annual report 2012 – 13 - Australian Government Solicitor

Australian Government Solicitor the leading lawyers to governmentannual report 2012 – 13

ABN 69 405 937 639Offices:Canberra T 02 6253 7000Sydney T 02 9581 7777Melbourne T 03 9242 1222Brisbane T 07 3360 5600Perth T 08 9268 1199Adelaide T 08 8205 4211Hobart T 03 6210 2100Darwin T 08 8943 1444© Australian Government Solicitor 20134 National Circuit, Barton ACT 2600ISSN 1444-6154For further information please contact:AGS Corporate CommunicationsT 02 6253 7241E ags@ags.gov.auor visit the AGS website at www.ags.gov.auPrinted by CanPrint Communications, ACTii AGS Annual report 2012–13

PART 1delivering ourmandate andcorporate planAGS Annual report 2012–13 5

About AGSThe Australian Government Solicitor(AGS) is the leading provider of legaland related services to AustralianGovernment agencies. We are oneof Australia’s largest national lawpractices, with an office in everycapital city. AGS provides servicesin 40 specialised areas of law.AGS is a statutory authority within theAttorney-General’s portfolio, establishedunder the Judiciary Act 1903. We aresubject to the reporting and accountabilityrequirements of the CommonwealthAuthorities and Companies Act 1997 (CAC Act).We are also a government businessenterprise under the CAC Act and operateon a commercial and competitive basis.We have 2 shareholder Ministers – theAttorney-General and the Minister forFinance.AGS acts primarily for Australian Governmentagencies and for entities in which theAustralian Government has an interest. Atthe request of executive governments, we canalso act for State and Territory governmentorganisations.We regularly provide advice to Cabinet and,more broadly, on policy development,law-making, commercial negotiations, riskmanagement, dispute management andlitigation in courts and tribunals. We alsoprovide extensive advice on public sectorcorporate governance issues, includingthe establishment and administration ofCommonwealth agencies.AGS has been appointed to each of theGovernment’s 4 legal services categories onthe Legal Services Multi-Use List, which beganin June 2012. They are Government andAdministrative Law, Dispute Resolution andLitigation, Corporate and Commercial Law,and Other.OFFICE OF GENERAL COUNSELAGS advises and assists Commonwealthagencies across the full spectrum ofgovernment administrative decisionmakingand activity. AGS’s Office of GeneralCounsel (OGC) delivers specialist legaladvice, constitutional litigation and relatedservices spanning the spectrum of theCommonwealth’s activities acrossall portfolios.OGC has key expertise in all aspectsof Commonwealth constitutional law,the development, implementation andinterpretation of Commonwealth laws,administrative law and the machinery ofgovernment and includes Australia’s leadingspecialists in statutory interpretation,constitutional law, public international lawand national security law.Our lawyers regularly advise on governance,the machinery of government, administrativelaw, statutory interpretation, freedom ofinformation and privacy, immigration law,health law, public revenue and finance,climate change, energy and water, Indigenousissues, employment law and workplacerelations. OGC also comments on allsubmissions to Cabinet. OGC lawyers alsoundertake a range of legislative drafting.6 AGS Annual report 2012–13

OGC’s Constitutional Litigation Unit isinvolved in every significant constitutionalcase in the High Court, working closelywith the Solicitor-General and theAttorney-General’s Department’s Officeof Constitutional Law.AGS DISPUTE RESOLUTIONAGS Dispute Resolution is the governmentspecialist in resolving and managing disputesand offers a modern and efficient litigationpractice with a focus on alternative disputeresolution. We act in all types of matters,from small claims and disputes to the largestand most sensitive litigation matters. Areascovered include administrative law, regulationand enforcement, information protection andaccess, taxation, national security, recoveriesand insolvencies, competition and consumerlaw, compensation, employment, industriallaw and commercial disputes. We practise inall Australian courts and tribunals, includingthe High Court, Federal Court, Federal CircuitCourt, Administrative Appeals Tribunal andthe Supreme Courts of all Australian Statesand Territories.AGS COMMERCIALAGS assists government agencies with thefull range of corporate and commercial legalmatters. Many of our commercial lawyersbring a special perspective to their workgained from many years’ experience in bothpublic and private sector commercial matters.They are expert in advising on taxation,information and communication technologyprojects, grants and funding, consumer andcompetition, intellectual property, media andcommunications, environment and resources,State and intergovernmental agreements,infrastructure, construction, property andleasing, insurance, banking and finance,procurement, tendering and contracting,probity, process and risk management.AGS Commercial works closely with OGCand AGS Dispute Resolution when clients’matters also involve administrative ordispute-related issues.OUR MANDATEAGS’s mandate emphasises 2 objectives.We are to support the Attorney-Generalin the role of First Law Officer of theCommonwealth by:— providing quality legal services to theAustralian Government and its agencies— ensuring that we maintain:– the ability, through our focus ongovernment, to meet the generallegal services needs of agencies atcompetitive prices– a ‘whole-of-government’ approach– the corporate memory ofCommonwealth legal practiceand advice given by AGS on theConstitution and the law applicableto the Australian Government andits agencies– the ability to meet the unique legalservices needs of the AustralianGovernment, including in the areasof work reserved for governmentproviders.We are to operate efficiently as agovernment business enterprise andadd shareholder value by:— operating on a commercial basis— achieving a commercial rate of returnon equity investment— paying agreed dividends to theCommonwealth.OUR VISIONOur vision for the reporting period was:To be a world-class adviser helping ourclients to advance the national interest.OUR ETHICS AND VALUESOur ethics govern our attitudes and actions.They reflect our distinctive character as agovernment business providing legal servicesto predominantly public sector clients.Our ethics are integral to the way AGSemployees work together. Our sharedcommitment to AGS operating as an ethicalAGS Annual report 2012–13 7

AGS at workElena ArducaLouise Buchanan Justin Davidson Allyson Ladhams Jane Lye Tara McNeillyNatalia MilutinovicPrivacy and information securityAGS lawyers have been advising Commonwealth agencies on the important privacy reforms madeto the Privacy Act 1988 by the Privacy Amendment (Enhancing Privacy Protection) Act 2012. Theseamendments will come into effect on 12 March 2014.We advised the Attorney-General’s Department (AGD) on aspects of the development of the PrivacyAmendment (Enhancing Privacy Protection) Bill 2012, which introduced the Government’s firststageresponse to the Australian Law Reform Commission’s (ALRC) 2008 report For your Information:Australian privacy law and practice. We also advised AGD on aspects of the development of thePrivacy Amendment (Privacy Alerts) Bill 2013, relating to mandatory data-breach notification, whichforms part of the Government’s second-stage response to the ALRC report.In the first half of 2013, AGS held Government Law Group seminars in Canberra, Melbourne, Sydney,Brisbane, Adelaide and Perth about privacy reforms that will commence operation in early 2014.The speakers were Elena Arduca (Senior Executive Lawyer), Louise Buchanan (Senior Lawyer), JustinDavidson (Senior Executive Lawyer), Allyson Ladhams (Lawyer), Jane Lye (Senior Executive Lawyer),Tara McNeilly (Senior General Counsel) and Natalia Milutinovic (Lawyer).The presenters outlined the key changes made by the privacy reforms, identified and discussedsome of the areas likely to impact on current agency operations and made suggestions about whatagencies will need to do (and when) to get ready for the reforms. The seminars focused on thecoverage and practical effect of some of the new Australian Privacy Principles, which will replace thecurrent Information Privacy Principles and National Privacy Principles. They also summarised someof the new powers that have been given to the Australian Information Commissioner and identified3 stages of preparation work for agencies, outlining the issues to be considered in each stage andsuggesting approaches to the tasks that will need to be undertaken in each stage.We prepared a range of fact sheets and other publications on the privacy reforms, which areavailable on our website. We also prepared detailed training courses about the reforms, offered aspart of our client training packages. In addition to these services, we are advising a broad rangeof agencies on the implications of the reforms on their day-to-day business and assisting withpreparation of updated documents to be rolled out when the reforms commence.In addition to our significant tranche of work on the privacy reforms, AGS lawyers have workedclosely with agencies to assess the privacy implications of significant projects and assist with thesuccessful delivery of programs and policy objectives. We have kept well-informed of internationaldevelopments in privacy and information security law through activities such as participation(via internet streaming) in the World Summit on the Information Society Review Event hosted byUNESCO in Paris on 25–27 February 2013.AGS Annual report 2012–13 9

AGS at workSimon Konecny Fiona Mackrell Kate Cabot Kenneth Eagle Cathy ReidAGS’s international workAGS has undertaken a wide range of work in the international arena in 2012–13. This ranged fromthe continuation of high-profile challenges to the tobacco plain packaging legislation broughtagainst Australia, to commercial negotiations surrounding international construction projects.International contract negotiationsAGS has provided advice to the Department of Foreign Affairs and Trade (DFAT) on thebuilding and construction of the new embassy complexes in Indonesia and Thailand. Led bySimon Konecny (Deputy General Counsel Commercial), we assisted DFAT in contracting for theconstruction of the embassy complexes and related project management and constructionmanagement services. This was a fully-designed project that permitted the use of moretraditional contract strategies which, in turn, achieved greater clarification of risk allocationbetween the contracting parties and greater pricing certainty.Regional processing centres – Nauru and Manus IslandAGS also assisted the Department of Immigration and Citizenship in negotiating arrangementsfor the establishment of a regional processing facility in Nauru, both at tender and contractstages. The key issues in this transaction were the need for flexibility in identifying theDepartment’s requirements, and a short timeframe. AGS advised that in the circumstances, thestrategy that best suited the Department’s requirements was a relationship-type contract, givingthe Department flexibility to vary the project and to allow early commencement. Simon Konecny,Fiona Mackrell (Senior Lawyer) and Kate Cabot (Lawyer) worked on the facilities contracts.AGS’s Kenneth Eagle (Senior Executive Lawyer) and Cathy Reid (National Group ManagerCommercial) also assisted the Department with the negotiation of contracts to provide servicesassociated with the transfer of people to and the ongoing operation and management of theregional processing centres on both Nauru and Manus Island. These contracts needed to benegotiated in very short timeframes and allow for sufficient flexibility to enable the scope ofthe services to be adjusted to meet the changing requirements.10 AGS Annual report 2012–13

Simon Daley PSMTobacco plain packaging litigationLed by Simon Daley PSM (Chief Solicitor Dispute Resolution) an AGS team worked on theinvestment treaty arbitration brought by Philip Morris Asia against the Commonwealth underthe 1993 Agreement between the Government of Australia and the Government of Hong Kongfor the Promotion and Protection of Investments. The arbitration (ongoing at the time of thisreport) is being conducted under the United Nations Commission on International Trade LawArbitration Rules 2010.Philip Morris Asia has claimed that the plain packaging legislation constitutes a breach of anumber of Australia’s obligations under the agreement with Hong Kong. The arbitral Tribunalhas been constituted and the Tribunal has determined that Singapore will be the seat of thearbitration.The first procedural hearing was held on 30 July 2012 and a timetable has been fixed for thefurther conduct of the matter. AGS is representing the Commonwealth and is instructing a teamof Australian and international counsel led by the Solicitor-General, Justin Gleeson SC.AGS also assisted DFAT with aspects of the challenges to the plain packaging legislation broughtagainst Australia in the World Trade Organisation (WTO). Ukraine, Honduras, the DominicanRepublic and Cuba have claimed that Australia’s plain packaging measure is inconsistent withcertain obligations under the WTO Agreements on Trade-Related Aspects of Intellectual PropertyRights, Technical Barriers to Trade, and the General Agreement on Tariffs and Trade 1994.The AGS team worked closely with the Office of International Law in the Attorney-General’sDepartment, DFAT and the Department of Health and Ageing on these matters.AGS Annual report 2012–13 11

Support for the Attorney-GeneralSupporting the Attorney-Generalas First Law Officer of theCommonwealth, as described in ourmandate, is fundamental to AGS’soperations and to our value as theGovernment’s own legal adviser.AGS assists the Attorney-General as First LawOfficer by ensuring the Government hashigh-quality legal and related services thatadvance the national interest. We also play anessential role in helping government agenciesto comply with the Legal Services Directions(LSDs), in particular the obligation to behaveas a model litigant in the conduct of litigation.AGS regularly prepares reports to the First LawOfficer detailing significant matters for whichclients have engaged us.TIED WORKAGS undertakes tied (non-contestable) work,which the Government has determinedshould be performed by AGS and other tiedproviders pursuant to the Attorney-General’sLSDs. Tied work includes legal work associatedwith the Constitution, Cabinet matters,national security and public international law.Constitutional mattersAGS advises the Government onconstitutional issues and conducts itsconstitutional litigation. Constitutionallaw involves essential aspects of Australia’ssystem of government which can haveenduring and whole-of-governmentimplications extending beyond the interestsof any particular department or portfolio.These considerations require a high andspecialised level of legal expertise andcentral coordination.We also review Cabinet submissions toidentify potential constitutional and otherlegal issues arising from proposals.We maintain a uniquely qualified team oflawyers with extensive experience in advisingon constitutional issues and in the conductof constitutional litigation. Chief GeneralCounsel Robert Orr PSM QC, Deputy GeneralCounsel Guy Aitken and National GroupLeader of OGC Leo Hardiman lead our teamof advisers on constitutional issues. DeputyGovernment Solicitor David Bennett QC andConstitutional Litigation Unit team leaderAndrew Buckland lead our constitutionallitigation practice.Constitutional adviceThis year we advised on constitutionalissues in a range of legislative developmentprojects including the National DisabilityInsurance Scheme (now DisabilityCareAustralia), gambling reforms, a new modelfor Commonwealth funding for schools andthe implementation of the Government’sresponse to the Productivity Commissionreview of wheat export marketingarrangements.Following the High Court’s decision inWilliams v Commonwealth, which changedthe previously understood scope of theCommonwealth’s power to spend moneyand enter into contracts, AGS assisted allagencies to assess the level of constitutionalrisk associated with their existing spendingprograms. This involved assessing over1,100 programs in a short period. Anumber of agencies also asked us to reviewnew programs and policy proposals forconstitutional risk.12 AGS Annual report 2012–13

Constitutional litigationThe Government can become involved inconstitutional litigation in 2 ways. The firstis when the Government is a party in itsown right, where proceedings have beencommenced by or against it. Second, theCommonwealth Attorney-General has a rightto intervene on behalf of the Governmentin cases raising constitutional issues. TheJudiciary Act 1903 requires parties in suchcases to give Attorneys-General notice of theconstitutional issues (under s 78B) to allow adecision to be made on intervention by eachAttorney-General (under s 78A).AGS’s role includes considering notices givenunder the Judiciary Act and, in consultationwith the Commonwealth Solicitor-Generaland interested agencies, advising theAttorney-General’s Department (AGD) onwhether the Attorney-General shouldintervene.This year AGS reviewed 246 notices givenunder s 78B of cases raising constitutionallaw issues. The Attorney-General intervenedunder s 78A in 11 cases including 9 in theHigh Court and 1 in the Full Federal Court.AGS also advises the Government on allsubmissions on constitutional law issues thatare put to courts on behalf of Commonwealthagencies. This is to ensure that submissionsare accurate and apply Commonwealthconstitutional policy consistently.One of our major constitutional litigationmatters decided this year was the tobaccoplain packaging matter in the High Court.Major tobacco companies British AmericanTobacco, Philip Morris, Imperial Tobacco,Van Nelle Tabak Nederland and JTInternational SA had argued before the HighCourt that the Government’s legislation wasunconstitutional and would invalidly acquiretheir copyright and intellectual property.They argued the measure breached theconstitutional requirement that theacquisition of property by the Governmentbe on just terms. The High Court held thatthe legislation was not contrary to thatconstitutional requirement.Other significant matters during2012–13 included:Fortescue Metals Group v Commonwealth[2013] HCA 34, in which the Commonwealthsuccessfully defended a challenge to theconstitutional validity of the MineralResources Rent Tax Act 2012.TCL Air Conditioner (Zhongshan) Co Ltd v Judgesof the Federal Court [2013] HCA 5; (2013) 87ALJR 410, in which the CommonwealthAttorney-General intervened to support,successfully, the validity of provisions of theInternational Arbitration Act 1974.Maloney v The Queen [2013] HCA 28; (2013)87 ALJR 755, in which the CommonwealthAttorney-General intervened successfully.X7 v Australian Crime Commission and theCommonwealth [2013] HCA 29; (2013) 87ALJR 858.Monis & Droudis v The Queen [2013] HCA 4;(2013) 87 ALJR 340, in which theCommonwealth Attorney-General intervenedsuccessfully.Baker v Commonwealth [2012] FCAFC 121;(2012) 206 FCR 229.Crosby v Kelly [2012] FCAFC 96; (2012) 203FCR 451, in which the CommonwealthAttorney-General intervened successfully.National securityAGS continues to work closely with AGDand security and law enforcement agenciesto deliver successful outcomes in nationalsecurity.Our centrally coordinated national securitypractice ensures consistency in our capabilityacross all AGS offices. More than 20 AGSlawyers work regularly on nationalsecurity matters.National security remained a high concern forthe Government during 2012–13. We actedin major matters involving collection andprotection of national security information,offences and criminal proceedings relatedto national security and proceedings aboutadverse security assessments.AGS Annual report 2012–13 13

Our work included assisting the AustralianSecurity and Intelligence Organisation andthe Australian Federal Police with legalaspects of their support for prosecutions.International lawAGS advises on international law issues,working closely with AGD’s Office ofInternational Law (OIL). During the year,in consultation with OIL, we advised onmatters that required consideration of morethan 20 international treaties, covenantsand declarations.POLICY AND PROGRAM MATTERSSome significant matters feature in casestudies (AGS at work) in this report. Othersincluded:— the Royal Commission into InstitutionalResponses to Child Sexual Abuse— the recommendations of the (Houston)Expert Panel on Asylum Seekers— offshore processing of asylum seekers— education funding reform— Commonwealth financial frameworkreform— the carbon price— gambling reform— energy market reform— the Murray–Darling Basin Plan— wheat export marketing legislativeamendment— proposed bargaining options for enterpriseagreements— fisheries legislation and the ‘supertrawler’— minority government issues— amendments to the Electoral Act 1918— local government referendum— Emergency Alert, the national telephonewarning system used by emergencyservices— major government procurements— property requirements for agencies— commercial and other considerationsassociated with the G20 Summit plannedfor 2014 in Brisbane.SIGNIFICANT NON-CONSTITUTIONALLITIGATIONSome significant litigation matters that didnot involve constitutional issues were:— Plaintiff S10 2011 v Minister forImmigration and Citizenship; Kaur vMinister for Immigration and Citizenship;Plaintiff S49/2011 v Minister forImmigration and Citizenship; PlaintiffS51/2011 v Minister for Immigration andCitizenship [2012] HCA 31— Ashby v Commonwealth of Australia— Board of Bendigo Regional Institute ofTechnical and Further Education andAdvancement v Barclay [2012] HCA 32(Minister for Education, Employment andWorkplace Relations intervening)— Plaintiff M47/2012 v Director General ofSecurity [2012] HCA 46— ACCC v Neighbourhood Energy Pty Ltd[2012] FCA 1357— Secretary to the Department ofSustainability and Environment (Vic) vMinister for Sustainability, Environment,Water, Population and Communities [2013]FCA 1— Commissioner of Taxation v Qantas Airways[2012] HCA 41— Commissioner of Taxation v ConsolidatedMedia Holdings Ltd [2012] HCA 55.LEGAL SERVICES DIRECTIONSOur success in assisting our clients to complywith the LSDs is measured by the numberof reported breaches. During the year, therewas no finding of an LSD breach in matters inwhich AGS acted.Other LSD-related activities during the yearincluded the revision and updating of ourNational Professional Standard regardingAGS’s obligations under the LSDs.14 AGS Annual report 2012–13

AGS at workGlenn OwbridgeJody Marshall Matthew Crowley Rebecca Daumont Tony Giugni Kathryn GordonACCC air cargo litigationThe Australian Competition and Consumer Commission (ACCC) air cargo litigation – a seriesof high-profile cases alleging collusion on fuel and other surcharges for air cargo services –culminated in a series of hearings in 2012 and 2013.A team of AGS lawyers conducted litigation on behalf of the ACCC against 15 internationalairlines. AGS helped the ACCC prepare for proceedings between 2008 and 2012 and assisted withprosecution in Federal Court hearings and defence of appeals to the Full Federal Court and theHigh Court during 2012 and 2013.As well as pursuing the contested litigation, AGS helped achieve mediated outcomes whereappropriate. To date, proceedings against almost all respondents have been successfullyresolved, with court-ordered civil penalties so far totalling $98.5 million and expected to exceed$100 million. The outcomes have allowed the ACCC to demonstrate its determination to pursuecartel arrangements made here or overseas by foreign corporations where they impact onAustralian prices and consumers.Glenn Owbridge (Special Counsel, Competition and Consumer Law) headed the national team ofAGS practitioners who worked on these cases. Jody Marshall (Senior Executive Lawyer) managedand coordinated the national team, playing an integral role in the case strategy and development.Core team members included Matthew Crowley (Senior Executive Lawyer), Rebecca Daumont(Senior Lawyer), Tony Giugni (Senior Lawyer) and Kathryn Gordon (Senior Lawyer).The air cargo litigation has been described by the ACCC as its biggest investigation ever. Notableaspects of the cases included:— application of the Competition and Consumer Act 2010 (formerly the Trade Practices Act 1974)to overseas entities for conduct occurring partly in Australia and partly overseas, and theresultant challenges presented to the ACCC’s powers to issue compulsory notices— complexities resulting from the impact of foreign government ownership of some ofthe airlines— unprecedented testing of the parameters of price fixing under the Act.AGS and ACCC teams worked intensively, particularly over 2012–13, to address these complex legalissues, resulting in ground-breaking decisions that will clarify the law for future regulatory andenforcement action as well as general litigation.AGS Annual report 2012–13 15

Operating as agovernment business enterpriseAGS is a fully competitive andcommercial legal services providertasked by our mandate to achieve acommercial rate of return on equityinvestment and pay agreed dividendsto shareholder Ministers on behalf ofthe Commonwealth.KEY RESULTSIn 2012–13 AGS:— exceeded our corporate plan target fortrading revenue by $3.9 million and profitbefore tax by $3.2 million— achieved satisfactory or betterperformance trends against all corporateplan performance measures.MARKET TRENDSAGS remains by far the largest singleprovider of legal services to government.Our market share was steady during 2012–13,at around 40%.The external market for government legalservices remained challenging this year, as ithas been for some years. As we anticipated,budgets were tighter for many key clients dueto financial constraints. We expect decreasesin client budgets will continue and thatagencies will seek to reduce external legalspend to a greater extent than internal spend.We have seen declines in the volumes of AGS’swork that were once ‘bread-and-butter’ forrevenue and important for enabling juniorlawyers to gain experience to progress tomore senior matters in the future.Increasingly, we are seeing a reliance on AGSfor the more complex legal work.The introduction of the Legal ServicesMulti-Use List has seen further challengesin recent months – in particular, a greateradministrative load in responding to farmore bids, and a greater diversification ofrequirements (for example, value-addedservices and complex individual reportingarrangements). Developing effective strategiesto manage the administrative load andpotential ‘opportunity cost’ of this is a concernfor AGS.StrategiesWe have anticipated and responded to thetrends and challenges of the market over thepast few years by becoming more streamlinedand efficient. Organisational changes havestrengthened our national practices andimproved our business processes.We will continue to reinforce our corestrengths – our excellence in legal advice andrepresentation, our unique closeness to andunderstanding of government and our focuson providing the best possible service to ourclients. Key strategies to achieve this featurein our corporate plan for 2013–16. They are:— reinforcing our client service and clientcare strategies— promoting our competitive pricing— developing trusted partnerships within-house legal teams— actively seeking new businessopportunities.16 AGS Annual report 2012–13

MEASURING OUR PERFORMANCEAGS has 5 performance measures (financialand non-financial) that we use to assessand report on progress in our corporate planstrategies.In 2012–13, we achieved good or betterperformance results in 4 measures andsatisfactory or better in 1 measure.Scorecard of AGS performancePerformance measure 2012–131. Financial performance •2. Business efficiency •3. Leverage / solvency •4. Customers and stakeholders •5. Staff •Code• good or better performance or trends• satisfactory performance or trends (includingrevenue within 3% of corporate plan target)• unsatisfactory performance or trendsFINANCIAL OUTCOMESThe financial result for 2012–13 was positivegiven difficult trading conditions (includingthe financial constraints on agencies and thecontinued growth of in-house legal areas).— our trading revenue ($111.9 million) was$3.9 million higher than the corporateplan target— our profit including interest was$6.1 million – more than double thecorporate plan target— we paid dividends during the year of$9 million.Since 1999, when AGS became a governmentbusiness enterprise, we have made profitstotalling $158 million, from which wehave provided $50.5 million in tax or taxequivalents and $108.8 million in dividends,special dividends and repayments of equity.In addition, we repaid a government loan of$15.1 million.Performance measure 2012–13Revenue from legal service trading$111.9mTotal shareholder return 7.6%Dividends paidLegal service earnings beforeinterest and tax (EBIT)Profit from legal service tradingbefore interest, tax, depreciationand amortisation (EBITDA)Debtor and WIP days$9.0m$4.1m$7.6m81 daysAGS Annual report 2012–13 17

AGS at workLeo HardimanAndrew Chapman Joe Edwards Richard Harding Leah EdwardsJim SullivanLeah LyonsRanjeet Jordan Linda Richardson PSM Helen Curtis Lillian RichesKate CabotDisabilityCare AustraliaDisabilityCare Australia, the national disability insurance scheme, was established by theGovernment to provide individualised support for eligible people with permanent and significantdisability. AGS played a fundamental role in advising on legal aspects of the developmentof the scheme, the associated Act and accompanying rules and assistance with commercialarrangements to support the implementation.Establishing DisabilityCare AustraliaDuring 2012–13, Leo Hardiman (Deputy General Counsel), Andrew Chapman (Counsel) andJoe Edwards (Senior Lawyer) provided a range of constitutional and other legal advice on thedevelopment and implementation of the National Disability Insurance Scheme Act 2013.A team of AGS lawyers was engaged in January 2013 by the Department of Families, Housing,Community Services and Indigenous Affairs (FaHCSIA) to draft legislative instruments (known as‘rules’) for the Act. This aspect of the work is discussed on page 49 of this report.AGS also gave advice on machinery-of-government issues concerning the establishment ofDisabilityCare Australia.Richard Harding (Special Counsel Dispute Resolution) and Leah Edwards (Senior General Counsel)advised on employment arrangements for staff of DisabilityCare Australia.AGS property lawyers led by Jim Sullivan (Senior Executive Lawyer) and assisted by Leah Lyons(Senior Lawyer) and Ranjeet Jordan (Senior Lawyer), also provided advice to assist DisabilityCareAustralia to procure binding leases for 7 pilot sites in 4 States within a very short timeframe. AGSassisted in negotiations with each landlord’s solicitors for the purposes of DisabilityCare Australiaformally documenting the short-form leases of the pilot sites.AGS commercial lawyers Linda Richardson PSM (General Counsel Commercial), Helen Curtis(Senior Executive Lawyer), Lillian Riches (Senior Lawyer) and Kate Cabot (Lawyer) provided probityadvice to FaHCSIA for a number of procurements related to the design and implementation ofthe national disability insurance scheme.18 AGS Annual report 2012–13

Outcomes against our corporate planAGS CORPORATE PLAN 2012–15AGS aims to be:— integral and critical to the role of theAttorney-General as First Law Officer— the first choice legal service providerto government— a truly integrated national practice thatdelivers consistent high-quality legalservices— an expert, reliable and flexible legaladviser meeting client needs.This year, we delivered our corporate aimsthrough strategic activities in 4 key areas,outlined in our corporate plan:— Our clients— Our practice— Our people— Our businessOur clientsSTRATEGIC FOCUS FOR 2012–15— actively pursue new business opportunitiesand work in emerging areas of governmentpolicy— strengthen our business with key clients— further develop strategic and trustedpartnerships with in-house legal teams— continue to foster our staff’s commitmentto consistency and quality of service— promote our competitive pricing anddemonstrate value for money in our bidsand quotes.KEY OUTCOMESIn 2012–13 AGS:— raised our profile and increased ourbusiness in growing and emergingpolicy areas— enhanced our contact and relationshipswith in-house legal teams of existing andpotential new clients through our clienttraining and events program.DEVELOPING BUSINESS OPPORTUNITIESWhile the matters outlined in other sectionsof this report accounted for a considerableamount of AGS’s work this year, we alsocontinued to focus, through corporate planactivities, on developing new business ingrowing policy areas and programs – inparticular energy, resources and water,employment law, social media, lawenforcement/regulatory and civil penalties,and commercial litigation.AGS Annual report 2012–13 19

We reviewed our practices, identifiedmarketing needs, undertook recruiting,produced publications, held seminars andother events and presented at conferencesto raise our profile within the potentialclient base.Initiatives in the areas of social media,employment law and civil penalties arehighlighted in case studies throughoutthe report.In addition we held:— roundtable discussions with key clientsabout proposed amendments to theframework for the review of the energyrevenue determinations, water tradingrules and on new revenue determinationrules for electricity— Government Law Group seminars inCanberra, Sydney and Melbourne onprotection of information to showcase ourlaw enforcement team. A number of ourlawyers attended client law enforcementforums.— Government Law Group seminars onconflicts and confidentiality in Canberra,Sydney and Melbourne and we also gavepresentations on contract terminationto industry conferences and to clientagencies.Our efforts contributed to AGS gaining newinstructions across our target areas of law,particularly in law enforcement/regulatoryand civil penalties matters. We weresuccessful in a range of relevant parcel bidsfor key clients, which will bring future workin these areas.CHANGES IN KEY PUBLIC SECTORREQUIREMENTSAnother growth area was assisting agenciesto implement a number of changes inlegislation, rules and program operations.During the year we:— held Government Law Group seminarsaround the country followingthe implementation of the newCommonwealth Procurement Rules from1 July 2012. We also updated a number offact sheets and worked with agencies toupdate their template documents— worked with the Department of Financeand Deregulation (Finance) on the wholeof-governmenttemplate grant agreementand the release of the government grantguidelines, and updated our Legal briefingpublication on grants— completed the development of theCommonwealth National Lease for Finance— worked with Finance on the new templatefor low-risk grants, supporting theGovernment’s broader policy in the notfor-profitsector and with several otheragencies on precedent documents forfunding programs— promoted AGS’s expertise in advisingon the reforms to the Privacy Act 1988that will come into effect in March 2014.A coordinated national program ofGovernment Law Groups, client trainingand publications will continue through2013.— held Government Law Group andlunchtime seminars in April and May inCanberra and across Australia on changesto the Public Service Act 1999 and possiblechanges to the Fair Work Act 2009— assisted numerous agencies withprogram design considerations followingthe Williams decision. These includedconstitutional issues and a range of otherlegal and policy considerations.— advised on the Public Governance,Performance and Accountability Bill 2013.BUILDING RELATIONSHIPSOutpost practiceAGS has a substantial outpost practicethrough which lawyers at all levels workexclusively with a particular client, eitherin-house or from AGS, in the short, mediumor long term.Our outposted lawyers play a vital role indeveloping better client relationships whichin turn generate better outcomes for ourclients and for us.20 AGS Annual report 2012–13

courses. These were open to all governmentlawyers and featured a range of topicsincluding administrative law, grants, freedomof information, privacy, commercial law,probity and evaluating tenders. We alsoconducted 52 client-specific courses on topicsincluding principles of decision-making andstatutory interpretation.In addition to our regular programs, weintroduced 1-hour seminars for clients ona range of legal topics including probity,indemnities and the Personal PropertiesSecurities Register, the model litigantprinciple and procedural fairness.In March 2013 we presented our inaugural‘Afternoon with government lawyers’ sessionto lawyers from several departments based inWoden, ACT.In June 2013 we hosted ‘Excellence ingovernment decision-making: An AGSsymposium’ in Canberra. The group of 100attendees enjoyed papers from Judge JeffreyS Sutton of the US Sixth Circuit Court ofAppeals, Justice John Basten of the NewSouth Wales Court of Appeal and JusticesRares, Perram, Jagot and Kerr of the FederalCourt. They also heard from Professor GeorgeWilliams and Associate Professor MatthewGroves. The symposium was the seventhevent in the Excellence series of conferences,which began in 2009.IMPROVING BUSINESS AND CLIENTCARE SKILLSIn the first half of the year we held a nationaltraining program for lawyers and supportstaff that focused on business-winning andexcellence in quoting for legal services. Thetraining was conducted in anticipation ofthe increase in requests for quotes under theLegal Services Multi-Use List (LSMUL). Thetraining included presentations at each AGSoffice on effective quoting and tendering,developing appropriate pricing optionsand communicating value to clients. It alsoincluded podcasts on our intranet on theLSMUL and preparing quotes.Enhancing client serviceAGS monitors satisfaction with theconsistency and quality of our service throughindividual client discussions and feedback,and through an annual client survey, this yearconducted online.Jasper Consulting, which also conductedthe survey in 2011, carried out the surveyfrom late November to early December 2012.It was distributed to almost 2,000 headsof legal areas and instructing officers whohad actively done business with AGS in theprevious year.The survey findings showed a high level ofsatisfaction with AGS’s performance, legalexpertise, quality of relationship, ease of doingbusiness with and responsiveness. Identifiedareas for improvement were discussed furtherduring client focus groups and our NationalClient Service Managers conference in May.Clients also noted the increased competitionfor their attention by participants in themarket.The feedback from the focus groups and theconference helped to shape actions in thecorporate plan for 2013–16, which has beendeveloped with a strong emphasis on clientservice excellence.Client feedbackAGS regularly receives positive feedbackfrom our clients, which we disseminatewidely to our legal staff and promote on ourOutstanding Client Service section of ourintranet and through our intranet news.We also have annual Client Care Awards foroutstanding client service. This year 24 legaland corporate staff received awards.22 AGS Annual report 2012–13

DEVELOPING COMPETITIVENESSTHROUGH PRICINGTo better help clients manage their legalexpenditure and to adapt to the newprocurement arrangements under the LSMUL,our client services, finance and legal teamsmade concerted efforts to improve the way wedevelop and express our pricing for individualbids and tenders.We continued to promote our pricing strategythrough client meetings and communicationsas well as bids. We clearly outlined our valuefor money, value-adds and flexibility in ourpricing strategies in all responses to clientrequests for quotes. The client feedback wehave received indicates that our pricing levelsare consistently competitive.Our practiceSTRATEGIC FOCUS FOR 2012–15— continue to evolve our national practice— further develop our legal services capabilityand capacity— enhance and promote our reputation as thekey provider of core government work.KEY OUTCOMESIn 2012–13 AGS achieved:— benefits to clients through greaterconsistency and better allocation ofmatters— promotion of our reputation through keyevents to mark our service to governmentsince federation.STRENGTHENING OUR NATIONAL PRACTICEIn 2011–12, we implemented a restructureof our legal practices to better position theorganisation to meet future challenges. Therestructure aimed to deliver more sustainabledeployment of legal resources and supportfunctions and greater consistency in qualityand service across offices. It was expected totake 2 years to be fully implemented.At the end of 2011–12 we assessed therestructure’s progress and, as a result, in2012–13 we implemented further changesto strengthen practice leadership andsupervision practices and support corporateprocesses. They included increased supportfor team leaders, in particular leadershipdevelopment, mentoring opportunitiesand training on remote supervision.At the end of the 2-year implementationperiod, the restructure is now delivering clearbenefits to clients through greater consistencyand ability to pull together expertise andteams across offices to meet client needs.AGS lawyers are also seeing benefits fromgreater opportunities to work with abroader range of experts, increased careerdevelopment opportunities, clearer careerpaths and more focused training anddevelopment.AGS Annual report 2012–13 23

Building capability and capacityThroughout the year the practice groupsreviewed their capabilities and capacity inlight of current client demand. Each practicegroup also reviewed its processes for ensuringthat work is allocated at appropriate levelshaving regard to workloads, efficiencies andclient preferences.We continued to support our practicenetworks, which are networks of AGS lawyerswith an interest in a particular area of lawwho share their expertise and experience,knowledge of new legislative or case lawdevelopments, precedents and trainingopportunities. Membership of these practicenetworks comes from across our 3 nationalpractice groups, ensuring that expertise isshared across groups.Our practice networks enable our lawyers towork collaboratively across the country, withour lawyers within each practice networkhaving regular contact through telephoneconferences, network meetings and email.We continued to invest in our nationaltraining program to ensure the continuousdevelopment of our expertise and thecurrency of our lawyers’ knowledge. Ourteam leaders and practice network leadersare closely involved in the development andimplementation of our training to ensureconsistency across locations and groups.AGS’s national IT system allows teamsacross the country to work seamlessly onmatters; it also means our lawyers haveinstant access to comprehensive researchdatabases, including our national LegalOpinions database, substantive precedentsand national templates. We have numerousnational specialist intranet pages aimedat sharing knowledge across our practicegroups. Our practice groups and networksare continuously involved in updating anddeveloping new knowledge databases to coverour legal areas.PROMOTING OUR EXPERTISEAn important strategy in our corporate planthis year was to proactively promote ourspecialist expertise and longevity and toenhance our reputation as a key provider ofcore government work – through both ourbusiness-winning efforts and our marketingand communications activities and events.A key activity in this year’s marketing strategywas the redesign of our website. The newsite, launched in November 2012, includedupdated content and functionality and astronger client focus. Content was tailoredto complement the information available toclients through the LSMUL and to provideeasier access to more comprehensive detailsabout our services and lawyers.Also in November, the legal professionpublication Australian Lawyers Weeklyfeatured a lengthy profile on AGS, describingus as ‘vital cogs in the machine’.In March we released our first vodcast (orvideocast) on the topic ‘Beware of hiddenleasing costs’. This was a new serviceoffered by our podcast partners, BRR Media(BoardRoom Radio). As with our podcasts, thevideo was offered to a number of broadcastpartners who embedded it in their websites.One of our major activities was thepublication and launch of the third volumeof Opinions of Attorneys-General of theCommonwealth of Australia with opinions ofSolicitors-General and the Attorney-General’sDepartment. This is featured in a case studyon page 41.We also produced a souvenir publicationto mark 110 years of service to theCommonwealth of Australia by AGS andits predecessor agencies – in particular theCommonwealth Crown Solicitor’s Office.The 2 publications and associated onlineresources provide a lasting record of AGS’scentrality to government since federation,and our continuing role as custodian of theCommonwealth legal corporate memory.24 AGS Annual report 2012–13

Our peopleSTRATEGIC FOCUS FOR 2012–15— enhance our leadership capability— continue to develop the best workforceprofile— foster a highly-professional and collegiateculture.KEY OUTCOMESIn 2012–13 AGS:— enhanced our leadership programthrough senior leadership and supervisorsworkshops and conferences— strengthened work health and safety(WHS) skills of senior managers— conducted a review of legal support— implemented outcomes from the 2012employee survey.ENHANCING LEADERSHIP CAPABILITYAGS continued investing in employeedevelopment during 2012–13, largely throughtraining in leadership and managementdevelopment and in WHS.Leadership and management developmentevents included:— Leadership Series presentations for seniorexecutives with keynote speakers. Theseincluded former secretary DEWHA DavidBorthwick, former Centrelink CEO JeffWhalen, International Bar AssociationPresident Michael John Reynolds, AGSAdvisory Board Chairman John Allen,Sex Discrimination CommissionerLiz Broderick, and Deputy SecretaryGovernance Department of the PrimeMinister and Cabinet, Renee Leon— professional supervision workshops forSenior Executive Lawyers and SeniorLawyers, with a focus on the role of thelead lawyer in managing matters— management development workshops forSenior Executive Lawyers, Senior Lawyersand Senior Specialists, which focused onmanaging employees and understandingone’s leadership style— remote supervision for legal team leaders— management development for ManagingLegal Assistants— Leaders Conference for AGS senior leaders.This is an annual 2-day conference forAGS senior managers, including the CEO.The conference covered key businesstopics on client service and professionaldevelopment topics on neuroscience ofleadership, resilience and managementstyles of leaders.In addition to these events, a number of WHSworkshops were held for employees andsenior managers.National Practice OrientationThe National Practice Orientation (NPO) fornew starters to AGS was presented to 28lawyers and 2 senior specialists. The NPOprovided an opportunity for employees tolearn about what is expected of them whileworking at AGS. They also met key AGSprofessional leaders and executives andestablished networks with other colleagues.Graduate and summer clerk recruitmentWe conducted our annual graduaterecruitment campaign from mid-Februaryto mid-June 2013. Fifteen high-calibre younglaw graduates and lawyers (including 1Indigenous candidate) were offered a place inthe 2014 AGS graduate program. There were543 applications.The summer/winter clerk recruitmentcampaign started in mid-June and is expectedto offer 5 places to students in Melbourne,Sydney and Canberra offices.Succession planningSuccession planning is a high priority and anongoing task for the AGS executive to ensureour legal expertise is aligned with clientrequirements.AGS Annual report 2012–13 25

FTE changesLawyers andGraduatesSeniorLawyersSeniorExecutiveLawyersLegalSupport andParalegalsCorporateSupport1 July 2012 87.4 108.2 120.7 136.8 155.9 608.930 June 2013 85.2 116.1 119.8 125.6 153.7 600.3AGSLawyer turnoverLevel 2011–12 2012–13Lawyer/Graduate 27% 16%Senior Lawyer 10% 12%Senior Executive Lawyer 5% 3%Legal Support and Paralegal 10% 15%Corporate Support 12% 7%AGS 12% 10%Note: Turnover refers to resignations and retirements for ongoingand term lawyersLawyer stability% at30 June 2012% at30 June 2013Ongoing lawyers >3 years at AGS 74% 74%Personal leave2011–12 2012–13Average days taken per employee 9.8 10.0Note: Includes ongoing, term and casual employees but excludesemployees on long-term leave and contractors.26 AGS Annual report 2012–13

% Female and male at 30 June 2013Female MaleLawyer/Graduate 65% 35%Senior Lawyer 67% 33%Senior Executive Lawyer 47% 53%Legal Support and Paralegals 76% 24%AGS 67% 33%% Part-time and full-time at 30 June 2013Part-time Full-timeLawyer/Graduate 2% 98%Senior Lawyer 31% 69%Senior Executive Lawyer 23% 77%Legal Support and Paralegals 24% 76%AGS 22% 78%This year we assessed areas of capacity(appropriate skills of lawyers to meet currentclient demands) and addressed gaps by fillingthrough internal promotions or recruitinglawyers with appropriate skills.We also monitored high-performingemployees to ensure that their professionaldevelopment was progressing. We addressedother factors, such as challenging work andremuneration, on an individual basis.AGS Annual report 2012–13 27

WORKFORCE PROFILEA key priority for the practice groups was toensure an appropriate balance between theprogression of high-performing employeesand well-managed employment costs.Outcomes for the financial year included thefollowing:— Overall employee numbers were slightlylower at the end of the financial yearfor both legal and corporate areas (1.4%reduction). For Lawyers, Senior Lawyersand Senior Executive Lawyers, there wasan increase of 4.5 FTEs. For corporate andlegal support staff there was a reductionof 13.4 FTEs.— Senior Lawyers were the only groupthat increased in number (7% increase),which was due to the promotion of juniorlawyers. This was to ensure progressionand retention of key talent.— Turnover at AGS decreased from 12%in 2012 to 10% in 2013, with a notabledecrease in Lawyer/Graduates turnoverat 16%. This is the lowest turnover for thisgroup in almost 10 years.FOSTERING PROFESSIONALISM ANDCOLLEGIALITYAGS AlumniThe alumni program established last year tokeep AGS in touch with former employeescontinued successfully, with events inCanberra, Brisbane and Sydney.AGS Alumni provides an opportunity toenhance contact and friendships with formercolleagues, develop useful business networks,foster career development and mentoring,and promote AGS’s profile within the legalprofession.Employee surveyWe conducted an employee satisfactionsurvey in May 2013. The results showed thatoverall satisfaction had improved with ageneral increase in the number of positiveresponses for all questions. The number ofemployees participating increased from 44%in 2012 to 54% (356) in 2013.The most supported issues were:— ‘fair day’s work’ was the highest-ratedissue in 2013. 88% of employees felt thatthey and their colleagues were puttingin a fair day’s work, which could indicatework load capacity is optimal or at peaklevels— enjoying work – 85% of employeesanswered the question as strongly agree/agree— effective supervision – 84%— satisfaction with employmentat AGS – 78%— learning and developmentopportunities – 75%.Perceptions relating to tools and resourcesexperienced an 18% increase in favourableresponses although responses confirm theneed for work to continue in improvingIT facilities.The least supported issues were:— pay and remuneration— managing inappropriate behaviour— career prospects.Actions to be taken to address issues include:— each practice and function area will bedeveloping actions in response to surveyfindings— HR Services will continue with theleadership, management and supervisiontraining of employees— training programs will address issuesof inappropriate behaviour.EMPLOYEE WELLBEINGA Comcare WHS inspection audit wasconducted on AGS’s approach to managingpsychological injuries, including bullyingand harassment. Offices in Canberra, Sydney,Melbourne, Brisbane and Perth were selectedand all received a satisfactory report. Areas foraction included further training, additionalrisk assessments and improved access toinformation by employees.28 AGS Annual report 2012–13

A key focus of WHS this year has beenon training for employees and managerson bullying and harassment, resilienceand depression. Overall complianceobligations remained an ongoing task withimprovements realised in areas such asreporting, committee management andinformation on the intranet.Key achievements in 2012–13AGS developed a new WHS framework, whichresulted in the following:— AGS’s Comcare premium for 2013–14has been reduced by $300,000 due to areduction in the number and cost of claims— automated external defibrillators weredeployed in Canberra, Sydney, Melbourne,Adelaide, Brisbane and Perth offices— a national program of influenzavaccination and heart health checkswas delivered— a targeted WHS training program wasdeveloped and delivered— workshops were provided formanagement on bullying and harassment,managing mental health issues, conflictmanagement and resilience— workshops were provided for all staffon understanding depression and stressmanagement.Our businessSTRATEGIC FOCUS FOR 2012–15— make doing business with AGS easier— create greater business efficiencies— ensure our technology is appropriate toour business.KEY OUTCOMESIn 2012–13 AGS:— brought the Canberra accommodationproject to fruition— updated key business processes andimproved IT services.IMPROVING BUSINESS PROCESSESAND EFFICIENCIESBuilding on the progress made during thelegal practice restructure in 2011–12 and thereview of its implementation this year, wecontinued to implement cost savings andbusiness process changes in the corporatesupport function areas.Key aims included developing a consistentnational approach to invoicing andimplementing a simpler, more streamlinedreporting regime for clients. We found thatachieving consistency was difficult becauseof the need to meet varying clientrequirements.We also concentrated some invoicing andbilling processes in a single national location,consolidated our banking to one provider andstandardised processes for payment.We reviewed and updated our NationalFinance Standards concerning managementof client and third party funds, managementof assets, and our financial frameworkgenerally. The CEO approved amendmentsto these standards in April 2013.Canberra accommodationThe long-running project to improve AGS’sCanberra accommodation came to fruitionwith the signing of a long-term lease for thetop 2 floors of 4 National Circuit in Barton.AGS Annual report 2012–13 29

Canberra staff will relocate in September2013.The building and precinct received a numberof awards and accolades at the ACT AustralianInstitute of Architecture Awards in June.ENSURE OUR TECHNOLOGY ISAPPROPRIATEThis year saw a number of improvements inour IT environment and services:— in November 2012 we released AGSConnect, a safe way to work on the AGSnetwork from home when travelling andfrom tablet devices— consolidation of State-based electronicdocument stores into a single nationalstore greatly simplified document sharingfor teams working across State boundaries— the Office Productivity Program deliveredupgrades to our spreadsheet, email andpresentation software, which reducedsupport costs, improved reliability,simplified exchanging documents withclients and delivered collaboration tools— we upgraded from our former version ofMicrosoft Office (Office Professional 2003)to Office 2013.The Executive Management Committeeapproved a capital plan for a stagedreplacement of IT and communicationsequipment.Library ServicesBuilding on last year’s budget savings, LibraryServices achieved a further 5% reduction in itsexpenditure this year.Library staff provided legal reference supportfor many significant matters during the year.The development of a new national trainingprogram was reflected in 32% moreparticipants in legal training sessions thisyear, with library staff devoting 40% moretime to delivering such sessions.Use of the Legal Opinions database continuedto grow. Searching of the database increasedby 7% during the year while the databasegrew by 14%.30 AGS Annual report 2012–13

AGS at workCameron HutchinsDonna Robinson Gary Power Sabina Aielli Denise AttardKelvin BoatengBen MayASIC’s Storm investigation work winds upAGS’s involvement in the Australian Securities and Investments Corporation (ASIC) investigationinto the collapse of Storm Financial Limited in 2008 drew to a close in 2012–13. We worked closelywith ASIC on this matter from May 2009.A team of AGS lawyers was outposted to ASIC, while others in Sydney, Melbourne and Brisbanealso worked on the investigation. The AGS team worked on Federal Court litigation involving aclaim by ASIC that Storm Financial operated an unregistered managed investment scheme, andthat Macquarie Bank, Commonwealth Bank and Bank of Queensland were knowingly involved inthe operation of the scheme.The Storm proceedings were extremely complex and involved AGS working on the investigationsinto the failure of Storm Financial, unconscionable conduct, breach of contract, civil penaltiesissues and unregistered managed investment scheme issues. The litigation involved millionsof documents, 95 witnesses, a tender bundle of 11,000 documents and a hearing that ran for48 days, generating 3,000 pages of transcripts and 600 exhibits.The Statement of Claim was filed in the Brisbane registry in December 2010, and the hearingbegan in September 2012, concluding on 12 December 2012. Oral submissions took place inFebruary 2013, and judgment is now reserved. The litigation has already resulted in the recoveryof significant compensation for investors advised by Storm Financial.The AGS team at ASIC included (at various times) Cameron Hutchins (Senior Executive Lawyer),Donna Robinson (Senior Executive Lawyer), Gary Power (Senior Lawyer), Sabina Aielli (Lawyer),Denise Attard (Lawyer), Kelvin Boateng (Lawyer) and Ben May (Lawyer).AGS Annual report 2012–13 31

AGS at workAndrew DillonRichard HardingFiona Dempsey Leah Edwards Damien O’Donovan Rodger PrinceEmployment law activitiesAGS has acted for a large number of Commonwealth agencies in employment and workplacerelations disputes, such as unfair dismissal actions, general protections claims and workplacebargaining disputes. Our lawyers have had critical input into all of the major workplace relationsreform initiatives over the last 2 decades.We continue to be a leader in advising on machinery-of-government changes. Across 2012–13 weadvised on the employment arrangements for a range of newly established APS agencies, such asthe National Health Funding Body, and advised the Wheat Export Authority on the process andentitlements for its staff as that agency was being wound-up.Within the employment law field, probably the single largest issue that our OGC lawyersadvised on in 2012–13 was work health and safety. Due to the unique structure andgovernance arrangements of the Commonwealth, model laws are not always easy to apply toCommonwealth agencies. We assisted clients to navigate some very complex issues in orderto sensibly and practically apply the model laws to their activities.In addition to advice and representation in specific matters, during the year AGS continued toactively help agencies to stay informed of the latest developments in employment law, anddevelop their skills and knowledge in this critical area of government operations.Employment Law ForumOur annual Employment Law Forum was held in Canberra in October 2012 with more than130 participants. Highlights of the forum included a substantial segment on the meaning of‘reasonable administrative action’ under the Safety, Rehabilitation and Compensation Act(a similar term is soon to be included in the Fair Work Act); a presentation given by Andrew Dillon(Senior General Counsel) on preparing persuasive ‘reasonable administrative action’ submissions;a session by Richard Harding (Special Counsel Dispute Resolution) on the High Court’s decision inBarclay; and presentations by senior officials from the Federal Court of Australia.Free seminars and publicationsDuring the year we assisted clients by providing information about and analysis of 2 significantreform initiatives that will affect their approach to employment law.Amendments to the Public Service Act 1999 came into effect on 1 July 2013 and made a number offairly significant changes to employment arrangements in the APS. In February 2013 we publishedan Express law (electronic bulletin) for clients informing them about the amendments. Topicscovered included the new Values and Employment Principles, amendments to the Code32 AGS Annual report 2012–13

Craig Rawson Sarah Wright Bianca Wellington Virginia Mastersof Conduct, the Public Service Commissioner’s expanded functions and new powers of review,and the roles and responsibilities of Secretaries and the Senior Executive Service under theamended Act.In June 2013 we published an Express law covering new anti-bullying measures and otheramendments to the Fair Work Act 2009. The publication gives a summary of the background andpurpose of the Fair Work Amendment Bill 2013, including an explanation of the anti-bullyingmeasures, family-friendly measures, and amendments to the right of entry provisions.Free seminars were held in Canberra, Sydney, Melbourne, Brisbane and Adelaide to tell ourclients about the Public Service Act and Fair Work Act amendments, and what they wouldmean in practice for agencies. Our presenters included Fiona Dempsey (Senior Lawyer),Leah Edwards (Senior General Counsel), Richard Harding, Damien O’Donovan (Senior GeneralCounsel), Rodger Prince (Senior Executive Lawyer), Craig Rawson (Senior Executive Lawyer),Sarah Wright (Senior Executive Lawyer) and Bianca Wellington (Counsel). These seminars werevery popular, with more than 200 agency staff attending in total.Client trainingOur client training calendar includes a range of employment-related training. Our presenters areAGS lawyers who are experts in the subjects they teach. During a year when continued prioritywas being given to work health and safety (WHS), AGS delivered a number of presentationsfor clients on the Work Health and Safety Act 2011. We presented separate modules on generalawareness, duties of officers, work health and safety for human resources managers, WHS forprocurement, and WHS for grants.Virginia Masters (Senior Executive Lawyer) developed and delivered a new presentation titledTough Conversations about poor performance to clients in Canberra, Sydney, Brisbane, Melbourneand Darwin. The presentation recognises that many managers despair at the prospect of startinganother performance cycle with the sense that performance issues identified at the end of thelast cycle could still linger at year’s end. The 90-minute presentation explores how to structureperformance-related conversations to get to a decisive point. It also examines the reasons whyemployees fail to perform to expectations, and provides guidance on critical conversations thatlead to improved performance or underperformance management action, and lists a range ofways to motivate supervisors to do their part in the performance framework.AGS Annual report 2012–13 33

PART 2accountabilityand managementAGS Annual report 2012–13 35

Corporate governanceAs a government business, AGS differssignificantly from private sector lawfirms in that it operates within a uniquelegislative and accountability framework.Through this framework, we are accountablefor our performance to our shareholderMinisters – the Attorney-General and theMinister for Finance – and, through them,to the Parliament and the Australiancommunity.LEGISLATIVE FRAMEWORKAGS’s legislative framework has 3 mainelements:— The Judiciary Act 1903, which, under s 55J,establishes AGS as a statutory authority:– s 55K sets out AGS’s functions – thesefunctions include providing legal andrelated services to the Commonwealthto, persons and bodies for any purposefor which the Commonwealth has thepower to make laws to, and, on request,the States, Territories and Norfolk Islandand State, Territory and Norfolk Islandpersons and bodies.– s 55N sets out the persons and bodies towhom AGS may provide services in theexercise of its functions.– The Judiciary Act also specifies therights, duties and obligations of AGSlawyers, provides for the appointmentand terms and conditions of AGS’s CEO,sets out AGS’s powers and provides amechanism for setting AGS’s corporategovernance requirements.— The Commonwealth Authorities andCompanies Act 1997 (CAC Act) sets outthe reporting, accountability and otherrequirements AGS must meet. Regulationsmade under that Act prescribe AGS as agovernment business enterprise.— AGS’s corporate governance arrangements,issued by AGS’s shareholder Ministerspursuant to s 55ZE of the Judiciary Act,complement and expand AGS’s obligationsunder the CAC Act. The arrangements alsoset out AGS’s mandate and objectives. Ourmandate is set out on page 7 of this report.AGS has a sole director for the purposes ofthe CAC Act – the CEO. AGS does not havea board of directors in the usual sense thatapplies to Corporations Act companies. TheCEO is appointed by, and is responsible to,shareholder Ministers for ensuring that, indelivering legal services:— AGS is managed in the best interests ofthe Commonwealth— AGS’s business activities are conductedto minimise any risk of divergenceof interests between AGS and theCommonwealth— AGS and its employees maintainthe highest standards of integrity,accountability and responsibility.EXTERNAL CORPORATE GOVERNANCEResponsible MinistersFor the reporting period, the Attorneys-General were the Hon Nicola Roxon MP (to4 February 2013) and the Hon Mark DreyfusQC MP (from 4 February 2013). Shareholderresponsibility for AGS was exercised jointlyby the Attorney-General and the Minister for36 AGS Annual report 2012–13

Finance and Deregulation, Senator the HonPenny Wong.Ministerial directionsSection 55ZE of the Judiciary Act providesfor the Attorney-General and the FinanceMinister (acting jointly) to inform the CEOof the corporate governance arrangementsthat are to apply to AGS. In November 2003,shareholder Ministers issued corporategovernance arrangements for AGS thatcontinued to apply to AGS during 2012–13.During 2012–13, there were no notificationsof General Policy Orders that were to apply toAGS under s 48A of the CAC Act.The following general policies were notifiedto AGS before 1 July 2008 under s 28 of the Act(as in force before 1 July 2008) and continue toapply to AGS:— the Australian Government ProtectiveSecurity Policy Framework (whichreplaced the Australian GovernmentProtective Security Manual)— the National Code of Practice forthe Construction Industry and theImplementation Guidelines for theCode (to apply to construction-relatedactivity undertaken by Commonwealthauthorities).Significant eventsNo significant events in the context of s 15of the CAC Act occurred during 2012–13.This section deals with the need to notifythe responsible Minister of events such asproposals to form a company, partnership,trust or joint venture; to acquire or disposeof a significant shareholding; to acquire ordispose of a significant business or commenceor cease a significant business activity; or tomake other significant change.Judicial decisions and reviews byoutside bodiesDuring 2012–13, no judicial decisions ordecisions of administrative tribunals had,or may have, a significant impact on AGS’soperations, nor were there any reports on theoperations of AGS by the Auditor-General(other than the report on the financialstatements) or by a parliamentary committee.AccountabilityUnder the provisions of the CAC Act and theAGS corporate governance arrangementsissued by our shareholder Ministers, we arerequired each year to prepare a corporate plancovering an outlook period of 3 years. The plansets out broad areas of strategic focus, eachcritical to our continuing business successand building our future. Under each area ofstrategic focus, the plan identifies a number ofspecific actions to be undertaken during thefirst year of the planning period. As required,AGS provided its corporate plan for 2013–16to shareholder Ministers by 31 May 2013.We provide our shareholder Ministers withconfidential quarterly progress reports,including financial statements, against theobjectives, strategies and actions detailed inour corporate plan.We are also required to prepare an annualstatement of corporate intent, which is ahigh-level summary of our annual corporateplan. The statement is agreed betweenshareholder Ministers and AGS and istabled in Parliament. AGS’s annual financialstatements are audited by the Auditor-General for the Commonwealth.Although AGS does not receive any Budget orother appropriations, AGS can be requestedto attend the estimates hearings of theSenate Standing Committee on Legal andConstitutional Affairs for matters associatedwith AGS’s operations.AGS ADVISORY BOARDAGS does not have a board of directors; wehave an Advisory Board comprising the CEOand 3 to 5 external (non-executive) memberswho are appointed by the CEO on thenomination of AGS’s shareholder Ministers.The role of the AGS Advisory Board is toadvise the CEO on the strategic developmentof AGS as a business and on our businessperformance to ensure that:— the Commonwealth’s investment in AGSis safeguarded and enhancedAGS Annual report 2012–13 37

— AGS’s strategic direction is conducive toour long-term success as a governmentownedprovider of quality legal servicesto the Australian Government— AGS meets our responsibilities andobligations to shareholder Ministers andeffectively communicates with them onour operations and performance.The non-executive members of the AGSAdvisory Board during 2012–13 were:— John Allen (chair): principal of John Allen& Associates (executive search consulting).(15 November 2000 – 14 May 2013)— Richard Alcock: Managing Director,Investment Banking Group, Merrill LynchInternational (Australia) Ltd. (Appointed15 August 2011.)— Dymphna (Deej) Eszenyi: practisingbarrister working predominantly in civiland industrial law. (Appointed 15 August2011.)— Richard Ryan AO: company director;chair of Editure Ltd and several otherboards; former Chancellor Charles DarwinUniversity. (Appointed 15 November2003.)Audit CommitteeMembers of the Advisory Board also sat onAGS’s Audit Committee:— Richard Ryan (chair until 14 May 2013)— Richard Alcock (member and then chairfrom 15 May 2013)— John Allen— Dymphna (Deej) Eszenyi (from 15 May2013).AGS’s Audit Committee is established inaccordance with s 32 of the CAC Act andAGS’s corporate governance arrangements.The role of the committee is to assistthe CEO to discharge responsibilities inrelation to AGS’s management and businesscontrol framework, audit and financial riskmanagement.The CEO and Chief Financial Officer have astanding invitation to attend each meetingand representatives of the Australian NationalAudit Office are invited as observers.AGS Advisory Board members’ attendanceat meetings of the Advisory Board and AuditCommittee in 2012–13 is shown in thefollowing table.Meetings attended by AGS Advisory Boardmembers (number attended/number held whilea board or committee member*)AGS AdvisoryBoardAuditCommitteeNumber of meetings2012–13 4 2John Allen 4/4 2/2Richard Alcock 4/4 2/2Deej Eszenyi 4/4 0/0Richard Ryan 3/4 2/2Ian Govey (CEO) 3/4 2/2** The CEO is not a member of the Audit Committeebut has a standing invitation to attend committeemeetings.Non-executive Advisory Board membersare contracted, on a fee-for-service basis, toprovide advice to AGS’s CEO. Members’ feesare based on comparable fees recommendedby the Remuneration Tribunal. Members wereinformed of their responsibilities throughletters of engagement setting out the termsand conditions of their appointment to theBoard.The Advisory Board has implementeda system for reviewing its performanceannually.38 AGS Annual report 2012–13

Our external corporate governancestructureAdvises the CEO on thestrategic developmentof AGS as a businessand on its businessperformanceAGS Advisory BoardParliamentShareholder MinistersAttorney-General,Minister for Financeand DeregulationAGS annual reportAGS statement ofcorporate intentSenate Estimates hearingsAGS corporate planConfidential quarterlyreportsAssists the CEOto discharge hisresponsibilities in relationto AGS’s managementand business controlframework, auditand financial riskmanagementAudit CommitteeCEOLegislative framework:– Judiciary Act– Commonwealth Authoritiesand Companies Act– AGS corporate governancearrangementsINTERNAL CORPORATE GOVERNANCEDirectorUnder s 55S of the Judiciary Act, the CEO isthe sole director of AGS for the purposes ofthe CAC Act and is equivalent to an executivedirector. The CEO has the function ofmanaging AGS.For the reporting period, the director wasIan Govey.Internal corporate governance committeesDuring 2012–13, the following internalcorporate governance committees advised theCEO on the effective management of AGS:— Executive Management Committee(EMC) – advises the CEO on AGS’s businessdevelopment and operations and ensuresAGS operates effectively and efficiently asa nationally integrated business— Strategy and Operations Advisory Group –considers major strategic and operationalissues— Employee Council – provides a forum foremployee representatives to advise theCEO on AGS employment issues.RISK MANAGEMENTEach year, under the CEO’s leadership, theEMC develops an AGS risk managementplan that identifies and assesses high-levelbusiness risks across AGS. The plan comprisesa summary and a series of individual riskmanagement plans for each identified riskwhich are prepared by senior managers whoare members of the EMC.A summary of the plan is included in theAGS corporate plan submitted to shareholderMinisters.The Audit Committee annually reviews AGS’srisk management plan, particularly risksassociated with financial management.INDEMNITIES AND INSURANCE PREMIUMSFOR OFFICERSAGS provides an indemnity to the CEO underthe terms and conditions of his appointment,indemnifying him against any liabilityincurred by him in good faith in connectionwith his duties but excluding any liability orlegal costs in respect of which AGS must notindemnify the CEO pursuant to s 27M of theCAC Act.AGS Annual report 2012–13 39

AGS’s organisational structure and reporting lines to the CEO at 30 June 2013CEOLegal Service DeliveryChief Operating OfficerProfessional leadersChief GeneralCounselChief CounselCommercialChief CounselDispute ResolutionChief SolicitorDispute ResolutionDeputy GovernmentSolicitorDeputy GeneralCounsel and SpecialCounsel (in specificpractice areas)Office of General Counsel (OGC)National Group LeaderNational Group Managers (2)Team LeadersOGC lawyers and legal supportAGS CommercialNational Group LeaderNational Group Managers (2)Team LeadersCommercial lawyers and legalsupportAGS Dispute ResolutionNational Group LeaderNational Group Managers (3)Team LeadersDispute Resolution lawyersand legal supportRegional client relationsand local leadershipOffice DirectorsOutpost ServicesNational ManagerPractice SupportNational ManagerLibrary ServicesNational ManagerTraining ServicesNational ManagerPro Bono ServicesNational ManagerFinancial ServicesCFOClient ServicesDirectorHR ServicesDirectorIT ServicesNational ManagerAGS also provides an indemnity to eachnon-executive member of the AGS AdvisoryBoard under the terms and conditions of theirappointments, indemnifying them againstliability to third parties incurred in goodfaith in connection with their duties andfor reasonable legal costs in defending civilproceedings concerning such liability or indefending criminal proceedings in which theyare acquitted.Professional indemnity insurance andother appropriate insurances, including aDirectors and Officers Liability and CompanyReimbursement policy, have been acquired onterms and conditions that are consistent withprovisions in the CAC Act.FREEDOM OF INFORMATIONIn accordance with competitive neutralityprinciples, AGS is exempt from the operationof the Freedom of Information Act 1982.Consequently, AGS is not subject to theInformation Publication Scheme at Part IIof the Act.ADVERTISING AND MARKET RESEARCHAGS is not a statutory agency under the PublicService Act 1999 and is therefore not subjectto s 311A of the Commonwealth ElectoralAct 1918, which requires the annual reportsof state, parliamentary departments andstatutory agencies to include particularsabout their advertising and market researchactivities.40 AGS Annual report 2012–13

AGS at workL–R: Robert Orr PSM QC, Adam Kirk, Carmel Meiklejohn, James Faulkner PSM SC and Peter BensonHistoric legal opinions database, book and websiteOn Tuesday 28 May 2013, the Attorney-General the Hon Mark Dreyfus QC MP launched the third volumeof Opinions of Attorneys-General of the Commonwealth of Australia with opinions of Solicitors-Generaland the Attorney-General’s Department. It tells the national story in the period 1923–45 from a uniqueperspective. The legal advice published in this volume grapples with the significant challenges to thewelfare of Australia’s people during this time, including the Great Depression and the Second World War.The publication was a joint project of AGS and the Attorney-General’s Department (AGD).The first and second volumes were published in 1981 and 1988 respectively and, until now, were onlyavailable in print. However, with the publication of the third volume, the content of all 3 volumes – coveringselected opinions from federation and the creation of the Commonwealth in 1901 to shortly after theSecond World War in 1945 – was published online at the new Legal Opinions website (www.legalopinions.ags.gov.au) as a combined project of AGS, AGD and the National Archives of Australia (NAA).The launch also marked the completion of the project to digitise significant opinions from 1901 to 1923which were not in either the published volumes or our internal 85,000-strong electronic OpinionsDatabase. The only copy of many opinions in this period, including opinions by Alfred Deakin and otherearly Attorneys, was the hard-copy bound year-by-year volumes of the Opinion Book which were held bythe NAA. However, these are in a poor condition and deteriorating rapidly and, without digitisation, theywould have been lost forever. So AGS, AGD and the NAA jointly funded this project that digitised all thepaper opinions from 1901 to 1923.Attended by an audience of 95, the launch was held in the conference centre of 4 National Circuit,which will be the new office location for AGS Canberra from September 2013. The speakers included theAttorney-General the Hon Mark Dreyfus QC MP; James Faulkner SC, General Counsel (Constitutional), Officeof Constitutional Law, AGD; Roger Wilkins AO, Secretary, AGD; CEO Ian Govey; and Robert Orr PSM QC.In his speech, Ian Govey noted that the projects met AGS’s mandate of maintaining the corporate memoryof Commonwealth legal practice and advice and that, ‘one important way we fulfil this role is by keepingthe electronic database of current and historical legal advice to the Commonwealth. There are no betterexamples of our delivery on this mandate to maintain the Commonwealth’s corporate memory of legalpractice than the 3 projects we launch today, the third volume of the opinions book, the website of all3 volumes of opinions and the digitisation of significant opinions from 1901 to 1923.’He continued: ‘The availability of all 3 volumes of opinions online gives greater exposure to these opinions.It will make them much more accessible to historians, students and generally to the citizens of Australia.The Freedom of Information Act notes the strong link between principles of representative democracy andavailability of government information. While this initiative makes available historical legal advice, and notcurrent advice, it is nonetheless a significant step in providing much greater accessibility to legal opinionswhich formed a key part of the working of the Commonwealth Government.’AGS Annual report 2012–13 41

AGS at workTony BealJustin Davidson Adrian Snooks Andrew Schatz Alex ReadfordMobile apps and social mediaAGS is alert to the legal issues affecting Government agencies as they use new technologiesto reach new audiences, share information in new and engaging ways, lower costs and provideservices with significantly greater convenience and simplicity.During 2012–13 we advised Australian Government agencies on the use of social media andmobile applications or ‘apps’ for short, and provided training to equip clients to meet thechallenges they face in a quickly evolving communication environment.DHS’s award-winning appAGS provided strategic legal input to the Department of Human Services (DHS) to assist with arange of new social media initiatives including the development of mobile apps for smartphonesand tablets.One of these initiatives is the Express Plus Students app, which allows students to engage withgovernment in relation to their Youth Allowance, Austudy and ABSTUDY assistance withouthaving to go to a Centrelink office.The Express Plus Students app, which has now been joined by a family of other Express Plus apps,recently won the prestigious 2013 Overall Award for Excellence in eGovernment at the AustralianCeBit technology conference and AGS is proud to have supported DHS in this effort.AGS undertook a strategic review of the full range of agreements that DHS was required to enterinto with Apple and Google to publish iOS and Android versions of the app.We also provided solutions to make it easier for the app development team to identify the keylegal agreements that DHS was entering into through development of the apps.Sue Bird, Chief Counsel DHS, wrote to the AGS team to recognise their efforts:‘Thank you very much for your advice and assistance in the last 48 hours. Our AssociateSecretary, Ben Rimmer, has asked that I pass on his personal thanks to you all for being soresponsive and undertaking such a huge amount of work in the extremely tight timeframe.I am well aware that you have worked through the night and wanted to express mygratitude while also adding that we would not be intending to do this to you again in a hurry.Many thanks on a job well done!’Key AGS lawyers who advised DHS on the on the Express Plus Students app were Tony Beal(Deputy General Counsel Commercial), Justin Davidson (Senior Executive Lawyer), Adrian Snooks(Senior Executive Lawyer), Andrew Schatz (Senior Lawyer) and Alex Readford (Lawyer).42 AGS Annual report 2012–13

Christopher BehrensKirsty WindeyerHelen ChisholmForums and seminarsDuring 2012–13 AGS presented a number of forums and seminars focused on mobile apps andsocial media.At a CAC Act Legal Network Finance and Legal Forum, jointly hosted by AGS and theDepartment of Finance and Deregulation, an expert panel including AGS lawyers – Tony Beal,Christopher Behrens (Senior Executive Lawyer), Kirsty Windeyer (Senior Executive Lawyer), andHelen Chisholm (Counsel) – presented on legal issues in social media ranging across defamation,copyright infringement, managing apps development, privacy and employment law.AGS also presented a well-attended Government Law Group called Avoiding ‘app’-oplexy.Adrian Snooks gave an in-depth presentation on the many legal issues that need to be takeninto account in the process of developing and launching apps. Real-life experiences in successfullydeveloping and launching apps from an agency-perspective were also shared by representativesfrom DHS and the Australian National Preventive Health Agency.AGS Annual report 2012–13 43

Social responsibilityCOMMUNITY SERVICE OBLIGATIONSAGS is not subject to, and does not receivefunding for, any formal community serviceobligations. However, as a legal serviceprovider operating as a government businessenterprise, AGS has general obligations tothe community and to its employees to actas a good corporate citizen. Key activitieswe undertake include pro bono legal work,environmental initiatives and reconciliationinitiatives.PRO BONO LEGAL WORKAs a government-owned business andstatutory authority, AGS can only undertakepro bono work that involves acting for aperson or body for whom AGS can act inaccordance with its functions and powers asprovided for under its enabling legislation, theJudiciary Act 1903. AGS does not undertakepro bono work in any matter against aCommonwealth agency or where there is anunacceptable potential for conflict of interestfor government clients.AGS’s pro bono work increased significantlythis year, with an increase in the numberof placements undertaken by our lawyersin public interest clearing houses andcommunity legal organisations and greaterinvolvement in project work and internationalwork.We recorded 6,999 hours of pro bono work,which was above our target of 6,140 hours(109.18% against our target) with anaverage of 22 hours per lawyer. We receivedconsistently excellent feedback on our work.PlacementsOur pro bono clients included the NorthAustralian Aboriginal Justice Agency, DarwinCommunity Legal Services, QueenslandPublic Interest Law Clearing House, theArts Law Centre of Australia, Public InterestLaw Clearing House NSW, Public InterestLaw Clearing House Victoria, DisabilityDiscrimination Legal Services Victoria, ACTPro Bono Clearing House, Street Law, ACT,Consumer Law Centre, ACT, Welfare RightsLegal Centre, Tasmanian Pro Bono ClearingHouse, WA Law Access Pro Bono Scheme andthe Employment Law Centre, WA.Project workWe also increased our project work duringthe year. For example, AGS lawyers assistedPILCHConnect (the specialised arm ofPILCH Victoria which deals with not-forprofits)with a review of their IP Guide. Wereviewed template agreements for the ArtsLaw Centre to ensure they complied withthe requirements of the Personal PropertySecurities Register Act 2009. We worked withCARE Australia, a new pro bono client, toprovide general commercial advice and assistwith some employment training. We workedon a brochure ‘Young People and the Law ACT’for the Aboriginal Legal Services, ACT/NSW,and advised the Aurora Education FoundationLtd (also a new pro bono client) on tax-relatedissues.We assisted the Fred Hollows Foundation byreviewing and updating a number of theircommercial templates, and worked on8 matters referred though the LawHelpScheme which AGS helped establishto provide pro bono legal assistance toIndigenous corporations established underCorporations (Aboriginal and Torres StraitIslander) Act 2006.Our lawyers also volunteered in communitylegal centres.44 AGS Annual report 2012–13

International workWe continued delivering free legal training inPort Moresby in November 2012, March 2013and June 2013 to lawyers from the Papua NewGuinea Solicitor General’s and State Solicitor’soffices, covering statutory interpretation,professional writing, presentation skills andcontract management. Feedback from theSecretary of the Ministry of Justice and theAttorney-General described the quality of thetraining as ‘outstanding’ and highly relevantto their work.AwardsThe quality and value of our pro bono workwas recognised this year with CatherineLangman’s selection as one of 6 finalists inthe Burgess Paluch Pro Bono Award. AGS wasalso nominated as a finalist, with the ArtsLaw Centre, for the 2012 Pro Bono PartnershipAward, presented by the Law and JusticeFoundation NSW.ENVIRONMENTAL PERFORMANCEUnder s 516A of the Environment Protectionand Biodiversity Conservation Act 1999, AGS isrequired to report on ecologically sustainabledevelopment and environmental matters.As a specialist legal practice operating incompetition with the private sector for theprovision of legal services to governmentclients, AGS does not administer programs orlegislation relating to ecologically sustainabledevelopment or the environment. We do,however, provide services to client agenciesto assist them in carrying out their workprograms, including ecologically sustainabledevelopment and environmental work.The major impact of AGS’s business operationson the environment relates to resource usagein leased office accommodation.Environmental policyWe acknowledge our responsibility toGovernment and the wider community tolimit the negative impact of our operations onthe environment. Our internal environmentalpolicy details a range of initiatives andpractices that can be adopted by AGScorporately and by individual employees.These include energy management, wasteand recycling, water conservation andenvironmentally considered purchasing.To help us implement these initiatives wehave a national network of environmentcontacts and greening groups, made up ofemployees who volunteer their time to assistwith environmental initiatives.RECONCILIATION AT AGSAGS’s 2012–13 Reconciliation Action Planfocused on recognising the traditionalcustodians through acknowledging country atall external events, inviting elders to conductwelcomes to country, screening The Act ofRecognition about the Parliament’s passingof the Aboriginal and Torres Strait IslanderPeoples Recognition Bill and holding events inour offices to celebrate National ReconciliationWeek and NAIDOC Week.Guest speakers increased AGS employees’understanding of culture and legal issues.Other aspects of the reconciliation programfor 2012–13 included our pro bono workfor Aboriginal corporations, increasing ourparticipation in programs that provideopportunities for law students and graduates,for example, the semester-long placementsby students in the University of WesternAustralia Advanced Diploma in IndigenousLegal Studies. We also participated in the LegalProfession Reconciliation Network, whichcomprises representatives from law firms,law societies and Indigenous lawyers. AGSemployees once again supported the bookswaps in our offices to raise funds for theNational Indigenous Literacy Foundation.Throughout 2012–13, AGS chaired theAttorney-General’s Portfolio ReconciliationNetwork, which comprises representativesfrom the portfolio agencies. For the firsttime, agencies reported on the delivery of theactions in the Portfolio Indigenous Statementof Commitment – to promote and monitorcultural capability and respect, provide careeropportunities and work with Aboriginaland Torres Strait Islander people in thedevelopment of design of policies and servicesacross the portfolio. The report was presentedto agency heads and representatives duringan event in National Reconciliation Weekthat also recognised the achievements ofthe portfolio’s Aboriginal and Torres StraitIslander employees.AGS Annual report 2012–13 45

AGS at workTim Begbie Katrina Close Justine Knowles Zita Rowling Emma Gill David Ablett Andrew BergerCivil penalties litigationA civil penalty is a pecuniary penalty imposed by the court in civil proceedings (as distinct froma fine in criminal proceedings). In matters involving Commonwealth agencies, the penalty isusually payable to the Commonwealth. Substantial civil penalties are an increasingly importantenforcement tool for a range of regulatory agencies, to deter both a particular respondent, andothers more generally, from contravening conduct.AGS has continued to broaden its civil penalties litigation practice throughout 2012–13. This is along-established and important part of our dispute resolution practice, and one in which AGS hasa particular depth of expertise.We also launched AGS’s inaugural series of civil penalties forums, which brought togetherregulators from 29 different agencies across the country to discuss common and developingissues in Commonwealth civil penalty cases. Coordinated and convened by Tim Begbie (SeniorGeneral Counsel), Katrina Close (Senior Executive Lawyer) and Justine Knowles (Senior ExecutiveLawyer), these forums will be held annually.Some of the civil penalty proceedings we successfully conducted in the course of the year arehighlighted below.• Clean Energy Regulator v MT Solar Pty Ltd – the first civil penalty case brought by the CleanEnergy Regulator. Penalties were imposed upon solar power installation companies, theirdirectors and a fraudulent electrician for the improper creation of Renewable EnergyCertificates under the Renewable Energy (Electricity) Act 2000. Tim Begbie was counsel onthe matter, with Zita Rowling (Senior Executive Lawyer) as solicitor.• Australian Competition and Consumer Commission v Kingsland Meatworks and Cellars Pty Ltd –penalties imposed for misleading representations as to the place of origin of food products.AGS’s lead lawyers on this matter were Emma Gill (Senior Executive Lawyer) and David Ablett(Senior Executive Lawyer).• Australian Communications and Media Authority v Bytecard Pty Ltd – penalties imposed forcontraventions of the Telecommunications Act 1997. AGS’s lead lawyers on this matter wereAndrew Berger (Senior General Counsel) and Tim Begbie.46 AGS Annual report 2012–13

Annamie HaleNathan SinnathuraiDavid SutherlandStephen VorreiterSarah Tormey• Australian Competition and Consumer Commission v Cotton on Kids Pty Ltd – penalties of$1 million for breaches of product safety laws to children’s nightwear. AGS’s lead lawyer on thismatter was Annamie Hale (Senior Lawyer).• Minister for Sustainability, Environment, Water, Population and Communities v Woodley –penalties imposed on a company and its director under the Environment Protection andBiodiversity Conservation Act 1999 for undertaking commercial rock lobster fishing activitieswithin the Tasman Fracture Commonwealth Marine Reserve. AGS’s lead lawyers on this matterwere Tim Begbie as counsel and Nathan Sinnathurai (Senior Lawyer) as solicitor.• Tax Practitioners Board v Munro – penalties and related relief for contraventions of the TaxAgent Services Act 2009, involving provision of tax agent services by a person who was not aregistered tax agent. AGS’s lead lawyer on this matter was David Sutherland (Senior Lawyer).• Australian Competition and Consumer Commission v AirAsia Berhad Company – penaltiesimposed for contravention of Australian Consumer Law involving the publication of the price ofair travel services without specifying the total price in a prominent way and as a single figure.The AGS team on this matter was led by David Ablett.• Tax Practitioners Board v Campbell – penalties and related relief for contraventions of the TaxAgent Services Act 2009, involving provision of tax agent services by a person who was not aregistered tax agent. AGS’s lead lawyer on this matter was Stephen Vorreiter (Senior ExecutiveLawyer).• Australian Competition and Consumer Commission v Hewlett-Packard Australia Pty Limited –penalties and related relief were obtained following agreement with the respondent, forbreaches of the Australian Consumer Law by Hewlett Packard for making misrepresentationsto consumers in connection with consumer guarantees for desktop and notebook computers,laptops and printers. In addition to injunctions, disclosure and adverse publicity orders and anorder for a compliance training program, a pecuniary penalty of $3 million was imposed uponHewlett Packard Australia. Sarah Tormey (Senior Lawyer) conducted the matter.AGS Annual report 2012–13 47

AGS at workJames GrahamBianca Wellington Andrew Chapman Rebecca Eldred Michael O’Rourke Marlowe ThompsonRobert Orr PSM QC Jenny Francis Alice Kingsland Robyn Briese Helen NevilleDrafting highlightsIn 2012–13, AGS worked on a broad variety of drafting projects, including a revision of theAustralian Public Service (APS) Values, finalisation of the Murray–Darling Basin Plan, the AustraliaNew Zealand Food Standards Code and the National Disability Insurance Scheme (DisabilityCareAustralia).Public Service Commissioner’s DirectionsAmendments to the Public Service Act 1999 that commenced on 1 July 2013 revised the formerAPS Values and introduced a set Employment Principles. The Commissioner’s Directions arecentral to the operation of the Act: among other things they determine as necessary the scopeand application of the APS Values and Employment Principles, set out how breaches of theCode of Conduct are to be dealt with and direct agency heads about processes to be followed inrespect of a range of other employment matters. The Directions were recast to bring them in linewith the amended Act, to make policy changes that the Commission had been considering forsome time, and to present the material in a way that agencies would find easier to follow. AGShelped the Commission to reconcile different policy aims, and structure and word the instrumentto achieve these aims. James Graham (Senior Consultant Legislative Drafter) prepared theDirections with assistance from Bianca Wellington (Counsel).Murray–Darling Basin PlanThe Murray–Darling Basin Plan was signed into law on 22 November 2012. AGS’s drafting team,led by James Graham and Camilla Webster (Senior Consultant Legislative Drafter) also includedAndrew Chapman (Counsel), Rebecca Eldred (Counsel), Michael O’Rourke (Counsel) and MarloweThompson (Counsel). The team was supported by Robert Orr PSM QC (Chief General Counsel),Jenny Francis (Senior General Counsel) and Alice Kingsland (Counsel), as well as consultantMegan Dyson. Both Robert and Alice, along with Robyn Briese (Senior General Counsel) assistedwith the development of the Water Act 2007, under which the plan is made. Helen Neville (SeniorGeneral Counsel), outposted counsel to the Department of Sustainability, Environment, Water,Population and Communities, advised the Department and the Minister about the adoption ofthe plan and oversaw 2 Bills to amend the Water Act, one of which was enacted the day beforethe Environment Minister adopted the plan.48 AGS Annual report 2012–13

Leo HardimanAnna LehaneFood Standards CodeDuring 2012–13, Michael O’Rourke and James Graham continued working with Food StandardsAustralia New Zealand to redraft the Australia New Zealand Food Standards Code. The code is oneelement in a cooperative arrangement between the Commonwealth, the Australian States andTerritories and New Zealand to implement uniform food standards.A 2008 NSW Supreme Court judgment highlighted problems in the existing code relating to itsenforceability and its consistency across jurisdictions and brought to light a range of draftingissues. Following an audit of the code by the former Office of Legislative Drafting and Publishing(OLDP), AGS was engaged to undertake a comprehensive rewrite of the code, addressing issuesraised by the NSW Supreme Court and by OLDP, and expressing the provisions of the code in amodern drafting style.Public consultation on a re-draft of the code closes on 27 September 2013.National Disability Insurance SchemeIn January 2013, a team of AGS lawyers – Leo Hardiman (Deputy General Counsel), James Graham,Jenny Francis, Anna Lehane (Counsel), Michael O’Rourke and Andrew Chapman – was engagedby the Department of Families, Housing, Community Services and Indigenous Affairs to draftlegislative instruments (known as ‘rules’) for the National Disability Insurance Scheme Act 2013.The rules set out criteria that a person must meet to be a participant in the scheme, the kinds ofsupports that will be funded for participants and the criteria for the registration of persons andentities to provide those supports to participants.The rules were drafted in a unique style that integrated background and explanatory materialwith the rules to ensure they are accessible to all affected members of the public.AGS Annual report 2012–13 49

Future directionsAs in recent years, ongoingpressure on revenue in the face of achallenging market can be expected.We will continue to respond in thebest possible manner to meet thechallenges of a changing governmentlegal services market by ensuringwe have a top-quality workforce andsustainable business strategies.CORPORATE PLANNING FOR 2013–16To meet our mandate and achieve our vision,AGS will focus on 4 key areas for the corporateplanning period 2013–16 under the categoriesof Our clients, Our practice, Our people andOur business. As the plan has an overallstrategy for 3 years, the new plan continuesthe focus of previous years. It details activitiesto support this strategic focus during thenext financial year. The overall strategy for2013–16 follows.Our clients— actively pursue new businessopportunities and work in emergingareas of government policy— strengthen our business with key clients— further develop partnerships within-house legal teams— create a culture in which client serviceexcellence is fundamental to everythingwe do— improve client perceptions of AGS’s costconsciousness.Our practice— continue to evolve our national practice— enhance and promote our reputation— further develop our legal servicescapability and capacity.Our people— enhance our leadership capability— continue to develop the best workforceprofile— foster our highly professional andcollegiate culture.Our business— make doing business with AGS easier— create greater business efficiencies.FINANCIAL PLANNINGOur 2013–16 corporate plan envisages AGSmaking a dividend payment for each year ofthe plan. Capital investment is covered in theplan, with the timing, level and financing ofthis investment being subject to investmentappraisal to ensure maximum value is added.Over the corporate planning period, we expectto continue to add shareholder value andimprove the efficiency of our operations. Wewill also be aiming to realise performanceagainst our non-financial performancemeasures at or better than the corporateplan target.Achieving our corporate plan will ensurethat AGS:— remains integral and critical to the role ofthe Attorney-General as First Law Officer— is the first choice legal service providerto government— is a truly integrated national practicethat delivers consistent high-qualitylegal services— remains an expert, reliable and flexiblelegal adviser meeting client needs.50 AGS Annual report 2012–13

AGS at workTony BealSwee-Kim TanCombating identity fraudAGS is working with the Attorney-General’s Department (AGD) and the Department of ForeignAffairs and Trade (DFAT) on key elements of the Government’s approach to identity security. AGS’sadvice has supported our clients in developing systems to ensure that government agencies thatcollect, store or use identity information have effective identity security measures in place.Identity security is central to Australia’s national security, law enforcement and economicinterests. Government agencies and businesses rely increasingly on the credibility of a person’sidentity information as evidence of who they are during a transaction. However, this is aparticular challenge as businesses and governments take advantage of the opportunities ofthe digital economy.National Document Verification ServiceAGD’s National Document Verification Service (DVS) is part of the Australian Government’scommitment to protecting the identity of Australians. The service is a secure system that canbe used to check, in real-time, whether a document is accurate and up-to-date.A project extending access to the DVS will enable automated online verification of informationfrom Commonwealth, State and Territory-issued documents such as passports, Medicare cards,driver’s licences and birth certificates, to be available to private sector organisations required toperform identity checks.For AGS, this involved designing an appropriate legal framework for the service and terms andconditions for organisations with a need for strong identity verification facilities, in particularbanks and other financial institutions, telecommunications carriers, casinos and gaming facilityoperators, gateways, information brokers and end-users.Tony Beal (Deputy General Counsel Commercial) and Swee-Kim Tan (Senior Lawyer) providedextensive support to AGD in this project, including drafting conditions of use, providing riskand liability advice and attending to contractual and procurement arrangements. They alsosupported the complex ongoing multi-party negotiations with stakeholders (State and Territorygovernments), official record-holders (Commonwealth, State and Territory agencies that issuedocuments relevant to identity verification), and major business users.AGS Annual report 2012–13 51

AGS at workDaryl AdamMathew Bradby Kenneth EagleTim Foley James Gergely Kathryn GrimesJoanne HuttCatherine LesliePeter MelicanAustralia Day Awards 2012Each year, our Australia Day Awards recognise the outstanding achievements and significantcontributions to AGS by staff across Australia. Recipients of this year’s awards follow.Daryl Adam, Manager Remuneration and Workforce Planning, HR – in recognition of his excellentwork on the new Canberra accommodation, in particular in negotiating the AGS lease for4 National Circuit.Mathew Bradby, Business Manager for AGS Dispute Resolution and AGS Commercial – inrecognition of his outstanding work as a Business Manager and his commitment to excellentclient service.Kenneth Eagle, Senior Executive Lawyer, AGS Commercial, Melbourne – in recognition ofhis outstanding work as a team leader and commercial law practitioner, his longstandingcontribution to the development of our national precedent system and his strategic support forour Client Services team in preparing for the implementation of the Legal Services Multi-Use List.Tim Foley, Senior Lawyer, AGS Dispute Resolution, Brisbane – in recognition of his outstandingdedication and commitment to serving AGS’s clients.James Gergely, Web Publisher Client Services – for outstanding work on the AGS website.Kathryn Grimes, Senior Executive Lawyer, AGS Commercial, Canberra – for her outstanding workas NCSM for FaHCSIA, and in particular for her excellent contribution to building our relationshipwith this key client.Joanne Hutt, Legal Assistant, AGS Dispute Resolution, Canberra – for her exemplaryprofessionalism and dedication to AGS, our clients and lawyers which makes her an outstandingrole model in AGS.Catherine Leslie, Special Counsel Tax Litigation, AGS Dispute Resolution, Sydney – in recognitionof her outstanding contribution as the technical leader of AGS’s National Tax Practice.Peter Melican, Senior Lawyer, AGS Dispute Resolution, Sydney – in recognition of his exceptionalprofessionalism, legal skills and work outcomes.52 AGS Annual report 2012–13

Claudia Oakeshott Tim Phillips Irene Sekler Catherine MannClaudia Oakeshott, Senior Lawyer, AGS Dispute Resolution, Sydney – for her exemplaryprofessionalism, outstanding professional ability and dedication to AGS.Tim Phillips, Manager, Pay Operations, Financial Services – in recognition of his outstanding clientfocus and service.Irene Sekler, Executive Lawyer, AGS Dispute Resolution, Canberra – in recognition of her highquality,hard work for clients in the intelligence and law enforcement communities and recentlyfor her central role in the team defending tobacco plain packaging in international proceedings.Catherine Mann, Senior Lawyer, Dispute Resolution, Canberra – in recognition of her outstandingprofessionalism, client service and contribution to enhancing AGS’s reputation in employmentand industrial law matters, particularly through her work in the Qantas, Slipper and Barclaymatters.TeamsAltobelli/Baker Team – Louise Rafferty, Meredith Allen and Asaf Fisher – in recognition of theiroutstanding work in the Altobelli/Baker matter.Personal Property Securities Register Team – Lee-Sai Choo, Mieke Dixon, Brooke Kowald,Nigel Oram, Matthew Walsh, Robyn Curnow, Toni Claydon and Katie Rodgers – to recognise theteam who helped raise client awareness about the operation of the Personal Property SecuritiesRegister and positioned AGS to capture new work in this area of law.Williams Risk Assessments Team – Kathryn Graham, Guy Aitken, Jenny Burnett, Leo Hardiman,Genevieve Ebbeck, Jenny Francis, David Lewis, Hilary Manson, Mark Molloy, Damian Page,Olivia Abbott, Donna Allen, Charlie Beltz, Andrew Chapman, Helen Chisholm, Joe Edwards,Steffen Etherton, Alice Kingsland, Wancy Lam, Anna Lehane, Piccolo Willoughby, Joel Gilbourd,Bronwyn Lo, Grace Ng, Kim Pham, Miriam Rath, Lisa Redman, Trang Nguyen and Inez Watts –in recognition of their outstanding work in completing constitutional risk assessments of over1,100 departmental programs in less than 8 weeks following the High Court’s decision in Williamsv Commonwealth to enable all agencies to report by their 5 October 2012 deadline.AGS Annual report 2012–13 53

PART 3financialstatementsAGS Annual report 2012–13 55

56 AGS Annual report 2012–13

AGS Annual report 2012–13 57

AUSTRALIAN GOVERNMENT SOLICITORSTATEMENT BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICERIn our opinion, the attached financial statements for the year ended 30 June 2013 arebased on properly maintained financial records and give a true and fair view of thematters required by the Finance Minister’s Orders made under the CommonwealthAuthorities and Companies Act 1997, as amended.In our opinion, at the date of this statement, there are reasonable grounds to believethat Australian Government Solicitor will be able to pay its debts as they become dueand payable.Ian GoveyChief Executive OfficerDavid RiggsChief Financial Officer26 August 2013 26 August 201358 AGS Annual report 2012–13

AUSTRALIAN GOVERNMENT SOLICITORSTATEMENT OF COMPREHENSIVE INCOMEfor the year ended 30 June 2013NotesYear ended30 June 2013$'000Year ended30 June 2012$'000INCOMERevenueSale of goods and rendering of services 5A 110 067 113 579Interest 5B 1 915 2 553Other revenues 5C 1 777 2 138Total revenue 113 759 118 270GainsReversals of previous asset write-downs andimpairments5D 96 137Total Income 113 855 118 407EXPENSESEmployee benefits 6A 84 006 85 663Suppliers 6B 19 476 20 663Depreciation and amortisation 6C 2 393 2 458Losses from disposal of assets 6D 67 114Write-down and impairment of assets 6E 1 261 340Other expenses 7 593 648Total expenses 107 796 109 886Profit before income tax 6 059 8 521Income tax expense 8 2 354 2 792Profit after income tax 3 705 5 729OTHER COMPREHENSIVE INCOMEItems not subject to subsequent reclassification to profit or lossChanges in asset revaluation reserves (669) (228)Total comprehensive income 3 036 5 501Total comprehensive income after income tax is attributable to the Australian Government.There are no minority interests.The above statement should be read in conjunction with the accompanying notes.AGS Annual report 2012–13 59

AUSTRALIAN GOVERNMENT SOLICITORBALANCE SHEETas at 30 June 2013Notes30 June 2013$'00030 June 2012$'000ASSETSCurrent assetsCash and cash equivalents 10A 15 057 13 884Investments under s19 of the CAC Act 10B 24 515 33 861Receivables 11 30 899 25 792Other current assets 12 1 919 2 278Total current assets 72 390 75 815Non-current assetsInfrastructure, plant and equipment 13A, C 6 231 8 971Intangibles 13B, C 594 679Deferred tax asset 8 6 829 7 003Total non-current assets 13 654 16 653Total assets 86 044 92 468LIABILITIESCurrent liabilitiesPayables 16 13 811 12 900Interest bearing liabilities 14 535 582Provisions 15 24 882 25 274Total current liabilities 39 228 38 756Non-current liabilitiesInterest bearing liabilities 14 2 732 3 267Provisions 15 5 369 6 108Total non-current liabilities 8 101 9 375Total liabilities 47 329 48 131Net assets 38 715 44 337EQUITYContributed equity 22 918 22 918Reserves 4 788 5 457Retained earnings 11 009 15 962Total equity 38 715 44 337The above statement should be read in conjunction with the accompanying notes.60 AGS Annual report 2012–13

AUSTRALIAN GOVERNMENT SOLICITORSTATEMENT OF CHANGES IN EQUITYfor the year ended 30 June 2013RetainedearningsAsset revaluationreserveContributedequityTotalequity2013$'0002012$'0002013$'0002012$'0002013$'0002012$'0002013$'0002012$'000Opening balanceBalance carried forward fromprevious years15 962 17 066 5 457 5 685 22 918 22 918 44 337 45 669Comprehensive incomeOther comprehensive incomeRevaluation adjustment – – (327) (61) – – (327) (61)Transfer reserve on disposedassets342 167 (342) (167) – – – –Profit after income tax 3 705 5 729 – – – – 3 705 5 729Total comprehensive income 4 047 5 896 (669) (228) – – 3 378 5 668Transactions with ownersDistributions to ownersReturns on capitalDividends (9 000) (7 000) – – – – (9 000) (7 000)Closing balance as at 30 June 11 009 15 962 4 788 5 457 22 918 22 918 38 715 44 337The above statement should be read in conjunction with the accompanying notes.AGS Annual report 2012–13 61

AUSTRALIAN GOVERNMENT SOLICITORSTATEMENT OF CASH FLOWSfor the year ended 30 June 2013Year ended30 June 2013Year ended30 June 2012Notes $'000 $'000OPERATING ACTIVITIESCash receivedLegal fees and reimbursements by clients 153 869 158 043Interest 1 804 2 407Other cash received 1 777 2 138Total cash received 157 450 162 588Cash usedEmployees (84 471) (82 318)Suppliers (56 549) (53 179)Income taxes paid (4 172) (2 394)Net GST paid (9 298) (9 511)Other cash used (587) (647)Total cash used (155 077) (148 049)Net cash from operating activities 17 2 373 14 539INVESTING ACTIVITIESCash receivedProceeds from sale of infrastructure, plant and equipment – 40Total cash received – 40Cash usedPurchase of plant and equipment (964) (1 969)Total cash used (964) (1 969)Net cash used by investing activities (964) (1 929)FINANCING ACTIVITIESCash usedRepayments of borrowings (582) (633)Dividends paid (9 000) (7 000)Total cash used (9 582) (7 633)Net cash used by financing activities (9 582) (7 633)Net increase / (decrease) in cash held (8 173) 4 977Cash and cash equivalents at the beginning of thereporting period 47 745 42 768Cash and cash equivalents at the end of thereporting period 1 10 39 572 47 7451Total cash and cash equivalents includes investments under section 19 of theCommonwealth Authorities and Companies Act 1997.The above statement should be read in conjunction with the accompanying notes.62 AGS Annual report 2012–13

AUSTRALIAN GOVERNMENT SOLICITORSCHEDULE OF COMMITMENTSas at 30 June 20131Operating leases included are effectively non-cancellable and comprise:Nature of leaseLeases for office accommodationAgreements for the provision of motor vehiclesfor senior executivesAgreements for the provision of office equipment30 June 2013 30 June 2012$'000General description of leasing arrangementLease payments are subject to annual or bi-annual review, eitherto market or be fixed increases as set out in the individual leases.No contingent rentals exist. There are no renewal or purchaseoptions available to AGS.Office equipment includes photocopiers and office machines andis leased over periods of 1 to 5 years at fixed payments.In July 2012 AGS entered into a Deed of Agreement for Lease to lease part of a new office building in Canberra.The lease commences in September 2013 and will replace AGS’s existing holdings in Canberra.The above schedule should be read in conjunction with the accompanying notes.$'000BY TYPECommitments receivableSublease rental income 8 716 4 030GST recoverable on commitments 19 158 9 052Total commitments receivable 27 874 13 082Commitments payableCapital commitmentsLeasehold improvements 442 –Total capital commitments 442 –Other commitmentsOperating leases 1 113 724 53 484Total other commitments 113 724 53 484Net commitments by type 86 292 40 402BY MATURITYCommitments receivableOperating lease incomeOne year or less 3 366 573From one to five years 5 241 1 660Over five years 109 1 797Total operating lease income 8 716 4 030Other commitments receivableOne year or less 4 523 1 449From one to five years 8 981 4 425Over five years 5 654 3 178Total other commitments receivable 19 158 9 052Total Commitments receivable 27 874 13 082Commitments payableCapital commitmentsOne year or less 442 –From one to five years – –Over five years – –Total capital commitments 442 –Operating lease commitmentsOne year or less 13 017 9 558From one to five years 40 466 28 914Over five years 60 241 15 012Total operating lease commitments 113 724 53 484Total Commitments payable 114 166 53 484Net commitments by maturity 86 292 40 402AGS Annual report 2012–13 63

AUSTRALIAN GOVERNMENT SOLICITORSCHEDULE OF CONTINGENCIESas at 30 June 201330 June 2013 30 June 2012Notes $'000 $'000Contingent liabilities – –Contingent assets – –Net contingencies – –Details of each class of contingent liabilities and assets, including those not disclosed above becausethey cannot be quantified or are considered remote, are shown in Note 19: Contingent liabilities and assets.The above schedule should be read in conjunction with the accompanying notes.64 AGS Annual report 2012–13

AUSTRALIAN GOVERNMENT SOLICITORNOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Contents1 Summary of significant accounting policies2 Segment reporting3 Economic dependency4 Events occurring after Balance Sheet date5 Income6 Expenses7 Operating expenses – other8 Income tax9 Dividends provided for and paid10 Cash, cash equivalents and investments11 Receivables12 Other current assets13 Non-current assets14 Interest bearing liabilities15 Provisions16 Payables17 Cash flow reconciliation18 Client and third party funds19 Contingent liabilities and assets20 Key management personnel remuneration21 Remuneration of auditors22 Financial instruments>1. Summary of significant accountingpolicies1.1 Objective of Australian Government SolicitorAustralian Government Solicitor (AGS) is a for-profitAustralian Government controlled entity.AGS is the leading provider of legal and related servicesto Australian Government departments and agencies.Operating on a fully commercial and competitive basis,we are one of Australia’s largest national law firms, withan office in every capital city.AGS is a statutory authority, within the Attorney-General’s portfolio, established under the Judiciary Act1903.We are subject to the reporting and accountabilityrequirements of the Commonwealth Authorities andCompanies Act 1997. AGS is also a government businessenterprise as prescribed by regulations made under theCommonwealth Authorities and Companies Act. AGS has2 shareholder ministers, the Attorney-General and theMinister for Finance and Deregulation.AGS acts primarily for Australian Governmentdepartments and agencies, and for entities in which theAustralian Government has an interest. AGS also acts forState and Territory government organisations at theirexecutive government’s request. The continued existenceof the Authority in its present form and with its presentprograms is dependent on Government policy.1.2 Basis of preparation of the financial statementsThe financial statements are general purpose financialstatements and are required by clause 1(b) of Schedule 1 tothe Commonwealth Authorities and Companies Act 1997.The financial statements have been prepared inaccordance with:• Finance Minister’s Orders (FMOs) for reporting periodsending on or after 1 July 2012• Australian Accounting Standards and Interpretationsissued by the Australian Accounting Standards Boardthat apply for the reporting period.The financial statements have been prepared on anaccrual basis and is in accordance with historical costconvention except for certain assets and liabilities at fairvalue. Except where stated, no allowance is made for theeffect of changing prices on the results or the financialposition.The financial report is presented in Australian dollars andvalues are rounded to the nearest thousand dollars unlessotherwise specified.Unless an alternative treatment is specifically required byan accounting standard or the FMOs, assets and liabilitiesare recognised in the balance sheet when and only whenit is probable that future economic benefits will flowto AGS or a future sacrifice of economic benefits willbe required and the amounts of the assets or liabilitiescan be reliably measured. However, assets and liabilitiesarising under executory contracts are not recognisedunless required by an accounting standard. Liabilities andassets that are unrecognised are reported in the scheduleof commitments and the schedule of contingencies.AGS Annual report 2012–13 65

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Unless alternative treatment is specifically requiredby an accounting standard, income and expenses arerecognised in the Statement of Comprehensive Incomewhen and only when the flow, consumption, or lossof economic benefits has occurred and can be reliablymeasured.1.3 Significant accounting judgements and estimatesIn the process of applying the accounting policies listedin this note, AGS has made the following judgementsthat have the most significant impact on the amountsrecorded in the financial statements:The fair value of leasehold improvements has beentaken to be the market value of similar properties asdetermined by an independent valuer.Surplus lease provisions raised require estimates of thelikelihood and extent of future potential rentals of theidentified surplus space. As such these estimates mayrequire revision in following years as the state of therental markets change.The liability for long service leave has been determinedby reference to the shorthand method prescribed in theFMOs as at 30 June 2013. The estimate of the presentvalue of the liability takes into account attrition ratesand pay increases through promotion and inflation.Infrastructure, plant and equipment are carried atfair value less subsequent accumulated depreciationand accumulated impairment losses. Valuations areconducted with sufficient frequency to ensure thatthe carrying amounts of assets do not materially differwith the assets’ fair values as at the reporting date. Theregularity of independent valuations depends upon thevolatility of movements in market values for the relevantassets.No accounting assumptions or estimates have beenidentified that have a significant risk of causing amaterial adjustment to carrying amounts of assets andliabilities within the next reporting period.1.4 New Accounting StandardsAdoption of new Australian Accounting StandardrequirementsNo accounting standard has been adopted earlier thanthe application date as stated in the standard.No new or revised standards, amending standards orinterpretations that were issued prior to signing of thestatement by the Chief Executive and Chief FinanceOfficer which are applicable to the current reportingperiod have a financial impact, or are expected to havea future financial impact on AGS.Future Australian Accounting Standard requirementsNo new or revised standards, amending standards orinterpretations that were issued prior to signing of thestatement by the Chief Executive and Chief FinanceOfficer which are applicable to the future reportingperiods are expected to have a future financial impacton AGS.1.5 RevenueRevenue from the provision of legal services is recognisedwhen time is recorded on matters, as the amounts ofrevenue can be reliably measured and itis probable that economic benefits will flow to AGS.Interest revenue is recognised using the effective interestmethod as set out in AASB 139 Financial Instruments:Recognition and Measurement.Other revenue is recognised when received or dueand receivable. Recoveries of disbursements and theassociated expense have been recognised in the financialstatements. AGS incurs expenses on behalf of clientsassociated with the provision of legal services. Theseexpenses total $31 464 000 ($25 719 000 for the yearended 30 June 2012) and are billed to the clientson a cost recovery basis. They are disclosed in notes 5Aand 6B and the flow of funds is shown in the Statementof Cash Flows.Revenue from disposal of non-current assets is recognisedwhen control of the asset has passed to the buyer.Receivables for goods and services, which have 30 dayterms, are recognised at the nominal amounts due lessany impairment allowance account. Collectability of debtsis reviewed at balance date. Allowances are made whencollectability of the debt is no longer probable.1.6 GainsSales of assetsGains from disposal of assets are recognised when controlof the asset has passed to the buyer.1.7 Transactions with the Australian Government asownerAt 30 June 2013, AGS has not provided a liability for a finaldividend for the current year. The amount and timing ofthe final dividend payment is subject to discussion withand agreement by shareholders.1.8 Employee benefitsBenefitsLiabilities for short term employee benefits (as defined byAASB 119 Employee Benefits) and termination benefits duewithin twelve months of the end of reporting period aremeasured at their nominal amounts.The nominal amount is calculated with regard to the ratesexpected to be paid on settlement of the liability.Other long-term employee benefits are measured as nettotal of the present value of the defined benefit obligationat the end of the reporting period minus the fair value atthe end of the reporting period of plan assets (if any) outof which the obligations are to be settled directly.LeaveThe liability for employee entitlements includes provisionfor recreation leave and long service leave. No provisionhas been made for sick leave as all sick leave is nonvestingand the average sick leave taken in future years byemployees of AGS is estimated to be less than the annualentitlement for sick leave.66 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013The leave liabilities are calculated on the basis ofemployees’ remuneration at the estimated salary ratesthat will apply at the time the leave is taken, includingAGS’s employer superannuation contribution rates tothe extent that the leave is likely to be taken duringservice rather than paid out on termination.The liability for long service leave has been determinedby reference to the shorthand method prescribed in theFMOs as at 30 June 2013. The estimate of the presentvalue of the liability takes into account attrition ratesand pay increases through promotion and inflation.Separation and RedundancyProvision is made for separation and redundancypayments. AGS recognises a provision for terminationwhen it has developed a detailed formal plan for theterminations and has informed those employeesaffected that it will carry out the terminations.Provision for separation and redundancy was of$906 000 made at 30 June 2013 ($1 146 000 in 2012).SuperannuationEmployees of AGS are members of the CommonwealthSuperannuation Scheme (CSS), the Public SectorSuperannuation Scheme (PSS), or to a schemedetermined by the employee, or in default of nominationby the employee, a scheme nominated by AGS.The CSS and PSS are defined benefit schemes for theAustralian Government. Other super schemes aredefined contribution schemes.The liability for defined benefits is recognised in thefinancial statements of the Australian Government andis settled by the Australian Government in due course.This liability is reported by the Department of Financeand Deregulation’s administered schedule and notes.AGS makes employer contributions to the employeesuperannuation schemes of:• The Australian Government, at rates determined byan actuary to be sufficient to meet the current cost tothe Government. AGS accounts for the contributionsas if they were contributions to defined contributionplans• non Australian Government funds, as determinedby the current AGS certified agreement.The liability for superannuation recognised as at30 June represents outstanding contributions for thefinal fortnight of the year.1.9 LeasesA distinction is made between finance leases andoperating leases. Finance leases effectively transfer fromthe lessor to the lessee substantially all the risks andrewards incidental to ownership of leased non-currentassets. An operating lease is a lease that is not a financelease. In operating leases, the lessor effectively retainssubstantially all such risks and benefits.Where an asset is acquired by means of a finance lease,the asset is capitalised at either the fair value of thelease property or, if lower, the present value of minimumlease payments at the inception of the contract and aliability recognised at the same time and for the sameamount.The discount rate used is the interest rate implicit inthe lease. Leased assets are amortised over the periodof the lease. Lease payments are allocated betweenthe principal component and the interest expense.Operating lease payments are expensed on a straight linebasis which is representative of the pattern of benefitsderived from the leased assets.Lease incentives taking the form of ‘free’ leaseholdimprovements and rent holidays are recognised asliabilities. These liabilities are reduced by allocating leasepayments between rental expense and reduction of theliability.1.10 Borrowing costsAll borrowing costs are expensed as incurred. During theyear AGS had no loans.1.11 CashCash is recognised at its nominal amounts.Cash and cash equivalents includes:• cash on hand• demand deposits in bank accounts with an originalmaturity of 3 months or less that are readily convertibleto known amounts of cash and subject to insignificantrisk of changes in value.Cash and cash equivalents exclude investments undersection 19 of the Commonwealth Authorities andCompanies Act 1997.1.12 Financial assetsAGS classifies its financial assets in the followingcategories:• held-to-maturity investments• loans and receivables.The classification depends on the nature and purposeof the financial assets and is determined at the time ofinitial recognition.Financial assets are recognised and derecognised upontrade date.Effective interest methodThe effective interest method is a method of calculatingthe amortised cost of a financial asset and of allocatinginterest income over the relevant period. The effectiveinterest rate is the rate that exactly discounts estimatedfuture cash receipts through the expected life of thefinancial asset, or, where appropriate, a shorter period.Income is recognised on an effective interest rate basisexcept for financial assets that are recognised at fair valuethrough profit or loss.Held-to-maturity investmentsNon-derivative financial assets with fixed or determinablepayments and fixed maturity dates that AGS has thepositive intent and ability to hold to maturity areAGS Annual report 2012–13 67

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013classified as held-to-maturity investments. Held-tomaturityinvestments are recorded at amortised costusing the effective interest method less impairment,with revenue recognised on an effective yield basis.Loans and receivablesTrade receivables, loans and other receivables that havefixed or determinable payments that are not quoted inan active market are classified as ‘loans and receivables’.Loans and receivables are measured at amortised costusing the effective interest method less impairment.Interest is recognised by applying the effective interestrate.Impairment of financial assetsFinancial assets are assessed for impairment at the endof each reporting period.Financial assets held at amortised cost If there isobjective evidence that an impairment loss has beenincurred for loans and receivables or held to maturityinvestments held at amortised cost, the amount of theloss is measured as the difference between the asset’scarrying amount and the present value of estimatedfuture cash flows discounted at the asset’s originaleffective interest rate. The carrying amount is reducedby way of an allowance account. The loss is recognisedin the Statement of Comprehensive Income.1.13 Financial LiabilitiesFinancial liabilities are classified as other financialliabilities.Financial liabilities are recognised and derecognisedupon trade date.Other financial liabilitiesOther financial liabilities, including borrowings, areinitially measured at fair value, net of transactioncosts. These liabilities are subsequently measured atamortised cost using the effective interest method, withinterest expense recognised on an effective yield basis.Other financial liabilities are subsequently measured atamortised cost using the effective interest method, withinterest expense recognised on an effective yield basis.The effective interest method is a method of calculatingthe amortised cost of a financial liability and ofallocating interest expense over the relevant period. Theeffective interest rate is the rate that exactly discountsestimated future cash payments through the expectedlife of the financial liability, or, where appropriate, ashorter period.Supplier and other payables are recognised at amortisedcost. Liabilities are recognised to the extent that thegoods or services have been received (and irrespective ofhaving been invoiced).1.14 Contingent liabilities and contingent assetsContingent Liabilities and Contingent Assets are notrecognised in the Balance Sheet but are reported inthe relevant schedules and notes. They may arise fromuncertainty as to the existence of a liability or asset orrepresent an asset or liability in respect of which theamount cannot be reliably measured. Contingent assetsare disclosed when settlement is probable but notvirtually certain and contingent liabilities are disclosedwhen settlement is greater than remote.1.15 Acquisition of assetsAssets are recorded at cost on acquisition except as statedbelow. The cost of acquisition includes the fair value ofassets transferred in exchange and liabilities undertaken.Financial assets are initially measured at their fair valueplus transaction costs where appropriate.Assets acquired at no cost, or for nominal consideration,are initially recognised as assets and income at their fairvalue at the date of acquisition.1.16 Infrastructure, plant and equipmentAsset recognition thresholdPurchases of infrastructure, plant and equipment arerecognised initially at cost in the Balance Sheet, wherethe equipment has a useful economic life greater than12 months and the type of asset collectively represents asignificant investment of AGS funds. Other purchases areexpensed in the year of acquisition.The initial cost of an asset includes an estimate of thecost of dismantling and removing the item and restoringthe site on which it is located. This is particularly relevantto ‘makegood’ provisions in property leases taken upby AGS where there exists an obligation to restore theproperty to its original condition. These costs are includedin the value of AGS leasehold improvements with acorresponding provision for the ‘makegood’ taken up.RevaluationsFair values for each class of assets are determined asshown below.Asset classLibraryLeasehold improvementsInfrastructure, plant andequipmentFair value measured at:Market selling priceDepreciated replacement costMarket selling priceFollowing initial recognition at cost, property, plant andequipment are carried at fair value less subsequentaccumulated depreciation and accumulated impairmentlosses. Valuations are conducted with sufficient frequencyto ensure that the carrying amounts of assets do notmaterially differ with the assets’ fair values as at thereporting date. The regularity of independent valuationsdepends upon the volatility of movements in marketvalues for the relevant assets.Revaluation adjustments are made on an asset by assetbasis as AGS is a for-profit entity.Any revaluation increment is credited to equity under theheading of asset revaluation reserve except to the extentthat it reverses a previous revaluation decrement of the68 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013same asset that was previously recognised throughoperating result. Revaluation decrements for each assetare recognised directly through operating result exceptto the extent that they reverse a previous revaluationincrement for that asset.Any accumulated depreciation as at the revaluationdate for Library and Infrastructure, plant and equipmentassets are eliminated against the gross carrying amountand the asset restated to the revalued amount.Any accumulated depreciation as at the revaluation datefor Leasehold assets is restated proportionately withthe change in the gross carrying amount of the asset sothat the carrying amount of the asset after revaluationequals its revalued amount.DepreciationDepreciable infrastructure, plant and equipment assetsare written-off to their estimated residual values overtheir estimated useful lives to AGS using, in all cases,the straight line method of depreciation. Leaseholdimprovements are depreciated on a straight-line basisover the lesser of the estimated useful life of theimprovements or the unexpired period of the lease.Depreciation rates (useful lives), residual values andmethods are reviewed at each reporting date andnecessary adjustments are recognised in the current, orcurrent and future reporting periods, as appropriate.Depreciation rates applying to each class of depreciableasset are based on the following useful lives:2012–13 2011–12Library 7–10 years 7–10 yearsLeasehold improvements lease term lease termOther infrastructure, plantand equipment– Computer equipment 3–7 years 3–7 years– Other plant and equipment 5–10 years 5–10 yearsThe aggregate amount of depreciation allocated foreach class of asset during the reporting period isdisclosed in Note 6C.ImpairmentAll assets were assessed for impairment at 30 June2013. Where indications of impairment exist, the asset’srecoverable amount is estimated and an impairmentadjustment made if the asset’s recoverable amount isless than its carrying amount.The recoverable amount of an asset is the higher of itsfair value less costs to sell and its value-in-use. Valuein use is the present value of the future cash flowsexpected to be derived from the asset. Where the futureeconomic benefit of an asset is not primarily dependenton the asset’s ability to generate future cash flows, andthe asset would be replaced if AGS were deprived ofthe asset, its value in use is taken to be its depreciatedreplacement cost.No indicators of impairment were found for assets at fairvalue.DerecognitionAn item of property, plant and equipment is derecognisedupon disposal or when no further future economicbenefits are expected from its use or disposal.1.17 IntangiblesAGS intangibles comprise internally developed softwarefor internal use and purchased software. These assets arecarried at cost.Software is amortised on a straight-line basis over theiranticipated useful lives. The useful lives of AGS’s softwareare 3 to 7 years (2011-12: 3 to 7 years).All software assets were assessed for indicationsof impairment as at 30 June 2013. No indicators ofimpairment were found.1.18 Taxation / Competitive NeutralityAGS is exempt from all State and Territory taxation. It isliable for Income Tax, Fringe Benefit Tax and for Goods andServices Tax (GST).Revenues, expenses and assets are recognised net of GSTexcept:• where the amount of GST incurred is not recoverablefrom the Australian Taxation Office• for receivables and payables.Competitive NeutralitySo that AGS does not have a competitive advantage overprivate sector legal practices these financial statementsinclude charges representing the full value of theseitems shown under the categories to which they relate.Amounts identified as competitive neutrality expenses arepaid to Consolidated Revenue each year and are recordedin the Financial Statements as a liability to the extent thatthey are unpaid at 30 June 2013.1.19 InsuranceAGS is aware of the potential for losses arising from itsnormal operations as a legal practice and has taken outinsurance arrangements designed to ensure that the riskof adverse effect on the profits, assets and cash flow isimmaterial to the continuing operations of AGS. Workerscompensation is insured through Comcare Australia.1.20 Income taxCurrent tax assets and liabilities for the current and priorperiods are measured at the amount expected to berecovered from or paid to the taxation authorities, basedon the current period’s taxable income. The tax rates andtax laws used to compute the amount are those that areenacted or substantively enacted by the reporting date.Deferred income tax is provided on all temporarydifferences at the reporting date between the tax basesof assets and liabilities and their carrying amounts forfinancial reporting purposes.AGS Annual report 2012–13 69

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Deferred income tax assets are recognised for alldeductible temporary differences to the extent thatit is probable that taxable profit will be availableagainst which the deductible temporary differencescan be utilised.The carrying amount of deferred income tax assets isreviewed at each reporting date and reduced to theextent that it is no longer probable that sufficienttaxable profit will be available to allow all or part ofthe deferred income tax asset to be utilised.Deferred income tax assets are measured at the taxrates that are expected to apply to the year when theasset is realised or the liability is settled, based ontax rates (and tax laws) that have been enacted orsubstantively enacted at the reporting date.Deferred tax assets and deferred tax liabilities areoffset only if a legally enforceable right exists to setoff current tax assets against current tax liabilitiesand the deferred tax assets and liabilities relate to thesame taxable entity and the same taxation authority.The Deferred Tax asset is recorded in the balancesheet at a full value of $6 829 000 at 30 June 2013($7 003 000 at 30 June 2012) on the assumption thatfuture profits and tax liabilities may be availableagainst which the asset may be realised.As AGS is an ‘exempting entity’ under the IncomeTax Assessment Act 1997, the Commonwealth, as itsowner, is not entitled to franking credits and AGS isnot required to maintain a franking account.>>>2. Segment reportingThe principal activity of AGS is the provisionof legal and related services. AGS operatesin every Australian capital city. Each officeprovides a similar range of services and servesprincipally Commonwealth Government clients.The majority of such services are providedunder nationally negotiated contractualarrangements.AGS regards the appropriate unit for segmentreporting to be all legal and related servicesdelivered by AGS from its Australian offices.3. Economic dependencyOn 1 September 1999 AGS was establishedas a government business enterpriseunder the Commonwealth Authorities andCompanies Act 1997. AGS’s continued abilityto carry out its normal activities is dependentupon fees received from clients, principallyCommonwealth departments and agencies andState and Territory government departmentsand agencies.4. Events after the balance sheetdateSince 30 June 2013 there have been no eventsthat require adjustment in the financialstatements.70 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000>5. IncomeNote 5A – Sale of goods and rendering of servicesLegal fees and disbursements recovered or recoverable on behalfof clientsDisbursements recovered or recoverable on behalf of clients(refer Note 1.5)141 531 139 298(31 464) (25 719)Total operating revenues 110 067 113 579Rendering of services to:Related entities 105 239 108 825External entities 4 828 4 754Total rendering of services 110 067 113 579Note 5B – InterestDeposits in AGS accounts 1 740 2 337Deposits in client and third party accounts (refer Note 18) 175 216Total interest 1 915 2 553Note 5C – Other revenuesReimbursements and miscellaneous receipts 887 1 335Rental income 890 803Total other revenues 1 777 2 138Note 5D – Reversals of Previous Asset Write-Downs and ImpairmentsAsset revaluation increments from revaluationLibrary 67 25Leasehold improvements – –Plant and equipment written up on revaluation 29 112Asset revaluation increments from revaluation 96 137>6. ExpensesNote 6A – Employee benefitsWages and Salaries 62 696 62 893Superannuation 9 148 8 752Leave and other entitlements 6 698 8 220Separation and redundancy 1 044 1 433Competitive neutrality - state payroll tax equivalence expense 4 420 4 365Total employee benefits 84 006 85 663AGS Annual report 2012–13 71

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000Note 6B – SuppliersSupply of goods and services and disbursements paid or payableon behalf of clientsDisbursements paid or payable on behalf of clients(refer Note 1.5)43 567 38 139(31 464) (25 719)Property lease rentals - minimum lease payments 7 687 7 505Surplus lease expense (1 021) 193Workers compensation premiums 597 405Competitive neutrality - regulatory neutrality expense 110 140Total suppliers 19 476 20 663Rendering of services from:Related entities 425 745External entities 19 051 19 918Total rendering of services 19 476 20 663Note 6C – Depreciation and amortisationDepreciation:Library 32 38Leasehold improvements 1 359 1 457Infrastructure, plant and equipment 762 776Total depreciation 2 153 2 271Amortisation:IntangiblesComputer software 240 187Total amortisation 240 187Total depreciation and amortisation 2 393 2 458Note 6D – Losses from disposal of assetsInfrastructure, plant and equipmentProceeds from disposal – (40)Net book value of assets disposed 67 154Total (net) losses from sales of assets 67 114Note 6E – Write-down and impairment of assetsAsset write downs and impairments from:Impairment loss expense – receivables 163 45Impairment loss expense – assets 39 100Revaluation decrement – Library 19 –Revaluation decrement – Leasehold improvements 34 101Revaluation decrement – Infrastructure, plant and equipment 1 006 94Total write-down and impairment of assets 1 261 34072 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013>7. Operating expenses – otherYear ended30 June 2013$'000Year ended30 June 2012$'000Insurance 510 566Competitive neutrality – state insurance duty equivalenceexpense83 82Total operating expenses – other 593 648>8. Income taxPrima facie income tax payable on accounting profit at 30% 1 817 2 557Tax effect of expenses that are not deductible for tax purposes 498 235Underprovision for income tax for prior year 39 –Income tax expense 2 354 2 792Income tax expense comprises:Provision for taxation 589 2 620Provisional tax payments made 1 552 1 184Underprovision for income tax for prior year 39 –Movement in deferred tax asset for current year 174 (1 012)Income tax expense 2 354 2 792Deferred tax asset 6 829 7 003>9. Dividends provided for and paidFinal dividend 2010–11 – 3 500>Interim dividend 2011–12 – 3 500Final dividend 2011–12 3 500 –Interim dividend 2012–13 500 –Special dividend 2012–13 5 000 –Total dividends provided for and paid 9 000 7 00010. Cash, cash equivalents and investmentsNote 10A – Cash and cash equivalentsCash balance comprises:Cash at bank and on hand 15 057 13 884Total cash and cash equivalents 15 057 13 884AGS Annual report 2012–13 73

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000>Note 10B – Investments under s19 of the CAC ActInvestments comprise:Term deposits with an original maturity of greater than3 months and less than 1 year 24 515 33 861Total investments under s19 of the CAC Act 24 515 33 861Total cash, cash equivalents and investments 39 572 47 74511. ReceivablesGoods and services 23 670 20 167Less: impairment allowance account (461) (298)23 209 19 869Other debtors 7 301 5 447Interest 587 4767 690 5 923Total receivables (net) 30 899 25 792All receivables are expected to be recovered in no more than 12 months.Receivables (gross) are aged as follows:Not overdue 26 034 21 984Overdue by:– less than 30 days 2 467 2 633– 30 to 60 days 1 232 609– 60 to 90 days 567 266– more than 90 days 1 060 5985 326 4 106Total receivables (gross) 31 360 26 090The impairment allowance account is aged as follows:Not overdue (244) (173)Overdue by:– less than 30 days – (7)– 30 to 60 days – (19)– 60 to 90 days (8) (28)– more than 90 days (209) (71)Total impairment allowance account (461) (298)74 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'00011. Receivables (cont.)Reconciliation of the impairment allowance account:Goods andservices$'000Goods andservices$'000Opening balance (298) (253)Amounts written off – –Amounts recovered and reversed 298 253Increase recognised in operating profit (461) (298)Closing balance (461) (298)>12. Other current assetsPrepaid property rentals 416 589>Prepaid insurance premiums 300 406Other prepayments 1 203 1 283Total other current assets 1 919 2 27813. Non-current assetsNote 13A – Infrastructure, plant and equipmentLibrary– at valuation (fair value) 319 319– accumulated depreciation – –Total library 319 319Leasehold improvements– at valuation (fair value) 19 229 17 046– accumulated depreciation (14 730) (11 310)Total leasehold Improvements 4 499 5 736Other infrastructure, plant and equipment– at valuation (fair value) 1 413 2 916– accumulated depreciation – –Total other infrastructure, plant and equipment 1 413 2 916Total infrastructure, plant and equipment 6 231 8 971All revaluations are conducted in accordance with the revaluation policy stated at Note 1. In 2012–13, anindependent valuer conducted the revaluations.Valuations of Leasehold Improvements and infrastructure, plant and equipment, with the exception of thefinanced lease incentives, were carried out at 30 June 2013 by an independent valuer.No indicators of impairment were found for infrastructure, plant and equipment.AGS Annual report 2012–13 75

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'00013. Non-current assets (cont.)Opening Asset Revaluation Reserve 5 457 5 685Library increment – 4Library decrement (2) –(2) 4Leasehold improvements increment 384 15Leasehold improvements decrement (691) (167)(307) (152)Other infrastructure, plant and equipment increment 56 127Other infrastructure, plant and equipment decrement (74) (40)(18) 87Net change in Asset Revaluation Reserve (327) (61)Transfer reserve on disposed assets to Retained Earnings (342) (167)Closing Asset Revaluation Reserve 4 788 5 457Note 13B – IntangiblesComputer softwarePurchased 3 628 3 559Accumulated amortisation (3 034) (2 880)Total intangibles 594 679No indicators of impairment were found for intangible assets.76 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Note 13C – Analysis of infrastructure, plant, equipment, and intangiblesReconciliation of the opening and closing balances of infrastructure, plant and equipment and intangibles (2012–13)ItemLibrary$'000Leaseholdimprovements$'000Other infrastructure,plant and equipment$'000Total other infrastructure,plant andequipment$'000Intangibles –computer software$'000Total$'000As at 1 July 2012Gross book value 319 17 046 2 916 20 281 3 559 23 840Accumulated depreciation/amortisation – (11 310) – (11 310) (2 880) (14 190)Net book value 319 5 736 2 916 8 971 679 9 650Additions by purchase – 448 352 800 164 964Restatement of makegood – – – – – –Revaluations through equity (2) (307) (18) (327) – (327)Revaluations through profit and loss 34 (19) (978) (963) – (963)Impairments through profit and loss – – (39) (39) – (39)Depreciation/amortisation expense (32) (1 359) (762) (2 153) (240) (2 393)Disposals – – (58) (58) (9) (67)Net book value as of 30 June 2013 represented by:Gross book value 319 19 229 1 413 20 961 3 628 24 589Accumulated depreciation/amortisation – (14 730) – (14 730) (3 034) (17 764)Net book value 319 4 499 1 413 6 231 594 6 825Reconciliation of the opening and closing balances of infrastructure, plant and equipment and intangibles (2011–12)As at 1 July 2011Gross book value 328 17 290 2 327 19 945 3 532 23 477Accumulated depreciation/amortisation – (9 807) – (9 807) (3 138) (12 945)Net book value 328 7 483 2 327 10 138 394 10 532Additions by purchase – 33 1 464 1 497 472 1 969Restatement of makegood – (20) – (20) – (20)Revaluations through equity 4 (152) 87 (61) – (61)Revaluations through profit and loss 25 (101) 18 (58) – (58)Impairments through profit and loss – – (100) (100) – (100)Depreciation/amortisation expense (38) (1 457) (776) (2 271) (187) (2 458)Disposals – (50) (104) (154) – (154)Net book value as of 30 June 2012 represented by:Gross book value 319 17 046 2 916 20 281 3 559 23 840Accumulated depreciation/amortisation – (11 310) – (11 310) (2 880) (14 190)Net book value 319 5 736 2 916 8 971 679 9 650AGS Annual report 2012–13 77

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000>14. Interest bearing liabilitiesLease incentives 3 267 3 849Lease incentives are categorised as follows:Current 535 582Non current 2 732 3 267Total lease incentive liabilities 3 267 3 849Total interest bearing liabilities 3 267 3 849Lease incentives includes those used to finance leasehold improvements.>15. ProvisionsEmployee provisionsCurrentRecreation leave 6 021 5 557Long service leave 14 004 13 981Performance pay due 3 233 3 921Other employee on-costs 1 465 1 481Total current employee provisions 24 723 24 940Non-currentLong service leave 4 117 3 997Other employee on-costs 257 249Total non-current employee entitlements 4 374 4 246Total employee entitlements 29 097 29 186Employee provisions are expected to be settled in:No more than 12 months 9 942 9 425More than 12 months 19 155 19 761Total employee entitlements 29 097 29 186The classification of current employee provisions includes amounts for which there is not an unconditionalright to defer settlement by 1 year, hence in the case of employee provisions the above classification does notrepresent the amount expected to be settled within 1 year of the reporting date.Lease provisionsCurrent:Provision for future lease escalation 159 175Surplus lease space – 159Total current lease provisions 159 33478 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'00015. Provisions (cont.)Non-current:Provision for future lease escalation 835 840Surplus lease space – 862Provision for makegood on lease terminations 160 160Total non-current lease provisions 995 1 862Total lease provisions 1 154 2 196Provisionfor futureleaseescalation$'000Surplusleasespace$'000Provision formake-goodon leaseterminations$'000Total$'000Carrying amount at 1 July 2012 1 015 1 021 160 2 196Additional provisions made 182 – – 182Amounts used (203) (97) – (300)Amounts reversed – (924) – (924)Unwinding of discount or change in discount rate – – – –Closing balance 2013 994 – 160 1 154AGS currently has 10 agreements for the leasing of premises which have fixed increases.AGS has averaged the lease payments during the fixed lease terms and accrued a liability which will reverseover the same period.AGS currently has nil premises with space identified as surplus to requirements.Surplus lease provisions raised require estimates of the likelihood and extent of future potential rentals ofthe identified surplus space.AGS has made a provision to reflect the present value of this obligation.AGS currently has 2 agreements for the leasing of premises which have provisions requiring AGS to restorethe premises to their original condition at the conclusion of the lease.AGS has made a provision to reflect the present value of this obligation.Year ended30 June 2013Year ended30 June 2012$'000$'000Total current provisions 24 882 25 274Total non-current provisions 5 369 6 108Total provisions 30 251 31 382AGS Annual report 2012–13 79

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000>>16. PayablesTrade creditors 8 305 5 239Salaries and wages 1 793 1 936Superannuation 243 236Separations and redundancies 906 1 146Due to Consolidated Revenue Fund 447 508GST payable to ATO 1 383 1 109Income tax payable to ATO 628 2 620FBT payable to ATO 106 106Total payables 13 811 12 900All payables are currentTrade creditors: Settlement is usually made net 30 days or in accordance with supplier terms of payment.17. Cash flow reconciliationReconciliation of cash and cash equivalents as per balance sheet to statement of cashflowsCash at year end per Statement of Cashflows 39 572 47 745Balance sheet items comprising cash and cash equivalentsCash at bank and on hand 15 057 13 884Term deposits with an original maturity of greater than3 months and less than one year24 515 33 861Total cash and cash equivalents 39 572 47 745Profit after income tax 3 705 5 729Non-cash items:Depreciation and amortisation 2 393 2 458Write-down of infrastructure, plant and equipment 1 059 195Impairment of infrastructure, plant and equipment 39 100Reversals of previous asset write-downs and impairments (96) (137)Loss on disposal of assets 67 114Changes in assets and liabilities:Decrease / (increase) in receivables (5 108) 1 263Decrease / (increase) in Deferred Tax Asset 174 (1 013)Decrease / (increase) in prepayments 377 (273)Increase / (decrease) in trade creditors 894 4 514Increase / (decrease) in employee provisions ( 89) 1 637Increase / (decrease) in lease provisions (1 042) (48)Net cash from operating activities 2 373 14 53980 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013>18. Client and third party fundsYear ended30 June 2013$'000Year ended30 June 2012$'000AGS receives money in trust for clients usually pending settlement of clients’ transactions. These moneysare not available for legal practice operating purposes and are not recognised in the financial statements.Typically client funds are held for short periods of time for transactional purposes. Exceptionally funds maybe held for a longer period where a settlement is delayed or title to funds is disputed. By arrangement withour client interest may be payable to the client or the client’s nominee or on the instructions of a court. AGSdoes not pay interest to its clients except where an arrangement has been made to do so.Australian Government Solicitor client and third party funds accountsBalance at beginning of the period 5 032 15 552Add receipts 201 683 167 211206 715 182 763>Less expenditure 199 944 177 731Balance at end of the period 6 771 5 03219. Contingent liabilities and assetsAGS is aware of the potential for losses arising from its normal operations as a legal practice and has takenout insurance arrangements designed to ensure that the risk of adverse effect on the profits, assets and cashflow is immaterial to the continuing operations of AGS (Nil at 30 June 12). At 30 June 2013, AGS considers thescale of unquantifiable or remote contingent losses or gains to be immaterial.At 30 June 2013, AGS has not provided a liability for a final dividend for the current year. The amount andtiming of the final dividend payment is subject to discussion with and agreement by shareholders.AGS Annual report 2012–13 81

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013>20. Key management personnel remunerationNote 20A – Key management personnel remunerationYear ended30 June 2013Year ended30 June 2012$’000 $'000Short-termShort-termemployeeemployeebenefits:benefits:6 774 337 7 250 961SalarySalary 3 776 096 3 759 641Annual leave accrued 284 479 291 1864 060 575 4 050 8262013$2012$Performance bonuses 419 608 428 168Motor vehicle and other allowances 88 170 105 625Total short-term employee benefits: 4 568 353 4 584 620Post-employment benefits:Superannuation 556 906 592 422Total post-employment benefits 556 906 592 422Other long-term benefits:Long-service leave 91 731 93 894Total other long-term benefits 91 731 93 894Termination benefits – 50 000Total 5 216 990 5 320 936Notes1. Key management personnel remuneration includes all officers concerned with or taking part in the management of AGSduring the year and includes remuneration of the Chief Executive Officer, Senior Executives, Senior Executive Lawyers andSpecialist staff having a senior business management role.2. Remuneration includes salary, accrued leave, performance pay, accrued superannuation, the cost of motor vehicles, allowancesand fringe benefits tax included in remuneration agreements.3. Note 20A is prepared on an accrual basis (therefore the performance bonus expenses disclosed above may differ from thecash ‘Bonus paid’ in Note 20B).4. Note 20A excludes acting arrangements and part-year service where total remuneration expensed for a manager was lessthan $180 000.82 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000Note 20B – Average annual reportable remuneration paid to key management personnel for the reporting periodAverage annual reportableremmuneration 1(a)Number ofindividuals(b)Reportablesalary 2(c)Contributedsuperannuation 3(d)Reportableallowance 4(e)Bonuspaid 5$ $ $ $ $Totalreportableremuneration2012–13less than $180 000 * 6 105 010 14 510 – 8 820 128 341$180 000 to $209 999 3 169 380 25 084 – 10 045 204 509$210 000 to $239 999 2 179 626 24 678 – 22 918 227 222$240 000 to $269 999 3 201 933 28 527 – 25 743 256 203$270 000 to $299 999 1 214 266 29 100 900 30 632 274 898$300 000 to $329 999 4 244 097 34 574 75 37 113 315 859$330 000 to $359 999 1 284 467 37 065 – 35 000 356 532$360 000 to $389 999 1 284 590 39 392 – 40 752 364 734$450 000 to $479 999 1 413 475 54 ,567 – – 468 041Total 222011–12less than $180 000 * 7 122 828 14 950 – 8 101 145 879$180 000 to $209 999 3 163 417 22 021 – 10 237 195 675$210 000 to $239 999 1 188 663 26 334 – 14 870 229 867$240 000 to $269 999 2 197 326 27 817 – 26 951 252 094$270 000 to $299 999 3 213 216 31 902 800 31 903 277 821$300 000 to $329 999 3 247 075 37 000 – 33 523 317 598$330 000 to $359 999 1 277 619 32 411 – 35 000 345 030$360 000 to $389 999 1 299 730 44 856 – 40 701 385 287$450 000 to $479 999 1 402 458 63 036 – – 465 494Total 22Notes1. This table reports key management personnel, including those on part-time arrangements, who received remuneration during thereporting period. Each row is an averaged figure based on headcount for individuals in the band.2. ‘Reportable salary’ includes the following:i) gross payments (less any bonuses paid, which are separated out and disclosed in the ‘bonus paid’ column)ii) reportable fringe benefits (at the net amount prior to ‘grossing up’ to account for tax benefits)iii) exempt foreign employment income.3. The ‘contributed superannuation’ amount is the average actual superannuation contributions paid to mangement personnel in thatreportable remuneration band during the reporting period.4. ‘Reportable allowances’ are the average actual allowances paid as per the ‘total allowances’ line on individuals’ payment summaries.5 ‘Bonus paid’ represents average actual bonuses paid during the reporting period in that reportable remuneration band. The ‘bonus paid’within a particular band may vary between financial years due to various factors such as individuals commencing with or leaving AGSduring the financial year.6. Various salary sacrifice arrangements were available to key management personnel including superannuation, motor vehicle andexpense payment fringe benefits. Salary sacrifice benefits are reported in the ‘reportable salary’ column.AGS Annual report 2012–13 83

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Note 20C – Other highly paid staffYear ended30 June 2013Year ended30 June 2012$’000 $'000Average annual reportableremmuneration 1(a)Number ofindividuals(b)ReportableSalary 2(c)Contributedsuperannuation 3(d)Reportableallowance 4(e)Bonuspaid 5$ $ $ $ $Totalreportableremuneration2012–13$180 000 to $209 999 34 162 115 23 374 59 9 485 195 033$210 000 to $239 999 32 182 813 24 759 21 15 732 223 325$240 000 to $269 999 12 203 099 28 555 100 21 771 253 524$270 000 to $299 999 7 223 978 29 282 – 30 634 283 895$300 000 to $329 999 1 235 256 32 366 – 59 700 327 322$330 000 to $359 999 5 280 656 36 738 – 28 162 345 555$360 000 to $389 999 1 287 669 40 518 – 40 752 368 940$390 000 to $419 999 2 315 827 41 652 – 39 752 397 231Total 942011–12$180 000 to $209 999 34 161 156 22 726 62 11 003 194 946$210 000 to $239 999 27 178 886 24 708 83 16 710 220 387$240 000 to $269 999 13 202 514 30 417 125 17 509 250 566$270 000 to $299 999 5 214 116 27 443 – 40 244 281 803$300 000 to $329 999 2 231 932 33 758 450 49 835 315 975$330 000 to $359 999 4 265 575 39 845 – 41 590 347 010$360 000 to $389 999 3 304 063 40 555 – 24 035 368 653Total 88Notes1. This table reports staff:a) who were employed by AGS during the reporting period, including those on part-time arrangementsb) whose reportable remuneration was $180 000 or more for the financial periodc) were not required to be disclosed in Tables A or B.Each row is an averaged figure based on headcount for individuals in the band.2. ‘Reportable salary’ includes the following:a) gross payments (less any bonuses paid, which are separated out and disclosed in the ‘bonus paid’ column)b) reportable fringe benefits (at the net amount prior to ‘grossing up’ to account for tax benefits)c) exempt foreign employment income.3. The ‘contributed superannuation’ amount is the average actual superannuation contributions paid to staff in that reportableremuneration band during the reporting period.4. ‘Reportable allowances’ are the average actual allowances paid as per the ‘total allowances’ line on individuals’ paymentsummaries.5. ‘Bonus paid’ represents average actual bonuses paid during the reporting period in that reportable remuneration band.The ‘bonus paid’ within a particular band may vary between financial years due to various factors such as individualscommencing with or leaving AGS during the financial year.6. Various salary sacrifice arrangements were available to other highly paid staff including superannuation, motor vehicle andexpense payment fringe benefits. Salary sacrifice benefits are reported in the ‘reportable salary’ column.84 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013>21. Remuneration of auditorsRemuneration to the Auditor-General for auditing the financialstatements for the reporting period.Year ended30 June 2013$'000Year ended30 June 2012$'000The fair value of services provided was: 135 130No other services were provided by the Auditor-General during the reporting period.>22. Financial InstrumentS22A – Categories of financial instrumentsYear ended30 June 2013Year ended30 June 2012Notes $'000 $'000Financial assetsHeld-to-maturityTotal cash and cash equivalents and investments 10B 39 572 47 745Loans and receivablesReceivables – goods and services 11 23 670 20 167Receivables – interest 11 587 476Receivables – other debtors 11 7 103 5 447Carrying amount of financial assets 70 932 73 835Financial liabilitiesAt amortised cost:Lease incentives 14 3 267 3 849Trade creditors 16 8 305 5 239Carrying amount of financial liabilities 11 572 9 08822B – Net income and expense from financial assetsHeld-to-maturityInterest revenue 5B 1 915 2 553Net gain from financial assets 1 915 2 553AGS Annual report 2012–13 85

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'00022C – Net income and expenses from financial liabilitiesFinancial liabilitiesLease incentives – –Trade creditors – –Dividend payable – –Net gain/(loss) from financial liabilities – –22D – Fair value of financial instrumentsFinancial liabilitiesLease incentives 14 3 267 3 849Trade creditors 16 8 305 5 239Total 11 572 9 088Financial assets: The fair value is the same as the carrying amounts in the balance sheet.22E – Credit risk exposuresAGS is exposed to minimal credit risk as the majority of receivables are due from Commonwealth agencies.The maximum exposure to credit risk is the risk that arises from potential default of a debtor or non collectability ofdebt amounts. This amount is equal to the total amount of Receivables totalling $30 899 000 ($25 792 000 in 2012).AGS has assessed the risk of the non collectability of debt amounts and has allocated $461 000 ( $298 000 in 2012)to an impairment allowance account.AGS has policies and procedures in place for the recovery of debt.AGS holds no collateral to mitigate against credit risk.AGS has no significant exposures to any concentrations of credit risk.Credit quality of financial instruments not past due or individually determined as impaired:NotesNot pastdue norimpaired2013$'000Not pastdue norimpaired2012$'000Pastdue orimpaired2013$'000Pastdue orimpaired2012$'000Total cash and cash equivalents andinvestments 10B 39 572 47 745 – –Receivables – goods and services 11 18 344 16 061 5 326 4 106Receivables – interest 11 587 476 – –Receivables – other debtors 11 7 103 5 447 – –Total 65 606 69 729 5 326 4 10686 AGS Annual report 2012–13

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013$'000Year ended30 June 2012$'000Ageing of financial assets that are past due but not impaired for 2013Notes0 to 30days$'00031 to 60days$'00061 to 90days$'00090+days$'000Total$'000Receivables – goods and services 11 2 467 1 232 567 1 060 5 326Total 2 467 1 232 567 1 060 5 326Ageing of financial assets that are past due but not impaired for 2012Notes0 to 30days$'00031 to 60days$'00061 to 90days$'00090+days$'000Total$'000Receivables – goods and services 11 2 633 609 266 598 4 106Total 2 633 609 266 598 4 10622F – Liquidity riskAGS financial liabilities are payables and other interest bearing liabilities. The exposure to liquidity riskis based on the notion that AGS will encounter difficulty in meeting its obligations associated withfinancial liabilities.AGS’s manages liquidity risk throughout the year by monitoring cash and deposit balances and thetiming the due date for major liabilities.Cash is invested at higher rates of interest to the extent possible to meet working cash requirements andthe larger dividend and taxation obligations as they fall due.The following table illustrates the maturities for non-derivative financial liabilities 2013Within 1 to 5 > 51 year years years TotalNotes $'000 $'000 $'000 $'000Lease incentives 14 535 2 732 – 3 267Trade creditors 16 8 305 – – 8 305Dividend payable 16 – – – –Total 8 840 2 732 – 11 572The following table illustrates the maturities for non-derivative financial liabilities 2012Within 1 to 5 > 51 year years years TotalNotes $'000 $'000 $'000 $'000Lease incentives 14 582 3 267 – 3 849Trade creditors 16 5 239 – – 5 239Dividend payable 16 – – – –Total 5 821 3 267 – 9 088AGS has no derivative financial liabilities in both the current and prior year.AGS Annual report 2012–13 87

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTSfor the year ended 30 June 2013Year ended30 June 2013Year ended30 June 2012$’000 $'00022G – Market riskAGS holds basic financial instruments that do not expose AGS to certain market risks. AGS is not exposed tosignificant ‘currency risk’ or ‘other price risk’.Interest Rate RiskAGS Term Deposits are undertaken in consideration of the interest rate risk associated with changing marketinterest rates.The only interest-bearing items on the balance sheet are interest bearing liabilities in relation to leaseincentives. The amortisation schedule for lease incentives is fixed over the term of the lease and there is noassociated interest expense.88 AGS Annual report 2012–13

PART 4appendixesAGS Annual report 2012–13 89

Forums and publicationsFORUMSProperty and infrastructure forum, Canberra, 9 August 2012Administrative law forum, Canberra, 28 September 2012Employment law forum, Canberra, 25 October 2012Migration forum, Canberra, 13 November 20122nd National information law conference 14–16 November 2012FOI and privacy forum, Melbourne, 22 November 2012Civil penalties forum, Canberra, 20 March 2013Civil penalties forum, Melbourne, 28 May 2013Civil penalties forum, Sydney, 30 May 2013Quarterly FOI practitioners forums in CanberraBiannual FOI practitioners forums in MelbourneGOVERNMENT LAW GROUP MEETINGSProtection of government information, Adelaide, 4 July 2012Protections, privileges and pitfalls in the use of information, Sydney, 2 August 2012Insights into administrative law – pluses and pitfalls, Darwin, 16 August 2012 (Darwin’s first GLG)Personal Property Securities, Darwin, 13 September 2012Misfeasance, Canberra, 27 September 2012To catch a thief: statutory interpretation in action, Canberra, 23 October 2012Protections, privileges and pitfalls in the use of information, Melbourne, 1 November 2012Post-Williams – constitutional and legal issues in program design, Canberra, 7 November 2012Avoiding ‘app’-oplexy – successful app development, Canberra, 5 December 2012Privacy reforms: getting your agency ready for 2014, Canberra, 20 February 2013Privacy reforms: getting your agency ready for 2014, Melbourne, 28 February 2013Privacy reforms: getting your agency ready for 2014, Sydney, 7 March 2013Can vampires run the blood bank? Conflict and confidentiality, Canberra, 13 March 2013Privacy reforms: getting your agency ready for 2014, Brisbane, 14 March 2013To be or not to be...a secured party?, Perth, 25 March 2013Privacy reforms: getting your agency ready for 2014, Adelaide, 11 April 2013Commonwealth Grant Guidelines, Canberra, 8 May 2013Can vampires run the blood bank? Conflict and confidentiality, Sydney, 9 May 2013Australia’s federal future: competitive or cooperative?, Canberra, 4 June 2013Can vampires run the blood bank? Conflict and confidentiality, Perth, 6 June 201390 AGS Annual report 2012–13

Privacy reforms – getting your agency ready for 2014, Perth, 10 June 2013Changes in July to the Public Service Act and possible changes to the Fair Work Act, Brisbane,20 June 2013Changes in July to the Public Service Act and possible changes to the Fair Work Act, Adelaide,20 June 2013Changes in July to the Public Service Act and possible changes to the Fair Work Act, Melbourne,20 June 2013PUBLICATIONSExpress law newslettersNo. 192 New anti-bullying measures and other amendments to the Fair Work Act 2009, 28 June 2013No. 191 Bill introduces new governance, performance and accountability framework forCommonwealth bodies, 28 June 2013No. 190 Privacy reforms: introduction of Bill requiring notification of serious data breaches, 5 June 2013No. 189 Launch of Opinions of the Attorneys-General of the Commonwealth of Australia Volume 3,1923–45, and website of Legal Opinions 1901–45: www.legalopinions.ags.gov.au, 28 May 2013No. 188 Recent decision clarifies legal professional privilege for in-house lawyers, 24 May 2013No. 187 Changes to the operation of Division 81 of the A New Tax System (Goods and Services Tax) Act1999, 22 May 2013No. 186 High Court considers unreasonableness ground of judicial review of administrative decisions,21 May 2013No. 185 Exposure draft proposal to amend the Constitution released, 17 May 2013No. 184 Bill to introduce new public governance, performance and accountability framework,16 May 2013No. 183 Victorian Court of Appeal changes approach to civil penalties by consent, 27 March 2013No. 182 High Court finds Google not responsible for misleading ‘sponsored links’, 21 February 2013No. 181 Amendments to the Public Service Act 1999, 11 February 2013No. 180 New Commonwealth Grant Guidelines, 31 January 2013No. 179 Commonwealth win in the Victorian alpine grazing case, 30 January 2013No. 178 ACT Court of Appeal confirms police responsibilities for prevention of crime are criticalto determining whether a duty of care is owed, 21 December 2012No. 177 Freedom of information requests to the Official Secretary to the Governor-General,21 December 2012No. 176 Amendments to the Privacy Act 1988, 3 December 2012No. 175 Consolidation of Commonwealth anti-discrimination laws, 30 November 2012No. 174 Full Federal Court decision on public interest immunity, 29 November 2012No. 173 Supreme Court decision on the mistaken release of material determined to be exemptunder the Freedom of Information Act 1982, 9 November 2012No. 172 Review of the Freedom of Information Act, 1 November 2012AGS Annual report 2012–13 91

No. 171High Court delivers its reasons in the challenges to the Tobacco Plain Packaging Act,22 October 2012No. 170 High Court decides that regulations are inconsistent with the Migration Act 1958,22 October 2012No. 169 Submissions for ALRC inquiry into copyright and digital economy, 15 October 2012No. 168 Transfer of OLDP functions to the Office of Parliamentary Counsel, 5 October 2012No. 167 Federal Court decision on unwanted door knocking, 4 October 2012No. 166 Implied term of mutual trust and confidence in employment contracts: what does it meanfor Commonwealth agencies?, 28 September 2012No. 165 High Court decision clarifies adverse action provisions in the Fair Work Act 2009,21 September 2012No. 164 High Court decision on third party access under the Competition and Consumer Act 2010,17 September 2012No. 163 Parliament passes Bill that changes the way legislative instruments cease, 14 September 2012No. 162 Full Federal Court decision on loss or damage in the context of civil penalty matters,14 September 2012No. 161 High Court decision on procedural fairness, 10 September 2012No. 160 Federal Court decision on Federal Magistrates’ superannuation entitlements,7 September 2012No. 159 Parliamentary Joint Committee on Human Rights tables first report, 31 August 2012No. 158 High Court upholds Tobacco Plain Packaging Act, 15 August 2012No. 157 Final ALRC terms of reference for review of copyright exceptions and AGD review ofexceptions to liability for circumventing technological protection measures, 26 July 2012OTHER PUBLICATIONSFact sheetsNo. 31 Legal professional privilege in an in-house environment, June 2013No. 30No. 29Proposed Australian Privacy Principles 3 to 5 – collection of personal information andnotification, May 2013Understanding and complying with the new Australian Privacy Principle 8 – Cross-borderdisclosure of personal information, May 2013No. 28 Security interests and corporate insolvencies, May 2013No. 27 Privacy Act reforms – implications for enforcement functions, updated May 2013No. 26No. 25Conflicts of interest for tenders, funding programs and other government initiatives,April 2013Confidentiality considerations for tenders, funding programs and other governmentinitiatives, April 2013No. 24 Australian Privacy Principle 2 – Anonymity and pseudonymity, March 2013No. 23 App development legal issues, November 201292 AGS Annual report 2012–13

No. 22 Hidden costs in leasing, October 2012No. 21 Work Health & Safety – Considerations for construction projects, August 2012No. 20 The Personal Property Securities Act, September 2012No. 19 Work Health & Safety – HR Managers, updated October 2012No. 10 Legal issues to consider for new programs, updated November 2012No. 3 Lands Acquisition Act 1989, updated April 2013Commercial notesNo. 36 Planning for Commonwealth construction and fit-out projects, 5 March 2013Litigation notesNo. 22 This issue contains notes on the High Court’s decisions in constitutional cases over the last12 months, including cases on the Commonwealth’s power to contract and spend money,acquisition of property, freedom of political communication, freedom of interstate trade andvarious aspects of Chapter III judicial power, 10 December 2012Legal briefingNo. 99 Commonwealth grants: an overview of legal issues, 14 May 2013No. 98 Misfeasance, 4 December 2012No. 97 Commonwealth grants: an overview of legal issues, 30 November 2012 This issue wassuperseded by Legal briefing No. 99No. 96 Personal Property Securities Act, 9 August 2012BooksOpinions of the Attorneys-General of the Commonwealth of Australia, Volume 3: 1923–45 (co-publishedwith the Attorney-General’s Department)Podcasts and vodcastsTranscripts are available with each podcast for accessibility reasonsJenny Francis ‘Caretaker conventions to commence soon’, 28 June 2013Tara McNeilly ‘Managing social media records’, 23 April 2013Stuart Hilton ‘App development challenges for Commonwealth agencies’, 23 April 2013Alex Readford‘Beware of hidden leasing costs’, 22 March 2013 (note: this was our first vodcast)Tara McNeilly ‘Prepare for privacy changes now’, 1 February 2013Stuart Robertson ‘WHS concerns for construction projects’, 5 October 2012Lillian Riches ‘The new Commonwealth Procurement Rules’, 20 July 2012AGS Annual report 2012–13 93

Compliance indexThe index below shows compliance with information requirements contained in Section 9 andSchedule 1 of the Commonwealth Authorities and Companies Act 1997 (CAC Act) and theCommonwealth Authorities (Annual Reporting) Orders 2011.Commonwealth Authorities (Annual Reporting) Orders 2011(unless otherwise denoted)Audited financial statementsSchedule 1 ofthe CAC ActAnnual reportpage57–90Board performance review Clause 14 38Committees Clause 14 38–9Community service obligations Clause 20 44Dividends Clause 20 17Directors’ particulars Clause 13 39Enabling legislation Clause 10 36Environmental performance and environmentallysustainable developmentClause 12 45Ethics framework Clause 14 7–8Financial conditions Clause 20 17Freedom of information Clause 12 40Functions and powers Clause 10 6, 36–7General government policies notified by the Minister Clause 12 37Indemnities and insurance premiums for officers Clause 19 39Information about subsidiaries Clause 18 Not applicable –AGS does not haveany subsidiariesJudicial decisions and decisions of administrative tribunals Clause 17 37Key activities and changes Clause 16 3, 16–17Letter of transmittal (approval by CEO) Clause 6 1Location of major activities and facilities Clause 14 iiMinisterial directions Clause 12 37Objectives Clause 10 7Operational and financial results Clause 16 16–17Organisational structure Clause 14 4094 AGS Annual report 2012–13

Commonwealth Authorities (Annual Reporting) Orders 2011(unless otherwise denoted)Annual reportpageRelated entity transactions Clause 15 Not applicable– AGS has a soledirectorReports made by the Auditor-General, Parliamentarycommittee, Commonwealth Ombudsman or Office ofthe Australian Information CommissionerClause 17 37Responsible Ministers Clause 11 36–7Risk management Clause 14 39Significant events under s 15 of the CAC Act Clause 16 37Statement on governance practices Clause 14 36–40Workplace health and safety Clause 12 29AGS Annual report 2012–13 95

IndexAAboriginal Australians see Indigenous AustraliansAboriginal Legal Services ACT/NSW, 44accommodation, 29–30, 45accountability and management, 35–45administrative tribunal reviews, 37advertising and market research, 40Advisory Board, 37–8AGS Alumni, 28AGS Connect, 30air cargo services litigation, 15alternative dispute resolution, 7asylum seekers, offshore processing of, 10ATLAS travel document system, 53Attorney-General, 36–7, 50interventions under s 78A, 13support as First Law Officer, 7, 12–14Attorney-General’s Department, 9, 11, 14, 52Audit Committee, 38Auditor-General reports, 37Australia Day Awards, AGS, 52–3Australian Competition and Consumer Commission(ACCC), 15Australian Federal Police, 14Australian Government policy notifications, 37Australian Government Protective Security PolicyFramework, 37Australian Lawyers Weekly, 24Australian Privacy Principles (APPs), 9Australian Securities and Investments Commission(ASIC), 31Australian Security and Intelligence Organisation(ASIO), 14awards and recognition, 42, 45, 52–3Bbehaviour management, 28–9, 33Bennett, David QC, 12building and construction, 10bullying and harassment see behaviour managementbusiness development, 19–30business processes, 6–8, 19–30CCabinet submissions, review, 12capability review, 23capital investment, 51CARE Australia, 44cartels, 15cases see litigation; significant mattersChief Executive Officer (director), 36, 39indemnity, 39review, 3cigarettes, plain packaging, 10–11, 13civil penalties litigation, 46–7classification of staff, 26client base, 3, 12–14, 19–22Client Care Awards, 22client satisfaction, 22client service delivery, 23–4client survey, 22Code of Conduct, AGS, 8Comcare audit, 29Commonwealth Authorities and Companies Act 1997,36, 37Commonwealth National Lease development, 20Commonwealth Procurement Rules, 20community legal centres, 44community service obligations, 44conferences see training courses, conferences andother forumsConstitutional Litigation Unit, 7, 12constitutional matters, 6–7, 12–13constitutional risk management, 12construction see building and constructionconstruction industry code of practice, 37contracts, 10contracts see procurementcorporate governance, 36–40corporate intent statement, 37corporate objectives and strategies, 16–22corporate planning, 16, 19, 37, 50–1DDepartment of Families, Housing, Community Servicesand Indigenous Affairs (FaHCSIA), 18, 49Department of Finance and Deregulation, 20, 43Department of Foreign Affairs and Trade, 10, 11, 52–3Department of Health and Ageing, 1196 AGS Annual report 2012–13

Department of Human Services (DHS), 42Department of Immigration and Citizenship, 10Deputy Government Solicitor, 12DisabilityCare Australia, 18, 49dividends paid, 17document verification service see National DocumentVerification ServiceEecologically sustainable development, 45education and training see training courses,conferences and other forumsefficiency dividend, 16email bulletins, 33, 93emerging business opportunities, 19–20Employee Council, 39employee survey, 28 see also staffemployees see staffemployment law, 32–3Employment Law Forum, 32environmental policy, 45establishing legislation, 36ethics advisers, 8ethics and values, 7–8events, 22, 41, 45Executive Management Committee, 30, 39Express law bulletins, 33, 91–2Express Plus mobile apps, 42external corporate governance, 36–40Ffact sheets, 20feedback from clients, 22female staff, 27financial management, 29, 51financial outcomes, 17First Law Officer support, 7, 12–14Food Standards Australia New Zealand, 49Food Standards Code, 49forums see training courses, conferencesand other forumsFred Hollows Foundation, 44freedom of information, 40full-time staff, 28functions, 6, 12–14, 16–17, 36future directions, 50Ggender of staff, 27General Policy Order notifications, 37governance, 36–40government business enterprise operations, 7, 16–17business development, 19–24market trends, 16see also performance measuresgovernment decision making symposium, 22Government Law Group seminars, 9, 20government loan repayment, 17government policy notifications, 37government spending programs, advice on, 12Govey, Ian (CEO), 39, 41graduate recruitment, 25G20 Summit, 14HHigh Court cases, 7, 12–14, 15 see also litigation;significant mattersIidentity security, 52in-house legal services, 20–1, 31 see also trainingcourses, conferences and other forumsindemnities and insurance premiums, 39–40Indigenous Australians, 25, 45information and communications technology, 30upgrade and replacement plan, 30website review, 24Information Publication Scheme, 40information security, 9insurance premiums, 29, 39internal corporate governance, 39international law, 10–11, 12, 14, 45interventions under s 78A, 13intranet, 22, 29investment treaty arbitration, 11Jjudicial decisions, 37Judiciary Act 1903, 36, 37, 44ministerial directions under, 37s 78A interventions and s 78B notifications, 13Lleadership development, 24–25learning and development, AGS see professionaldevelopmentleasing see property and leasingleave, personal, 26Legal briefing newsletters, 20, 93AGS Annual report 2012–13 97

Legal Network Finance and Legal Forum, 43Legal Opinions database, 24, 30, 41legal services capability, 23Legal Services Directions (LSD) compliance, 12, 14Legal Services Multi-Use List (LSMUL), 6, 16, 22legal training see training courses, conferences andother forumslegislative drafting, 48–9legislative framework, AGS’s, 36library services, 30litigationcivil penalties, 46–7constitutional, 13international, 10–11non-constitutional, 14loan repayment, 17Mmanaged investment schemes, unregistered, 31management and accountability, 36–40management committees, 37–9membership, 38mandate, 7Manus Island regional processing centre, 10market see government business enterprise operationsmarketing strategy, 24meeting attendance, 38membership, management committees, 38Minister for Finance and Deregulation, 36–7ministerial directions, 37Ministers, 36–7 see also Attorney–Generalmobile apps, 42, 43model litigant obligations, 12Murray–Darling Basin Plan, 48NNational Code of Practice for the Construction Industry,37national disability insurance scheme see DisabilityCareAustraliaNational Document Verification Service, 52National Finance Standards, 29national practice groups, 6–7, 23, 40National Practice Orientation (NPO), 25National Professional Standard, 14National Reconciliation Week activities, 45national security, 13–14Nauru regional processing centre, 10new business opportunities, 19–20new employees, 25newsletters, 9, 20, 33, 91–2non-contestable (tied) work, 12notices under s 78B, 13number of staff, 26Oobjectives and strategies, 16–17, 19–30emphasised in mandate, 7Office of General Counsel (OGC), 6–7, 11, 12Office Productivity Program, 30offshore processing of asylum seekers, 10Opinions database, 30, 41Opinions of Attorneys-General publication, 24, 41organisation and structure, 6–8, 40Constitutional Litigation Unit, 7organisation chartsexternal corporate governance, 39legal services delivery, 40Orr, Robert PSM QC, 12, 41outcomes against corporate plan, 17, 19–30outlook, 50outpost practice, 20–1, 31PPapua New Guinea, 45part-time staff, 27performance, 17client satisfaction, 22financial outcomes, 17legal services capability, 23personal leave, 26Personal Property Securities Register, 22PILCHConnect, 44plans and planningreconciliation, 45risk management, 39work health and safety, 29podcasts, 24policy notifications, 37portfolio membership, 6practice groups, 6–7, 23, 40practice networks, 23privacy reforms, 9, 20pro bono legal work, 44–5procurement, 20, 22professional development, 22, 24–5professional indemnity insurance, 39–40professional standards, 7–8, 14profile, staff, 2898 AGS Annual report 2012–13

profitability, 17progress reports, quarterly, 37property and leasing, 20, 45protective security policy framework, 37public sector requirement changes, 20Public Service Commissioner’s Directions, 48publications and communication products, 20, 24, 33,90–3purchasing see procurementQquarterly progress reports, 37quoting see pricing projectRreconciliation, 45recruitment, 25regional processing centres, 10remuneration, 25, 28–9, 38reportingto Attorney-General’s Department, 37to shareholder Ministers, 37responsible Minister, 36–7restructure of legal practice, 23retention of staff, 25, 27revenue, 17reviews by outside bodies, 37risk management, 12, 39role, 6roundtables, 20Ssecurity, national, 13–14seminars see training courses, conferences andother forumssex of employees, 27shareholder Ministers, 6, 36–7 see also Attorney-Generalshareholder return, 17significant events, 37significant matters, 10–11, 13, 14, 15, 31 see also litigationsocial media, 20, 42social responsibility, 44–5Solicitor-General, 7, 11souvenir publication, AGS’s, 24staff, 24–9full-time, 27gender, 27indemnities and insurance premiums, 39numbers, 25, 26part-time, 28professional development, 22, 24–5profile, 25–7retention, 25, 27survey, 28work health and safety, 24–5, 29statement of corporate intent, 37Storm Financial Ltd investigation, 31strategies and objectives, 16–17, 19–30emphasised in mandate, 7Strategy and Operations Advisory Group, 39structure of AGS, 40succession planning, 25summer/winter clerk recruitment, 25support staff, 25survey of clients, 22Ttendering, 22tenders see procurementtied work, 12tobacco plain packaging litigation, 10–11, 13training courses, conferences and other forums, 20, 22,32, 43, 98international training, 45Uunregistered managed investment schemes, 31Vvalue for money of services, 22values and ethics, 8vision statement, 7vodcast, 24Wwebsite, 24, 41wheat export marketing, 14Williams decision, 12, 20women employees, 27work health and safety, 24–5, 29Work Health and Safety Act 2011, 33workers compensation claims, 29workforce see staffworkshops see training courses, conferences and otherforumsWorld Trade Organisation, 11AGS Annual report 2012–13 99