Waste and accountability gaps in government race to deliver COVID spending, audit finds

By Jackson Graham

October 28, 2021

parliament house victoria
James Merlino, Martin Foley, Lisa Neville and Martin Pakula have resigned their positions as frontbenchers in the Victorian state government. (Image: Adobe/FiledIMAGE)

Most Victorian departments can’t be sure fraud or corruption didn’t occur while spending billions of dollars on early COVID-19 initiatives, the state’s auditor-general says. 

A report released on Wednesday found that while departments made “extraordinary efforts” to respond to COVID-19, “not all departments effectively managed their spending” and there was waste in some cases. 

Examining the $4.4 billion the government spent on COVID-19 initiatives in 2019-20, the report says speed was prioritised over value for money in some instances, with seven of the state’s departments using more flexible procurement policies to respond to the crisis. 

“Most departments had gaps in how they used critical incident procurements, which means they cannot be sure material fraud or corruption did not occur,” the auditor found. 

Waste included the formerly named Department of health and human Services buying $172 million worth of masks and respirators that were not fit-for-purpose after scrambling to get hold of limited global supply.

As suppliers became overwhelmed, the price of hand sanitiser for the department of justice and community services fluctuated between $6 and $27 per bottle, the audit found. 

The report lists only two departments — DJCS and the Department of Environment, Land, Water, and Planning — consistently completed conflict of interest declarations related to the pandemic. 

“Managing conflicts of interest is particularly important during critical incidents when staff do not use a competitive process to select suppliers,” the auditor writes. 

“This can leave departments exposed to fraud or, at least, perceptions of favouritism.” 

It described “poor” management of conflicts of interest at DHHS, with an executive-level public servant not disclosing they had previously worked with a consultant the department hired.

The Department of Jobs, Precincts and Regions and the Department of Premier and Cabinet also used single quotations for COVID-19 government purchases in cases the auditor considered “non-urgent”. 

“Although the [Victorian Government Purchasing Board] policy does not require departments to seek quotes from more than one supplier during a critical incident, they must still consider value for money,” the report stated. 

It found DJPR selected a call centre for a $4.5 million contract “because the firm gave a discount” but did not explain why other firms were disregarded or whether they also offered discounted prices. 

The auditor examined grant programs worth about $1.1 billion announced prior to June 2020, and found due to the speed they were set up DHHS and DJPR “did not implement effective fraud controls at the start”. 

“Although they made improvements over time, there is a risk that internal reviews have not uncovered all cases of suspected fraud,” the report found. 

But it found the Department of Transport and DPC minimised the risk of fraud and waste by building controls into the grant application process.

The auditor made 16 recommendations to the government and six departments have accepted all of the recommendations.


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