The federal government watchdog has torn apart the Home Affairs Department's defence of itself after a scathing audit report revealed serious deficiencies with a troubled $2.6 billion surveillance contract.
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Labor committee chair Julian Hill colourfully added the Home Affairs secretary Mike Pezzullo's arguments were a "classic diversionary tactic" from valid criticism of his department.
Auditor-General Grant Hehir on Thursday morning told a parliamentary committee into public accounts and audits many of the department's defences or dismissals of the audit's criticisms didn't make sense to him.
The Australian National Audit Office report, released in October 2021, found the department's service contract for a fleet of fixed-wing aircrafts to patrol Australia's coastlines was poorly managed and underdelivering.
Mr Pezzullo in February conceded the contract, which will have run uncompetitively for 21 years when it expires at the end of 2027, was "not best-practice" but said his department's "fundamentally deficient" funding model had limited his options.
The top security bureaucrat said Home Affairs needed an integrated investment plan, like the Department of Defence, so it could be guaranteed with long-term funding certainty for projects.
But Mr Hehir on Thursday dismissed Mr Pezzullo's arguments as irrelevant given Home Affairs doesn't own aircrafts like Defence does.
"I think in the traditional sense of view of how you talk about that, it's not particularly relevant when you don't own or lease the assets and run it yourself," he said.
"In a really dynamic world, to lock yourself into a very steady contract can be a more expensive process for you because contract changes can be quite expensive to negotiate.
"But that's a service-planning, contract-planning issue."
The audit report found the department continued to pay for long-range aircrafts to surveil the coastlines for people smuggling and illegal fishing activities, despite the planes never being able to take off from the runway due to the additional fuel weight they held.
The surveillance contract, first signed in 2008, was increased nearly 30 per cent to $1.54 billion from $1.19 billion, according to the audit report in 2021.
It has again been extended to the end of December 2027 and will now cost a total of $2.64 billion.
"[Mr Pezzullo's defence] felt like a sort of a bait and switch, or smoke and mirrors, or a classic diversionary tactic - the best form of defence is attack," Mr Hill said.
"The department was being criticised, and [they] came up with some bright, shiny thing that didn't seem to actually have any relevance but it worked a treat in the media, they all ran the articles of the secretary earnestly saying this."
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ANAO Performance Audit Services Group executive director Brian Boyd said the department was able to meet contract targets by adjusting tasks against what is delivered.
"They've negotiated the contract to have something provided, which then physically isn't able to be provided but they're still paying that additional fee for an aircraft that can't perform the very reason it's there for," he said.
"Whilst at the higher level, the department's able to say that most of the time department's meeting the target under the contract for performance.
"What we point out in the audit report is that happens to a number of things where the department is able to upscore whether missions have actually been completed or not.
"The department is able to adjust what it tasks to what is able to be delivered rather than what, perhaps, is wanted to be delivered."
'Big job' to fix public service accountability: ANAO deputy
The audit office's senior officials told the committee it was "not unusual" for mid-senior level bureaucrats to push back during probes.
Deputy auditor-general Rona Mellor and Mr Boyd both described having to escalate issues to the deputy secretary and secretary level before the audit office's findings began to get acknowledged.
Mr Hill said it was a little bit concerning there was pushback at the higher rungs of the public sector.
"The first step to recovery is to know you've got a problem," he said.
"So, you've got to overcome denial first."
Ms Mellor said departments had also dismissed audit findings as simply "record-keeping" issues.
"That's a really big risk, chair, when we get responses to audits that people diminish what we're saying about the nature of evidence and the importance of it by treating it as a record-keeping issue," she said.
"We're actually talking about the evidence that supports the decision making, not just the physical record-keeping, and it's becoming a bit of a response to audits that people say that.
"I think there's a big job to do to really reinforce the importance of record-keeping, not just for compliance purposes."
Liberal deputy chair Linda Reynolds said she had noticed a disturbing trend during her short time on the committee.
Senior public servants had made a "fine art" out of not accepting personal responsibility for the department's actions, whether they were in the role at the time or not, Senator Reynolds noted.
Mr Hehir said he left it to other authorities to determine whether there is individual accountability.
"I think this committee over time has formed a view that departmental evidence from officials saying that they weren't there at the time isn't really acceptable, because they're representing an ongoing entity, not themselves," he said.
"Our audits are of entities and systems, we don't audit individuals."