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Govt, ACTEW take hit for salary fiasco

ACT Auditor General, Maxine Cooper.

ACT Auditor General, Maxine Cooper. Photo: Graham Tidy

Failings by both ACTEW and the ACT government led to the debacle over the under-reporting of executive salaries at the water utility, the ACT Auditor-General has found.

Maxine Cooper says the territory-owned ACTEW took too long to report a $234,000 mistake in its 2010-11 annual report and has reprimanded the ACT public service for failing to make a ''timely'' response to the error.

In a report released on Friday, the Auditor-General said she wanted the power to routinely audit the remuneration data of ACTEW's senior executives, but not to assess whether the managing director's salary was appropriate.

Dr Cooper's report follows weeks of controversy over Mark Sullivan's $855,000 pay packet, which was under-reported by $234,000 on two occasions in 2011. The saga led to the resignation of ACTEW chairman John Mackay at an extraordinary meeting with the water utility's official shareholders last week.

Mr Sullivan has also agreed to a $140,000 pay cut.

Dr Cooper tabled her review in response to a Legislative Assembly committee request for information on the incorrect reporting of the managing director's salary.

The report reprimands the water utility for taking five months to correct the $234,000 mistake and notify Chief Minister Katy Gallagher and Treasurer Andrew Barr.

''The issuing of a corrigendum for ACTEW's annual report 2011 was not undertaken in a timely manner,'' the report says.

''ACTEW identified the error on 3 October 2012 and the corrigendum was issued on 8 March 2013.''

But Dr Cooper is also critical of the ACT government response to the error.

She said ACT public servants contributed to the five-month delay in notifying shareholders by taking too long to provide advice to ACTEW.

''Advice from the ACT government was not readily forthcoming,'' Dr Cooper said.

''ACTEW first approached ACT government officers on 9 November 2012. In mid-December 2012 verbal advice was provided. Written advice followed on 24 January 2013.

''Such matters need to be resolved in a timelier manner and an agreed communication process between the government and ACTEW may assist.''

Dr Cooper said ACTEW should be required to include details of executive salaries in its financial statements each year for auditing.

This ''would provide greater assurance that remuneration was being accurately reported'' but ''the audit would not provide assurance that the amount paid to ACTEW's managing director is reasonable or represents 'value for money'.''

Dr Cooper also recommended that ACTEW and the ACT government agree to a documented communication process to make sure any future mistakes are addressed quickly.

The Chief Minister and Treasury Directorate said ''the second recommendation is sound and proposes a sensible improvement to the relationship between the ACT public service and ACTEW.''

The directorate said it ''has reinforced with relevant staff the need for its advice - especially as it relates to matters of accountability - to be provided promptly to ACTEW, and indeed to other ACT public sector entities seeking such counsel.''

Before his salary was cut, Mr Sullivan was Australia's highest-paid water executive by a margin of more than $200,000. But ACTEW has said an independent consultant had found Mr Sullivan was paid less than most company executives with similar responsibilities.

ACTEW has also been dealing in recent months with the threat of a massive profit downgrade from a proposed cut to water and sewerage charges.

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