NRAS: 'lack of understanding of regulations'

By David Donaldson

November 27, 2015

Poor understanding of regulations, failures to comply with administrative law and procedural fairness and inadequate risk management undermined the operation of the National Rental Affordability Scheme, says a report from the Australian National Audit Office.

The review looked at the application and assessment stages of the NRAS, which was launched in 2008 to contribute to improvements in the affordability of rental accommodation for low and moderate income households by prompting the construction of 50,000 new affordable rental properties.

The delivery of housing into the scheme was slower than expected and the government has signaled there will be no further funding rounds, meaning construction was effectively capped at 38,000 dwellings, so the program now moves to doling out the money already committed over a longer period.

Because these early parts of the NRAS have already passed, the report does not make recommendations, though it does consider some broader learnings. The report was critical of the basic management of the program:

“Administration of the application and assessment process and management of reserved allocations for NRAS has not been effective. During the early years there was a lack of understanding of the regulations and the operating environment, which led to the scheme being administered in a manner which did not fully accord with the requirements of the regulations.”

Current departmental estimates of the whole of life cost of the scheme are in the order of $3.5 billion, with this funding to be allocated up to 2026. Departmental budget forecasts indicate that by the end of 2014–15, nearly $560 million will have been spent, with incentive payments and tax offsets expected to peak in 2020–21 at around $345 million.

Auditor General Grant Hehir outlined a range of lessons, arguing “the implementation of NRAS has highlighted the need for effective planning and sound administration, if government programs are to be successfully implemented and are to achieve their objectives and expected outcomes.” Hehir said the findings reflected the importance of:

  • effectively planning for the implementation of programs, including allowing sufficient time for the administrative design features and any supporting legislative and regulatory frameworks to be settled prior to commencing formal implementation;
  • integrating risk management processes into the overall design, governance, strategy, planning and administration, to effectively manage risks to the achievement of the objectives and outcomes of programs;
  • identifying the required mix of essential skills, experience and capability to assist with the efficient and effective design, implementation and administration of programs, in accordance with broader government policy and any underlying legislative and regulatory frameworks;
  • conducting application and assessment processes in a manner that accords with policy, legislative and regulatory requirements, including establishing robust probity and sound decision making processes, and complying with procedural fairness and other administrative law requirements;
  • evaluating programs with a focus on understanding their impact, whether the policy objectives and expected outcomes are being achieved, and whether the underlying policy approach is an effective intervention;
  • departments drawing to the attention of the government, as early as possible, key risks and shortcomings in policy design and the likelihood that related programs may not fully achieve their intended objectives or outcomes; and
  • creating and maintaining a minimum standard of documentation in relation to administrative processes and decisions in order to support accountability and transparency.

In his response to the report, Department of Social Services secretary Finn Pratt agreed with the key findings, adding that:

“The department has recently undertaken significant reform of the administration of the NRAS, as well as implementing enterprise-wide reforms that will reduce the risk of administrative shortcomings in the future.”

Pratt also acknowledged “that issues with the scheme were exacerbated by several moves between departments as a result of machinery of government changes, along with the tight timeline for implementation.”

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