The federal Treasury Department has launched an internal audit into how $2.3 billion was paid to states and territories unlawfully, with its top official defending the department's response while conceding she could have been briefed earlier.
Senate Estimates Grilling Over "Technical" Breach
During a tense Senate estimates hearing on Thursday, Treasury Secretary Jenny Wilkinson faced sustained questioning from Coalition senators over eight payments totalling $2.28 billion made in the 2024-25 financial year.
The payments, which funded an extension of the government's energy bill rebate program, were found to be potentially in breach of the constitution because they lacked the required ministerial authorisation. This authorisation was needed to allow a senior official to approve the payments on the Treasurer's behalf.
Ms Wilkinson told the economics committee that she had asked Treasury's internal audit provider to review the corrective actions taken so far and to recommend further improvements. She also expressed support for the Australian National Audit Office if it decided to examine the payments in a future performance audit.
"Inadvertent Oversight" or Systemic Failure?
Despite the scale of the payments, Ms Wilkinson characterised the breaches as an "inadvertent oversight". She firmly stated she did not suspect any breaches of the Australian Public Service (APS) code of conduct by departmental officials.
"... no individuals are suspected of behaving improperly and all individuals cooperated constructively with the reviews we undertook and the corrective action," Ms Wilkinson said in her opening statement.
However, Liberal senator Dave Sharma challenged this assessment, arguing the breach must be "treated with the gravity it deserves". He called for a more thorough investigation, dismissing the government's characterisation of the error as merely technical.
"For the sake of the integrity and reputation of the federal public service, this issue cannot be simply swept under the carpet or dismissed as 'inadvertent' or an 'oversight'," Senator Sharma said.
Timeline of Discovery and Response
The secretary revealed she first learned of the illegal payments on September 12, while signing off on the department's annual report. This was months after she commenced in the role in June 2025.
"Perhaps it could have been brought to my attention earlier, I'm telling you when it was brought to my attention," she told the committee.
Ms Wilkinson emphasised that the correct amounts were ultimately paid to the right state and territory entities, in line with the relevant legislation and agreements. She praised Treasury staff for quickly identifying the issue, advising the Treasurer, and taking corrective action.
Separately, the Department of Finance confirmed it was notified of the unlawful payments on November 10, only after they were reported in the media. Finance Minister Katy Gallagher echoed the Treasury's position, stating the critical factor was that the problem was identified and rectified.
The management-initiated review will now examine internal processes, including when significant matters should be escalated to the secretary, to prevent a repeat of the costly error.
