Passport Office overcharged $15.9m for priority passports, audit finds

The Australian Passport Office, run by DFAT, has not been functioning efficiently since a post-pandemic surge, and does not take a customer-focused approach, the Australian National Audit Office found in a report tabled in Parliament on Wednesday.

The audit found that the passport office had missed the priority processing window of 20 hours for 73,769 applicants, or 17 per cent of of all priority applications, in the 2022-23 financial year.

These applicants had paid an estimated $16.6 million in fees, and while DFAT refunded $733,224 worth of them to a small portion of the affected people, that left an outstanding figure of up to $15.9 million "where applicants may have had a basis for claiming a refund".

The department accepted a recommendation that it should provide refunds of priority fees in such cases, and said it had commenced a "a comprehensive review of passport legislation it administers and will consider and address this recommendation in that context".

Refunds are currently available for people whose passports are not processed within the two business days, but they must apply for this themselves.

Applicants pay priority fees - of $252 as of January - for their passport to be processed within two business days. DFAT has a target to process standard applications in 10 days, though it advises people to leave six weeks for their application.

The priority fee is paid on top of the standard sum to have a passport processed - $346 for a 10-year adult passport, in January.

Priority fee revenue has also swelled, up from from $34.3 million in the 2017-18 financial year to $96.9 million in 2022-23.

Overall the audit found the passport office is failing to meet its own goal of processing 95 per cent of passport applications within 10 business days - instead processing 61 per cent of applications in this time frame during 2022-23.

But the audit also criticised the opaque way in which DFAT calculates its processing times.

For most applications, DFAT records the time taken from the registration of the application in its main system through to the final quality assurance of the completed passport booklet, or when the relevant state or territory office receives it.

This means the passport office is not measuring processing times as the number of days between a person lodging an application at Australia Post, for example, and receiving the document.

Furthermore, officers can pause the processing clock for a number of reasons - such as if additional information is required - and this affected 8 per cent of routine passport applications in 2022-23, for a median period of 2.8 days.

DFAT's target of 10 business days also differs from advice to customers on its website to allow a minimum of six weeks to receive their passports.

The department agreed to improve transparency over its processing times, and analyse its use of clock stopping.

Staff efficiency is also down in the passport office by 56 per cent, compared to figures from before the international border was closed in March 2020.

The average number of passport applications processed per full-time equivalent employees and contractors was 384 per quarter in 2022-23. Before the closure of the international border it was averaging 865 per quarter.

DFAT did not engage additional staff to process applications in time to avoid a significant backlog after the international border reopened in November 2021, the report also found.

This was despite its own December 2020 modelling predicting a "pent-up demand surge" in 2022. Advice from the modelling team in February 2022 told executives: "It would be prudent to prepare for a surge from April 2022."

This surge did come to fruition, with applications up by an average 22 per cent in the seven quarters following the reopening of the border, compared to pre-pandemic levels.

DFAT did not leave enough time to train contractors it brought on to manage the surge, and as such, a considerable backlog grew from late 2021 - peaking at 428,750 applications in September 2022.

In his response, Craig Maclachlan, who was acting as secretary for Jan Adams as at January 8, 2024, said the department accepted all nine recommendations made by the audit office.

"DFAT is committed to improving passport services and accepts the recommendations in the proposed report in full," Mr Maclachlan wrote.

"The department is pursuing initiatives that address, and in many cases go beyond the recommendations of this report."

The acting secretary said this was particularly in relation to inefficiencies created by legacy technologies used by the passport office.

He also acknowledged that the department's preparations for the "unprecedented post-COVID demand surge were not sufficient to maintain continuity of service".

"We regret any and all impact and inconvenience caused to the community and individuals during this time."

Mr Maclachlan also acknowledged the commitment and dedication of passport office staff and contractors, "who worked tirelessly to support the department in the challenging circumstances that arose post-COVID".