‘Though this be madness, yet there is
method in it’
Hamlet Act II, Scene ii
The ANAO released its effectiveness
audit (link
here) of the Indigenous Advancement Strategy (IAS) last Friday (3 February
2017). The IAS (link
here) is the Government’s major grants program in Indigenous Affairs,
allocating in excess of $1bn per annum for activities designed to deliver
services to Indigenous citizens and communities.
The Australian described the audit as ‘scathing’ (link
here), and noted:
However the
audit found that a seven-week planning and design period had “limited the
department’s ability to fully implement key processes and frameworks, such as
consultation, risk management and advice to Ministers”.
The program’s
short implementation time had then “affected the department’s ability to
establish transitional arrangements and structures that focused on prioritising
the needs of indigenous communities”.
Further, the
department’s grants administration process “fell short of the standard required
to effectively manage a billion dollars of Commonwealth resources”.
The ABC story (link
here) led with the following paragraph:
The Abbott government bungled its overhaul of
billions of dollars worth of Indigenous funding, a major report has found.
The Department of Prime Minister and Cabinet website
published a summary of the Department’s response to the audit (link
here) which tries valiantly to shift the focus to the future and away from
the findings, and as a result, in my opinion fails to adequately acknowledge
the seriousness of the findings.
The Minister for Indigenous Affairs published a
media release in response to the audit (link
here) titled “Government a step ahead of the ANAO audit recommendations”
which stated in the first paragraph that the audit findings related to the 2014
grant round, and ‘should be viewed as a historical observation on a process carried
out two-and-a-half years ago’.
The
implication that the ANAO and the Auditor General is a step behind the
Government in releasing this report, and that its assessment is not ‘fair and
reasonable’, is on its face extraordinary. So too is the Minister’s quite
direct criticism of the ANAO for failing to focus on the Government’s alleged
successes as stated in the minister’s media release:
Assessing the success of the IAS based on the introductory
period is premature. Any fair and reasonable assessment of the IAS needs to
consider a timeframe well beyond the introductory period to give the strategy
time to deliver the intended benefits.
By focusing its audit on the grants round, the ANAO has
paid insufficient regard to the state Indigenous Affairs was in when the
Coalition Government came to office in 2013 – and hence the need for the
Government to implement its reforms.
Before the Coalition introduced the IAS, it was not
possible to say where and how much taxpayer money was being spent or what
outcomes were expected for the outlay. I know this to be true, because they
were questions I repeatedly asked in Senate Estimates as an Opposition Senator.
These
criticisms ought to be seen for what they are: attempts to divert attention
from the shortcomings identified by the ANAO. In relation to the claim about
assessments in the ‘introductory period’ the Minister himself decided that the
previous Government’s Remote Jobs and Communities Program was a failure and
should be abolished while it was still less than 12 months old, and the
replacement Community Development Program is in diabolical trouble, with
soaring breach rates and substantial community concern (link
here). The comments about not being able to say where the money was being
spent and what outcomes were expected under the previous Government are issues
identified by the ANAO in relation to IAS. The degree of transparency in
relation to the IAS is virtually non-existent, as a cursory trawl through the
PMC website will reveal.
To
take just one example, the level of detail available in relation to expenditure
on the Minister’s signature program, the Remote School Attendance Strategy is
woeful, with no accessible detail on the allocation of funding, no detail on
the numbers of students impacted, only one internal quantitative evaluation
which suggests that the program’s impact, while positive, is far from making a
meaningful difference to overall remote school attendance. Yet the media
releases, magazine articles and good news stories keep rolling out.
In
an interview with the ABC in relation to the ANAO Report, the Minister was
reported as stating that he did not think errors were made (link
here):
"I don't
accept that this was some sort of disaster at all," Senator Scullion told
the ABC.
"All of
these criticisms are about departments and processes. What my job is to do is
focus on what people who receive the services think.
"The
fact is Aboriginal and Torres Strait Islanders, as a consequence of these
remarkable changes, are far better off."
In
essence the Government’s response has been to argue that the IAS involved
“remarkable changes”, that any issues identified by the ANAO are “historical
observations” of no relevance today, and that ‘these criticisms” are ‘unreasonable
and unfair’ and all about bureaucratic processes for which the minister is not
responsible.
Before
assessing the merits of these arguments, it is worth noting some of the ANAOs
detailed findings. Of necessity, they are extracts and the report needs to be
read in its entirety. Nevertheless, a number of the findings are extremely
concerning, and suggest deep-seated problems existed (and presumably continue
to exist) in the way Indigenous public policy is being implemented.
In
terms of understanding what has gone on here, it is important to understand
that the ANAO is precluded for examining the actions of Ministers; its focus is
entirely on the actions of agencies, notwithstanding that the Minister is the
decision maker and he and his office would have been integrally involved in the
roll out of this program (as was confirmed in Secretary Parkinson’s letter
(discussed below).
Here
are some of the more worrying quotes from the ANAO report (emphasis added):
7. While the Department of the Prime Minister and Cabinet’s design work
was focused on achieving the Indigenous Advancement Strategy’s policy
objectives, the department did not
effectively implement the Strategy.
10. The department’s grants
administration processes fell short of the standard required to effectively
manage a billion dollars of Commonwealth resources. The basis by which
projects were recommended to the Minister was not clear and, as a result,
limited assurance is available that the projects funded support the
department's desired outcomes. Further, the department did not: • assess
applications in a manner that was consistent with the guidelines and the
department’s public statements; • meet some of its obligations under the
Commonwealth Grants Rules and Guidelines; • keep records of key decisions; or •
establish performance targets for all funded projects.
11…..The department has commenced some evaluations of individual
projects delivered under the Strategy but has not planned its evaluation
approach after 2016–17.
16…..The department did not meet its commitments with respect to
providing advice on all the elements identified as necessary for the
implementation of the Strategy. The department
also did not advise the Minister of the risks associated with establishing the
Strategy within a short timeframe.
24. The department did not
maintain sufficient records throughout the assessment and decision-making
process. In particular, the basis for the committee’s recommendations is not
documented and so it is not possible to determine how the committee arrived at
its funding recommendations. The department did not record compliance with
probity requirements. Further, the department did not maintain adequate records
of Ministerial approval of grant funding.
1. 15…..the ANAO does not have
assurance that the department has produced complete records of the design and
implementation of the Strategy.
2.9…… The department advised the ANAO that it met with Indigenous
leaders and national peak bodies outside of the council but did not keep records of the meetings.
As such, it is not clear who the department met with, what feedback the
department received and how this was considered in developing the Strategy.
3.21….. There is limited evidence that regional profiles were
considered in the grant assessment process. As at August 2016, two years after
the commencement of the regional network, the department has drafted but not
finalised regional strategies.
3.23 The department advised that it has provided the Minister with
dashboard reports since August 2015. The reports include a short local issues
section that, until January 2016, focused on the Community Development Program
and Remote School Attendance Strategy. The dashboard reports provide a
reflection of activity within the regions, but do not meaningfully report on
the performance of the regional network.
4.17 ….. This meant that the information
from the application assessments was so aggregated that it did not provide
meaningful information to the committee against the selection criteria, and
subsequently the Minister.
4.20 ANAO analysis shows that some
projects that were awarded a high score against the selection criteria and need
score were not recommended for funding, and some low-scoring applicants were
recommended. For example, 59 projects that were awarded assessment scores
of 20 or below and a need score of 3 or less were recommended for funding.
Further, 222 projects that were awarded assessment scores of 26 or above, and a
need score of six or above were not recommended for funding.
4.25 The department provided the ANAO with a list of 415 demand-driven
applications it assessed, but could not confirm that it was a complete list of
the applications received. The ANAO identified 11 applications that were under
assessment for more than one year, with the longest time between application
and notification of outcome being 592 days.
4.34 The review of applications identified 300 missing applications that the department had received but not
registered for assessment.
4.36 The requirement that all projects were assessed by two staff was
not applied to all projects. Analysis by the ANAO identified that 815 out of
approximately 5000 project assessments did not receive two assessment
scores….4.37 As a consequence of being
assigned an automated score, the 815
projects were not appropriately considered against each of the individual
selection criteria at the assessment panel stage.
4.40 The probity plan required that committee meetings be recorded,
with minutes signed by the Chair of the committee, and that the Chair ensure
that the grant assessment process be comprehensively documented and tied
explicitly to the selection criteria. The committee did not record minutes of
its meetings, keep a record of the actions taken by the committee to address
conflicts of interest recorded by committee members, or keep records of key decisions.
4.41 The ANAO was provided with two different spreadsheets that,
according to the department, recorded the funding recommendations made by the
committee. Neither spreadsheet matched
with the value of funding recommendations recorded on the brief that the
committee Chair signed to approve the recommendations to the Minister, and
one of the spreadsheets recorded recommendations that the department later
advised the Minister were not an accurate representation of the committee’s
recommendations.
4.46 The department provided
descriptive information (such as project locations and electorates), but did
not provide the Minister with assessments of the extent to which projects met
each of the five Strategy selection criteria. The department advised the
ANAO that it provided the assessment score and need score to the Minister in
its initial $917 million recommendation brief, but was unable to provide
evidence of this.
4.48 Similarly, the department
did not maintain adequate records of the grants approved by the Minister.
4.61 As such, the department has
limited assurance that the process of negotiating funding agreements and
amounts was conducted fairly, and that applicants received similar
treatment across the regional network.
5.26 The department drafted an evaluation strategy in June 2014…... A
constraint on evaluation activity was that the evaluation strategy was not
formalised and no funding was set aside to implement the evaluation strategy.
The
ANAO has also published at pages 67/68 a copy of the letter responding to the
audit from the Secretary of PMC, Martin Parkinson. It is a only a slightly more
balanced response than that provided by the Minister, but is nevertheless a
letter which no Secretary, let alone the Secretary of PMC would ever wish to
have to sign.
Parkinson
acknowledges what he terms shortfalls in ‘some’ of the Department’s processes including
record keeping. He notes, inter alia:
The
department worked closely with the Minister for Indigenous Affairs and his
Office to ensure that they were apprised of the progress being made and
implementation challenges…The department considers the shortfalls in its
processes outlined in the Report and the potential implications arising from
them are overstated when seen in the full light of the transition….
The
substantive issues raised by the ANAO are extremely serious in their own right,
but it seems to me that there are two broader issues which deserve attention.
The first goes to the
quality of the advice provided by the Department to the Minister. The ANAO
makes clear that the advice was substantively faulty in relation to a
substantial proportion of the grants being considered. This raises broader
issues relating to the capacity of the APS to provide quality advice to
Ministers. It needs to be remembered that while Indigenous affairs is a complex
area of public administration, managing grants programs is core business for
the bureaucracy and it seems almost unbelievable to me that a central agency
such as PMC could get it so wrong. One must wonder where the Department’s Audit
Committee was during this process? Where was the Executive Leadership Group
which according to the Annual Report for 2013-14 (link
here) ‘considers strategic issues impacting on the Department, including
any ongoing or emerging risks, and monitors performance in delivering outcomes’?
It
was less than ten years ago that Peter Shergold (the then Secretary of PMC)
identified policy and program implementation as key areas of focus for the APS
and established an implementation unit in PMC to drive a stronger focus on the
issue across the APS.
More
importantly, and more worryingly, is the implication which can be drawn from
reading between the lines of Parkinson’s letter, (and from paragraph 16 of the ANAO
summary) that PMC failed to properly advise the Minister of the risks of
attempting to implement major change to Indigenous funding programs ‘within
very ambitious timelines’ presumably set by the Minister, either because it
didn’t recognise the full nature of the risks (but see paragraphs 2.18 and
2.19), and in any case decided to ignore
or discount them. The inevitable conclusion drawn by the ANAO was that the
bureaucracy did not provide appropriate (ie frank, fearless and quality) advice,
and we might surmise that the Department was perhaps afraid to tell the minister
and government that the reform agenda in the timeframe demanded was not
possible.
This
is an issue of much broader import than program administration in the
Indigenous affairs portfolio, and goes to the increasing politicisation of
senior levels of the APS, not in a partisan sense, but in the sense that it is
career suicide for a senior public servant to say ‘no Minister that is not
possible’. This increased ‘politicisation’ of the bureaucracy strengthens the
arguments for stronger independent checks and balances elsewhere in the systems
of public policy and administration.
The second issue goes
to the notion of ministerial responsibility. It is appalling that no-one appears
prepared to take responsibility for what is an extraordinary litany of
incompetence and ineffective program implementation. Of course the ANAO can
only asses what is recorded and it may well be that the Department was verbally
warning the Minister of the risks and the need to take corrective action. And
of course, once the course is set by the Minister, it is often impossible to
turn the clock back. Given the inevitability that the bureaucracy’s advice and
relationship with the minister is a ‘black box’, even to auditors, and that the
levels of resourcing for agencies are set by governments, there is an extremely
strong public interest in the minister being held accountable for the
performance of his Department. This is the normal Westminster theory, a notion
which appears to be increasingly ignored in practice.
What
is particularly concerning in the present case, and unprecedented in my memory,
is the Minister’s preparedness to denigrate the ANAO and attack the ANAO
conclusions (replicated more diplomatically by the PMC Secretary). This has the
effect of eroding the authority and independence of the ANAO and deserves
public censure.
The overall
outcome of all this is just too cute. The Department did not advise the
minister of the risks, so he takes no responsibility. The Secretary claims the
program was integral to ‘a very ambitious reform agenda but one that was long
overdue in the delivery of Indigenous programs’ and any ‘shortfalls in its
processes outlined in the Report and the potential implications arising from the
are overstated when seen in the full light of the transition…’, so there is no
case for the Department to be held responsible. The Minister claims that as a
result ‘of these remarkable changes’ Indigenous people ‘are far better off’,
the problems identified by the ANAO are merely of historical significance and
in effect have either been fixed or are being fixed. No one takes
responsibility.
The
information disclosed in the ANAO Report may just be an account of teething
problems in the reform of a complex grant program under tight deadlines. But
those reforms, driven by the minister, also created a system which created the
potential for substantial subversion of normal grant management principles and
normal principles of governance, where the Minister could if he so wished, take
funding decisions in accordance with whatever whim came to him, could reward favorites,
punish enemies, without reasons being recorded, details kept, and all hidden
from view and scrutiny. There is no evidence in the ANAO report that this
occurred in relation to this program, but the question is: where is the
assurance that it didn’t occur? And where is the assurance that it is not occurring
today? That is the purpose of good process, record keeping, timely transparency
and equal and fair grant management processes.
We
might believe that virtually all politicians and ministers are akin to saints,
and will never seek to pursue personal or political agendas, but the realist
within tells me there will always be a minority who are prepared to
opportunistically pursue self-interest and political agendas under the guise of
operating in the public interest. And that is why all those with an interest in
good governance ought to be concerned with what has been shown to have gone on
here.
Personal
disclosure: I
worked as a ministerial adviser for Minister Macklin from 2008 to 2011, and in
the Department of Families, Housing, Community Services and Indigenous Affairs
from 20011 to 2013.
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