Committee Details

OVERVIEW

Role of the Auditor-General 

The role of the Auditor-General is to provide parliament with independent assurance of public sector accountability and performance. This is achieved through reporting to parliament on the results of its financial and performance audits and other insights.

About the Auditor-General Report

The Auditor-General’s report to Parliament 13: 2022-23—Managing Queensland’s debt and investments 2022 outlines the results of a Queensland Audit Office (QAO) financial audit examining how the Queensland Government is managing its debt and investments.

In undertaking the audit, the QAO examined the 2021-22 financial statements of the Queensland Treasury, Queensland Treasury Corporation and QIC Limited, as well as a number of public financial corporations holding significant investments within government or assisting with the management of treasury operations for government entities. 

In addition to considering the overall debt and investment picture of these entities, the QAO sought to:

• analyse financial performance and recent transactions relating to the government’s debt and investments
• provide insights into the risks associated with debt and investments and how these relate to the government.

The report did not include any recommendations, but sought to highlight the following overall audit findings and insights: 

• In 2021-22, positive economic factors meant net debt (financial liabilities minus financial assets) decreased, in contrast with the recent years prior, when the government borrowed to stimulate the economy during the COVID-19 pandemic.
• This reduction in net debt will be brief, as the government expects its net debt to increase over the next 4 years as it uses borrowings to cover the cost of infrastructure and other major initiatives.
• Interest rates have risen, which will affect associated expenses, particularly for new borrowing. This will have an impact on the government’s fiscal principles relating to debt management – specifically, the ratio of net debt to revenue. Over the coming years, this is expected to become more of an issue, as borrowings are expected to increase and will be at a higher interest rate.
• Many of the entities holding the state’s investments – namely, the insurance entities within government – are facing extra challenges due to an increase in the cost of the services they fund (for example, there have been significant increases in the cost of building materials and medical services). These entities will need to ensure they have enough investments to fund their liabilities as they fall due.
• The Queensland Future Fund – Debt Retirement Fund, which was established in 2020-21 to help provide funding for the debt or provide more assets to support the debt position, underwent a process of diversification of its investments in 2021-22. The QAO noted the Fund did not pay down any government debt during the year, but was used to offset debt and support Queensland’s credit rating. There was a small decrease in its value from $7.742 billion as at 30 June 2021 to $7.718 billion as at 30 June 2022.
• In 2021-22, the Queensland Government restructured the Residential Tenancies Authority (RTA). While the RTA has traditionally been reliant on the returns from its investment of tenancy bonds to fund its services (eg investments of the bonds people pay up front before moving into rental properties), it has been significantly affected by market volatility. After a year in which the RTA’s investments made a loss of $52 million (for a net operating loss of $56 million for the year), the RTA sold its investments to the government and received the equivalent value in cash in return. Its operations will now be funded through annual grants.

The report also made reference to its previous recommendation in Auditor-General Report 11: 2011-22—Establishing the Queensland Future Fund (also considered by this committee – see webpage here), regarding the need for further detail in financial statements on the funds established under the Queensland Future Funds Act 2020. The QAO noted that it will continue to monitor fund activities and the level of disclosure through the reporting currently being provided.

Referral to Committee 

Standing Order 194B provides that the Committee of the Legislative Assembly shall, as soon as practicable after a report of the Auditor-General is tabled in the Assembly, refer that report to the relevant portfolio committee(s) for consideration. 

The committee is responsible under section 94 of the Parliament of Queensland Act 2001 for assessing the integrity, economy, efficiency and effectiveness of government financial management by examining government financial documents and considering reports of the Auditor-General.

The Legislative Assembly referred this Auditor-General's report to the former Economics and Governance Committee on 16 June 2023.  On 13 February 2024, the Legislative Assembly amended Schedule 6 of the Standing Rules and Orders of the Legislative Assembly, establishing the Cost of Living and Economics Committee, and transferred the Auditor-General's report to the Cost of Living and Economics Committee for consideration.