EXPLANATORY STATEMENT
STATUTORY RULES NO. 78 OF 1985
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE.
The attached Statutory Rules introduce into the Finance Regulations new regulations made for the purposes of Part XIIA of the Audit Act 1901. The making of the new regulations was authorised by sections 70AB and 71 of the Audit Act 1901.
Part XIIA of the Audit Act codifies the circumstances in which a Commonwealth employee, including a member of the Defence Force, may be held financially liable for a loss of, or deficiency in, public moneys, or for the value of a loss or destruction of, or damage to, other property of the Commonwealth where, inter alia, such loss, destruction or damage is due to the employee’s misconduct or gross negligence.
Part XIIA replaces the provisions of sub-sections 42(2), (3) and (4) and sections 43 and 44 of the Act which provide that the Auditor-General should surcharge an officer in respect of any loss of public moneys or loss of, or damage to, other Commonwealth property that occurred by reason of the officer’s mistake, neglect or error.
The regulations under Part XIIA establish procedures under which -
• a loss or damage allegedly due to a person’s misconduct, gross negligence or failure to observe a requirement of strict care will be brought to notice;
• the person, or persons, who appear to have been responsible for the loss or damage will be so informed;
• where it is necessary, an investigation of the loss or damage will be conducted either by an officer appointed for the purpose or, where the amount involved exceeds $100, by an investigation committee of three persons. The officer or the committee will report to the Departmental Secretary whether any person concerned should be held responsible for the loss or damage and the extent to which any such person should be held responsible;
• the person concerned is informed in writing of the findings of the investigation.
Section 70AC of the Act itself provides that thereafter the Secretary or his or her delegate shall formally determine the amount the person concerned should pay as recompense to the Commonwealth. Provision is also made for the person concerned to seek a review of the Secretary’s determination by the Administrative Appeals Tribunal, or to have the quantum of liability, if any, determined by a court.
In the event that the officer or employee does not voluntarily pay to the Commonwealth the amount of recompense specified in the determination, neither the Act nor the regulations will empower the Commonwealth to recover from that officer or employee any amount other than by due process in a court of competent jurisdiction. If it is necessary to pursue recovery by court action, no such action may be commenced until the period in which any appeal to the Federal Court in respect of any review decision by the Administrative Appeals Tribunal has expired.
Details of the regulations are as follows.
Regulation 126A - Interpretation
Sub-regulation 126A(1) defines the terms used in the regulations and adopts the same meanings as those expressed in Part XIIA of the Act.
The more significant definitions are:
“prescribed incident”: this term means a loss of, or a deficiency in, public moneys, or the loss or destruction of, or damage to, other property of the Commonwealth. The nature of such losses and deficiencies is amplified in sub-sections 70AB(1), (4), (5) and (8) of the Act.
“prescribed supervisor”: this is the Secretary of a Department or another officer to whom the Secretary has delegated his power, who will determine whether or not an officer has incurred a liability in connection with a prescribed incident and who will assess the amount of the officer’s liability, if any, in respect thereof.
“relevant officer”: this means an officer in relation to whom an investigation is caused to be held.
“relevant supervisor”: in relation to an investigation, this means the prescribed supervisor by whom the investigation is caused to be held.
Regulation 126B - Declarations for the purposes of the definitions of “officer” and “Secretary”
Sub-regulation 126B(1) - Sub-section 70AA(1) of the Act defines the term “officer” as one including a person who is included in a declared class of persons.
Sub-regulation 126B(1) declares persons employed in the Australian Secret Intelligence Service and the Australian Security Intelligence Organisation to be a declared class of persons, thus bringing those persons within the ambit of Part XIIA. Similarly, sub-regulation 126B(2) declares the respective Directors-General to be Secretaries, in respect of the declared classes of persons, for the purposes of Part XIIA of the Act.
Regulation 126C - Investigation of Losses, &c
Sub-regulation 126C(1) provides that where a prescribed supervisor believes that an officer could be liable in respect of a prescribed incident, that supervisor shall provide to the officer a written, signed notice that draws attention to the incident and to the provisions of Part XIIA of the Act and to these regulations.
Sub-regulation 126C(2) provides that the notice given to the officer in accordance with sub-regulation (1) shall also advise the officer whether the prescribed supervisor is of the view that an investigation into the prescribed incident is warranted.
If the prescribed supervisor is of the view that an investigation is not warranted, the officer is to be so informed; in that event, the officer is also to be advised that, notwithstanding, he may request the holding of an investigation.
In the event of an investigation being foreshadowed by the prescribed supervisor, or requested by the relevant officer, the latter is to be requested to furnish the name of an industrial or staff organisation of which he is a member, or to nominate the names of three persons, from whom one member of an investigation committee may be chosen.
Sub-regulation 126C(3) provides that where a prescribed supervisor has informed a relevant officer of the intention to conduct an investigation, or the relevant officer has requested that an investigation be held, the prescribed supervisor shall arrange for the conduct of that investigation as soon as practicable.
Sub-regulation 126C(4) requires that, subject to sub-regulation (5), an investigation is to be conducted by a committee of 3 persons, being a chairman and a second member appointed by the relevant supervisor and a third member appointed in accordance with sub-regulation (7). No member is to be a prescribed supervisor of the relevant officer.
Sub-regulation 126C(5) provides that where an investigation is to be held in respect of a loss or damage involving an amount estimated to be not in excess of $100, the investigation will be conducted by an officer appointed by the relevant supervisor.
Sub-regulation 126C(6) requires that, as far as it is practicable to do so, the second committee member appointed by the Secretary under sub-regulation (4) shall be drawn from a Department, unit of the Defence Force or place of employment other than that in which the relevant officer is employed, or was employed at the time of the relevant incident.
Sub-regulation 126C(7) requires that the third member of a committee appointed under sub-regulation (4) be -
• where the relevant officer is a member of a staff or industrial organisation - a person appointed by that organisation (if the organisation makes no appointment within 7 days, the relevant supervisor may appoint an officer).
• in any other case, a person nominated by the relevant officer. If the relevant officer fails to nominate a person for the purposes of appointment to the committee, or if a nominated person declines to be appointed, the relevant supervisor will appoint an officer.
Sub-regulations 126C (8) and (9) will require the relevant officer to be informed of the appointment of an investigation committee by notice in writing, in which
there will be specified the name and address of each committee member. The notice shall also specify the time and place of the meeting, invite written and/or oral submissions to the committee and notify the address to which a written submission should be forwarded.
Sub-regulation 126C(10) permits the chairman of the committee to extend the period during which the relevant officer may make a written submission to the committee.
Sub-regulation 126C(11) lays down an informal framework within which an investigation committee or an investigator will conduct an inquiry. The procedures are to be at the discretion of the chairman of the committee or the investigator and the proceedings shall be conducted in private with as little formality and technicality as a proper consideration of the matter will permit. Rules of evidence will not apply, the committee or investigator is to be entitled to access to all relevant records, and the relevant officer is to be permitted a reasonable examination of witnesses.
Sub-regulation 126C(12) provides that, before any submission is received from an officer other than the relevant officer, or an examination of an officer is undertaken, the officer’s attention is to be drawn to the provisions of Part XIIA of the Act and to these regulations.
Sub-regulation 126C(13) makes provision for persons to assist a committee or an investigator in the conduct of an investigation.
Sub-regulation 126C(14) requires the chairman of an investigation committee, or an investigator, to submit an investigation report not later than 3 months after appointment. The report is to set out -
(a) the findings of the investigation, including reference to any defects in official practices and procedures that may have contributed to the relevant incident;
(b) an assessment of the amount involved in a loss, damage or deficiency;
(c) the names of all officers who contributed to the relevant incident by misconduct or gross
negligence, the extent to which any officer should be held responsible, and the reasons supporting the conclusions reached;
(d) whether the relevant officer should be held liable for failing to exercise control over moneys or property for reason of his strict responsibility for safekeeping, rather than for reasons of gross negligence or misconduct;
(e) particulars of any mitigating circumstances that support a reduction in the liability of an officer, including reference to work experience, supervision and the adequacy of official instructions; and
(f) any relevant matter that comes to attention during the investigation.
Sub-regulation 126C(15) permits a relevant supervisor to extend, by not more than 3 months, the date by which an investigation report is to be submitted.
Sub-regulation 126C(16) will require an investigation report to record any objection made in respect of investigation procedures, any refusal by the committee or an investigator to allow examination of a witness, and any dissenting opinion by a committee member.
Sub-regulation 126C(17) provides that if an investigation committee concludes that an officer is liable under section 70AB of the Act to pay an amount to the Commonwealth in respect of a loss, deficiency or damage, the committee shall invite the relevant officer to furnish information concerning his current and prospective income and expenditure and his current and prospective assets and liabilities. Any information furnished to the committee is to be included in its report to the relevant supervisor.
Sub-regulation 126C(18) provides that a copy of a report is to be provided to the relevant officer, to any other officer who is found to be liable, and to the Secretary, Department of Finance. A copy may be provided, on request, to any other person.
Regulation 126D - Reduction of Liability
Sub-regulation 126D(1) provides that where an officer is found to be under a liability to the Commonwealth in
respect of a loss, deficiency or damage but mitigating circumstances exist, the officer is liable to pay to the Commonwealth an amount that is determined (by the Secretary, as stipulated in sub-section 70AC(1) of the Act) to be just and equitable.
Sub-regulation 126D(2) provides that where an officer is under a liability to pay an amount to the Commonwealth and the officer’s current and prospective income and expenditure, and current and prospective assets and liabilities, would not allow him to settle that liability either immediately or by instalments, the officer is liable to pay an amount that is just and equitable.
Regulation 126E - Office prescribed for the purpose of paragraph 70AG(c) of the Act
Regulation 126E defines the phrase “such office as is prescribed” that is used in paragraph (c) of section 70AG of the Act. Section 70AG provides that the provisions of Part XIIA apply to a prescribed authority as if references to the Commonwealth, its officers and its property in those provisions were references to a prescribed authority, its officers and its property. Regulation 126E adds that “the office prescribed in respect of a prescribed authority” is one whose occupant has the powers of a Secretary in the Australian Public Service in relation to the staff of a prescribed authority.