Friday 5 October 2018

The ANAO performance audit of the PMC regional network




The ANAO has recently released a report into the management of the Department of Prime Minister and Cabinet’s regional network which deals overwhelmingly with Indigenous engagement issues (link here).

For those interested in the detail of how PM&C manage their interface with local communities and organisations, the report is worth reading in full. It is also worth revisiting the recommendations of the 2017 ANAO performance Audit of the Indigenous Advancement Strategy (link here).

As with many ANAO reports, the recommendations are high level and anodyne, and few in number. See paragraph 24 on page 10 for a list of the recommendations. The grist is in the text of the report.

I don’t propose to attempt to summarise the report, nor to provide a comprehensive analysis. Instead, I will merely point out a few salient issues which jumped of the page as I read the report.

The first issue relates to Figure 1.2 on page 16 which provides an overview of PMC staffing numbers: of PMC’s staffing complement of 2188 public servants, the Indigenous affairs group totals 1261, or 58 percent.

Focussing just on indigenous affairs group staffing, 552 or 44 percent of Indigenous group staff are in the regional network.

Second, paragraph 2.1 describes the restructure proposed by Minister Scullion and agreed by Cabinet in April 2014. It includes the decision not to renew the National Partnership on Remote Service Delivery.

Third, para 2.5 indicates that almost a year later, the Department had not implemented a number of the design objectives required by the Government in its approval of the new regional structure.

Fourth, table 3.1 on page 26 is extremely revealing. It shows that over the three years between April 2015 and June 2018, the number of staff in the regional network were cut by 17.5 percent in the regional network, compared with a cut of 8.5 percent for the Indigenous affairs group as a whole, and compared with 5.8 percent for the Department as a whole. In other words, notwithstanding all the evidence which suggests on the ground engagement with Indigenous Australians is crucial to the success of policies and to the effectiveness of programs, the regional network took the brunt of the cuts imposed on the Department.

Reinforcing this tangible evidence that the regional network is not valued is a supporting finding, which noted:

The Network was designed to actively engage with and gather intelligence from Indigenous communities. However, the Network has inconsistent input into Indigenous policy and program development and the value of the Network is not being effectively leveraged. (para 20, page 9; para 4.27, page 45).

Fifth, the audit provides insight into the state of the strategic planning at the regional level (refer paras 3.17 to 3.22). It reveals that the Department prepared regional strategies in 2014 without any consultation with local interests (para 3.19). The ANAO correctly concludes: ‘it is not clear how the department has assurance that the strategies reflect the priorities of local communities’. These regional strategies have been replaced by Regional Blueprints which were drafted in February 2018, but had not been finalised by May 2018 (para 3.22).

Sixth, the Audit identifies a number of potentially serious gaps in the Department’s approach to risk management within the Network (paras 3.29, 3.30).

Seventh, one of the most intriguing parts of the ANAO report relates to grant administration. The ANAO notes at para 4.18:

The Government’s intention when establishing the Network was that Regional Managers would be accountable for improving Indigenous outcomes in the Government’s key priority areas within their region and that decision-making would be devolved to the Network. In September 2014, the Prime Minister approved the design of a network that allowed decision-making by senior staff close to the ground who could tailor funding to suit the local context

It then goes on to describe the actual arrangements in palace at para 4.20, which I quote in full (emphasis added):

In practice, under the IAS grant approval protocols the administered funds available for Network staff is nil, except for NAIDOC Week grants valued less than $5000, and the Regional Managers Discretionary Fund discussed below. The department advised that the Minister for Indigenous Affairs (the Minister) has elected to retain decision-making authority in relation to most grant funding approvals. In late 2015, the department requested permission for Regional Managers to have the delegation to approve certain projects within their region up to $500,000, but this was not approved by the Minister. The department has analysed the Minister’s approval rate for applications from April 2016 to June 2018. The department advised the ANAO that the Minister approved 53 per cent of all grant applications provided to him for consideration as the decision-maker, including grants not recommended for funding by the department.

In effect, the ANAO is describing a situation where the Minister has retained personal control over the approval of the vast majority of discretionary program resources in the Indigenous affairs portfolio. The major discretionary grant program is the Indigenous Advancement Strategy which involves $1.2bn in grants each year. The assessment of ministers’ actions is beyond the ANAO’s remit, so they tread carefully. However, it is patently clear that there is huge potential for these public funds to be allocated in ways which are designed to engender political support, or disincentivise criticism from potential grant recipients. This intense level of ministerial involvement in all facets of grant allocation is in my experience not standard practice across the public sector, and it does not accord with the government’s rhetoric regarding increasing the influence of the regional network which has the most direct engagement with Indigenous interests. In this context, it is also worth noting the first Recommendation of the 2017 ANAO audit of the IAS, to which PMC responded “Agreed’ less than two years ago:

Recommendation No. 1 Paragraph 3.29
The Department of the Prime Minister and Cabinet ensure that administrative arrangements for the Indigenous Advancement Strategy provide for the regional network to work in partnership with Indigenous communities and deliver local solutions.

There are a number of other issues of interest in the ANAO report, including detailed descriptions of internal reporting processes, the effectiveness of performance reporting, delays in an ongoing review of the network (‘the recalibration project’), and the approach to continuous improvement. The report repays close reading for those interested in the way the Indigenous affairs portfolio operates in practice.

For me, the take out from this report is that it provides further evidence of the mismatch between the Governments’ rhetoric about ‘working with Indigenous people’ and the reality as demonstrated in the continued under-resourcing of the organisational unit within government which is required to implement that aspiration. It also provides tangible evidence to support the view that the Minister actively plays favourites, and sees the Indigenous policy domain in highly politicised terms. This is arguably a retrograde development in public policy, where most Australians would prefer to see issues dealt with, and be seen to be dealt with, purely on their merits.

Finally, I can’t resist noting that the tension between the Auditor General’s independence and his concern not to antagonise key public service chiefs is on full display here. If one was to read only the five recommendations, and the response signed off by the Secretary of PMC, one would think that the issues raised here were largely technical and anodyne: nothing to see here! In contrast, a close reading of the report reveals a set of issues of substantive concern.