Ministers made up their own minds on regional grants after public servants gave weak advice

By Stephen Easton

Thursday November 14, 2019

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Public servants can’t stop ministers doling out questionable grants of taxpayer’s money, but it’s important that their advice on who deserves the money is strong and the process beyond reproach.

That cannot be said for the controversial Regional Jobs and Investment Packages.

A ministerial panel responsible for approving $220 million worth of grants found the advice it received unreliable and full of mistakes, so its members made up their own minds in a lot of cases. Then the auditors came through. Now some of the decisions they made are being strongly criticised and political journalists are shining a spotlight on where some of the money ended up.

The report by auditor-general Grant Hehir shows how the public servants could have provided much better support to their political masters. If they had more confidence in the advice they got from the Department of Infrastructure, Transport, Cities and Regional Development, perhaps they would have taken up more of it.

The ministers rejected 28% of the recommended grants, and approved 17% of applications the department recommended against approving. The main reason they cited for disagreeing was they felt the applications were incorrectly scored against the grant criteria.

Perhaps this weak advice came from poorly developed procedures and a group of public servants who were not properly trained. “It is not clear that the documented assessment procedures were sufficiently well developed, and there is insufficient evidence that each of the more than 60 individuals that undertook the assessments received adequate training,” the report states.

The auditors also found gaps in the records of why the ministers disagreed with the assessments provided by the department.

“The Panel records did not include a re-scoring of those applications. This adversely affected accountability as it meant there was not a clear line of sight between the departmental assessment results, the subsequent adjustments by the Ministerial Panel and the funding decisions.”

While Infrastructure was responsible for administering the program, it gave most of the work to the Business Grants Hub run by the Department of Industry, Innovation and Science. The auditor-general might put the operation of all federal grants hubs under more scrutiny in 2019-20.

Industry’s hub took over “receipt and assessment of applications, and execution and monitoring of grant agreements” but then it also outsourced the assessment process, paying $3.15 million to a company via a standing agreement for call centres, and listing this as something to do with recruitment on AusTender.


Read more in Mandarin Premium. Standing between politicians and barrels of pork: Verona Burgess on the need for strong and sound processes


One of the auditor-general’s “key lessons” for all government agencies is they cannot outsource accountability, either through shared services arrangements or external procurement. Still, as a shared services provider, Industry secretary Heather Smith promises the hub will do a better job.

This was the first time the Business Grants Hub had ever outsourced its work to a private company, and the regional grants program was one of the first it handled altogether. Smith assures Hehir the BGH has been continuously improving its assessment and decision-making processes, record-keeping and computer systems since the audit.

Broadly, Infrastructure provided clear and comprehensive funding recommendations to the ministerial panel, mostly in line with the Commonwealth grants administration framework. But this is hardly a saving grace as this advice was based on a substandard assessment process.

“Applications were not soundly assessed in accordance with the program guidelines,” Hehir’s team concluded.

“The eligibility requirements were not applied in full, and there are indications of shortcomings in the assessment of the merit criterion most directly related to the program outcomes. Requests for co-funding exemptions were not appropriately considered and conflict of interest management was not to a consistently appropriate standard.”

The ministerial panel went on to approve one grant that was not eligible for the funding, and five that missed the deadline but, for unknown reasons, were still considered. In total, 19 late applications were assessed, but the auditors only found nine explanations: in those cases extensions were granted in recognition that problems with the Business Grants Hub’s application system caused delays.

Infrastructure, which is led by secretary Simon Atkinson as of November 11, agreed to three recommendations and told the audit office it was already well on the way to learning from this experience; it claims to have “implemented the learnings” of an external assurance review that reached “similar conclusions” and delivered its report about 16 months ago.

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