standard ISO 14001:2004. This system improves performance and supports sustainability by helping cut energy and water consumption, greenhouse gas emissions and waste. We are applying these principles to other premises as the opportunity permits. Right: A comprehensive recycling system is just one of our new environmental initiatives (page 201). (Photo Craig Avery DOTARS)

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Social Performance

Tsunami support recognised. After the devastating Boxing Day Tsunami, 111 of our staff worked in the Department of Foreign Affairs and Trade emergency call centre. Many staff chose to come back from holidays early to help handle the thousands of calls from Australians trying to reach family and friends. All 111 staff were honoured with a DOTARS Australia Day award. Right: Mike McCartney from OTS, who coordinated our response, accepting his award from Secretary Mike Taylor (Photo Craig Stone DOTARS).
Other honours for staff. Almost 40 other staff received awards for their contribution to the department in 2004-05. Former departmental Secretary Ken Matthews, who now heads the National Water Commission, received an Order of Australia for his leadership on a range of issues. Right: General Manager for AusLink planning, John Elliott, was awarded a Public Service Medal in the Queen's Birthday Honours list for his contribution to AusLink. (Photo DOTARS/Geoff Comfort Photography)
Indigenous partnerships strengthened. We continued to lead whole-of-government efforts to build partnerships with and improve services to remote Indigenous communities in the East Kimberley (pages 10 and 17). We also supported staff to participate in the Indigenous Community Volunteer Program (ICV) (see case study page 173 ). Right: Tracey Svensson spent a month in Katherine NT coaching an Indigenous community in business planning through the ICV. (Photo courtesy Burridj Aboriginal Group Training Company)
Regional focus expanded. We continued to advise government on issues affecting Australia's regions including access to telecommunications. We also expanded our ability to evaluate the regional impacts of government policy, releasing major new research on taxable income by region. Further research is planned for 2005-06 (page 187). Right: Our second annual Regional Colloquium brought together more than 150 staff (page 170) (Photo DOTARS)
Health Week a runaway' success. We ran a health week to encourage staff to balance work and home and raise awareness of general health and OH&S issues. Health checks, bone density testing, yoga, massage and walking were just some of the activities offered. Pedometers distributed to staff were particularly popular and many teams are continuing to take regular lunchtime walks. Right: Health Week was overwhelmingly embraced by staff, with all sessions fully booked. (Photo DOTARS)
Staff active and caring. In 200405 our social club raised and donated around $2500 to a range of charities in support of cancer research, guide dog training, diabetes research and education, overseas aid, war veterans and the homeless. Staff in one business division also sponsored a nine year old girl in Columbia through PLAN International. Right: Many staff also made time to attend Minister Anderson's farewell and to contribute to a memory book presented to him at the function. (Photo DOTARS)

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Progress Against our Business Priorities for 2004-05

This report card summarises progress against the department's business priorities for 2004-05, and where to find more information on these within this report.

Table 2.4 - Report card on the department's business priorities for 2004-05

Priority		Progress*	More Info
1.	Implement AusLink to improve planning and investment in Australia's land transport infrastructure		page 14
2.	Realise rail's potential as a major freight mover through reforms to rail planning, regulatory and workplace arrangements in cooperation with the states and industry		page 62
3.	Minimise the risk of terrorist activities that could impact on transport through cooperation with relevant agencies, jurisdictions and industry		page 12
4.	Support the Australian Government's introduction of new airspace arrangements and governance framework for airspace policy, design and management		page 13
5.	Provide an environment and tools that encourage regional communities to lead their own development		page 16
6.	Assist with the implementation of the National Water Initiative		page 116
7.	Advise the Australian Government on its relationship with local government		page 16
8.	Support sustainable growth and opportunities in each of the territories		page 17
9.	Review and improve governance of portfolio bodies		page 13
10.	Implement the Australian Government's new cost recovery guidelines		page 18
11.	Prepare for the incoming government and implement election commitments		page 16
12.	Deliver effective performance, learning and development and good conditions for staff		page 166
13.	Improve communication on the department's governance and corporate performance		page 156
14.	Improve our resourcing and its management		page 19

*Status: fully achieved mostly achieved partly achieved not achieved

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