The ANAO performance audit of the NIAA NT Remote Housing program

 

I can keep honest counsel, ride, run, mar a curious tale in telling it and deliver a plain message bluntly.

King Lear Act One, Scene Four

 

The ANAO and its performance audit function is an extraordinarily valuable resource in providing the community with a level of assurance that government programs and policies are being managed effectively in the public interest. These reports also provide a welcome level of transparency that is in practice unavailable anywhere else, providing a window into the quality of bureaucratic advice and strategic planning that underpins the delivery of government services and programs.   

 

The ANAO’s recent report titled Remote housing the Northern Territory is a case in point (link here). It reports on the five year National Partnership for Remote Housing Northern Territory that provides for $550m in Commonwealth finance for the five years from 2018-19 to 2022-23. Program delivery is by the NT Government (NTG).

 

The performance audit is limited to the NT, because following the expiry of the ten year National Partnership on Remote Indigenous housing in 2018, the Commonwealth withdrew from funding remote housing in all other jurisdictions. The ANAO give a detailed and valuable account of the history of Commonwealth funding of remote housing.

 

The ANAO audit team on this report have done an excellent job in synthesising and compiling an enormous amount of information and data which will be enormously helpful to those interested in understanding what has transpired in relation to remote housing programs over the past 15 years. Unfortunately, in this area of Commonwealth activity, the past decade has been a story of progressive decline and poor management, a narrative that a detailed reading of the report confirms. Yet for reasons I can speculate on, but cannot confirm, a high level reading of the report, focussed on its key findings and recommendations, gives little hint that this is the case.

 

For example, the report states (para. 8):

Improving Indigenous housing in the NT has been a policy priority for successive Australian and NT Governments. By 2022–23 the Australian Government will have invested $2.65 billion over 15 years in remote housing in the NT through successive national partnership agreements.

 

This statement is factually correct, particularly if you give the term ‘policy priority’ a generous and flexible interpretation. Yet if we apply a more penetrating analysis, we can note that the total is in nominal dollars and the real expenditure in the earlier years is somewhat greater. Setting that aside, that ‘priority’ has averaged $177m per annum over the 15 years, whereas the current five year National Partnership provides for $110m per annum from the Commonwealth. The most recent National Partnership involves a nominal reduction in Commonwealth financial commitment of $67m per annum; hardly a reflection of an ongoing policy priority. For a discussion of whether the National Partnership Agreement incentivised a matched commitment from the NTG, see below.

 

The ANAO frames its findings as follows: [emphasis added]:

• The National Indigenous Australians Agency’s (NIAA) administration of funding for remote housing in the NT has been partly effective.
• The development of the National Partnership was partly effective.
• NIAA has been partly effective in assessing the delivery of the program of works under the National Partnership.
• NIAA has been partly effective in ensuring that the National Partnership’s outcomes are being achieved.

 

The ANAO’s formal recommendations align with these findings, albeit with a focus on the development of ‘risk based assurance processes’ in four of the five recommendations (para. 30).

 

The ANAO’s ‘glass half full’ approach is facilitated by two inter-related high level techniques or dispositions, though to be clear, I am not at all sure whether the ANAO sets out to do this deliberately, or whether it is merely a function of an inherently cautious culture.

 

The first is that the report uses excessively neutral language and a passive tone to communicate its findings, particularly in the executive summary sections. The best example is perhaps the way each of the four major findings and some of the supporting findings are framed, utilising the equivocal and indeterminate formulation that NIAA actions were ‘ partly effective’ (see paras. 14 to 17 and paras. 22, 23, 234 and 28). More substantively, in the reports recommendations, there is a subtle choice to focus on non-threatening technical issues such as risk management (important as they are) rather than highlighting management failures or lack of substantive progress.

 

The ANAO approach on communication and presentation in relation to what is a complex program is akin to assessing the operation of a sailing ship, and finding that notwithstanding the disintegrating caulking, the hull was partly effective, the broken compass which was only five degrees out was partly effective, and the damaged rudder is partly effective because it continues to steer the ship, albeit in circles.

 

The second high level reason for the ANAO’s high level anodyne framing is that its analysis is flawed in two respects: it doesn’t adopt a comprehensive or systemic approach to understanding what is occurring with the program, instead satisfying itself with segmented and compartmentalised assessments of different elements, without taking the next step and ‘joining the dots’. It also ignores or fails to grasp a couple of crucial issues that in turn would lead to a much more critical set of conclusions (I address these below). To use the sailing ship metaphor again, the ANAO short-sightedness is akin to failing to recognise that with key elements compromised, the operation of the ship is no longer fit for purpose, even if it continues to stay afloat.

 

To over-emphasise the critique of the ANAO would be a distraction. So I now turn to laying out a number of the ‘submerged’ key points which focus more on the performance of the NIAA based entirely on the information contained in the ANAO report. I won’t begin with a summary of the key information regarding the program as it is laid out in the summary section (paras. 1 to 33) which I recommend readers at least scan. The Commonwealth program is based on NTG implementation of the core elements (capital works, property and tenancy management (PTM) and Indigenous employment, and involves payments to the NTG based on delivery against agreed milestones.

 

The delivery of capital works is not on track

As at 30 September 2021, 39 months (65%) into the 60 month program which ends in June 2023, the Commonwealth program had delivered only 363 out of a projected 1950 bedrooms, or 19% (see para 1.11 and table 1.2). Only 26% of the program funding had been paid to the NTG, including 11% of the capital works funding. The ANAO determines that the NIAA assessment of the NTG’s delivery of the capital works is ‘partly effective’ (para 3.3), but the bottom line is that the NIAA has not delivered adequate progress and is now presumably in panic mode seeking to make up lost ground.

 

Slow delivery of outcomes has an adverse impact on Aboriginal tenants in overcrowded housing. The ANAO states that the ‘NIAA has not managed risks to the delivery of the National Partnership effectively’ (box above para 4.55). The statement is correct, but it evades the more fundamental point: the NIAA has not ensured that the outcomes required are delivered in a timely way. The ANAO Recommendation Five (para 4.68) is framed around risk management when in fact it should be framed around program delivery failure. The ANAO notes that NIAA were aware as early as November 2019 of delays in program roll out (para 4.8) and had expressed concern to the minister in April 2020 that the construction program may not be completed over the duration of the National Partnership (para 4.72). The recommendation that the ANAO should have made, but didn’t, was for the NIAA to urgently implement a strategy to bring the program back on course by June 2023.

 

In this context, the ANAO correctly raises the very real concern that NTG commitments to ensure the targets in the Commonwealth program are delivered will come at the cost of the NTG’s own committed targets (para 4.9). This raises a second key issue: why are there two sets of program targets being delivered simultaneously by the two Governments.

 

The Commonwealth decision to maintain separate program targets

It is not clear why the Commonwealth insisted on a separate program targets to be delivered by the NTG in parallel with its own program targets in its pre-existing program known as Our Community. Our Future. Our Homes (OCOFOH). It is problematic in a number of ways, yet the ANAO makes no adverse comment regarding this decision. Obvious disadvantages include added management complexity, reduced overall transparency, and increased risks of ‘target shifting’ and financial mismanagement. The ANAO uncovered, and notes without adverse comment, that PMC (before NIAA’s establishment) provided what appears to be incorrect and misleading advice to the Minister (see paras 2.10 to 2.12).

 

Part of the reason for two sets of targets may relate to a misleading narrative promulgated by PMC / NIAA in the drafting of the National Partnership and apparently accepted by the ANAO (see para. 1.5) that the NTG was matching the Commonwealth commitments. In fact, the NTG had committed $1.1bn over ten years from 2017-18 before the Commonwealth made its decision to continue funding in the NT (see para 2.33). In turn, this presentational sleight of hand relates to the underlying raison d’etre for the Commonwealth involvement in the NT in a context where it had taken a decision to withdraw from funding remote housing in every other jurisdiction.

 

What was the Commonwealth motivation for continuing a remote housing program in the NT?

The ANAO, somewhat credulously, notes that ‘the objective of the National Partnership is to improve housing conditions and reduce overcrowding in 73 remote communities and 17 town camps’ (para 2). The NIAA response to the performance audit goes further and states that ‘the sole objective of the National Partnership’ is to improve housing conditions and reduce overcrowding’ (Appendix One). The ANAO explains that the Commonwealth’s rationale for continuing the program in the NT while discontinuing its assistance in all other jurisdictions was that it ‘considered that the housing need was significantly higher’ in the NT (para. 1.14).

 

The 2017 Review of NPARIH (the national forerunner of the NT National Partnership) had determined that about half of the outstanding remote housing need to 2028 would be in the NT, but this does not explain why a Government would preference one half of the need over the other half, or one unhoused family in the Northern Territory over an unhoused family in Western Australia.

 

We can probably set aside the possibility that there was any link between the then Minister’s role as a Senator for the NT, and the decision, as he did not contest the 2019 election held two months after the National Partnership was established in March 2019.

 

However, the most substantial incentive for continued Commonwealth funding arose from the fact that the rollout of NPARIH from 2008 was predicated upon the granting of leases to Government to underpin improved tenancy management. In the NT, the Land Councils strongly pushed for the Commonwealth to hold those leases rather than the NTG, and the then Labor Minister agreed. The NT was the only jurisdiction where the Commonwealth holds housing leases directly.

 

The ANAO notes (see paras. 1.20 – 1.24) that the Commonwealth holds some 3500 underlying housing leases in the NT, and thus (in the absence of any subleases arrangements) is effectively the landlord and responsible for property and tenancy management (PTM) for around 59 percent of all remote housing. The LNP Government did not wish to take a direct role in delivering social housing in the NT, and thus needed to negotiate subleases and management responsibilities with the NTG (or some other entity). The objective of the National Partnership is more accurately characterised as the price of persuading the NTG to take on this responsibility. This conclusion is reinforced by the ANAO observation (para 1.24) that the current subleases over the Commonwealth housing leases are due to expire at the same time as the National Partnership, in June 2023.

 

Acknowledging that the Commonwealth had an ulterior motive for its decision to maintain a remote housing program in the NT is important because it explains in large measure the lack of attention to implementation that lies at the heart of the current failure to deliver on outcomes.

 

The Implementation Plan and PTM fiascos

The ANAO report makes clear that the Implementation Plan for the program, negotiated contemporaneously with the program design and negotiation, included numerous gaps and flaws such as reporting period inconsistencies, including in relation to PTM. They go so far as to count them, reporting over 30 inconsistencies, syntax and typographic mistakes,  (para 2.24, and footnote 44).  Recommendation One, which flows from this analysis, states:

2.28    National Indigenous Australians Agency revise the Implementation Plan to support public accountability by providing accurate information on how each party to the National Partnership for Remote Housing Northern Territory will achieve the outcomes and outputs.

 

This is fine and good, but the import of these multiple so-called ‘technical‘ errors (see para 2.29) is twofold: first, it made the key areas of the agreement such as payment schedules unworkable, and second, it demonstrates clearly that senior PMC/NIAA staff did not take the time to read the Implementation Plan. It is as if the roll out of the program wasn’t important; all that mattered was to shift responsibility for the Commonwealth landlord responsibilities to the NTG.

 

Even more surprisingly, PMC/NIAA set the funding amount for PTM in the Partnership Agreement at $35m, but failed to properly advise the Minister. The ANAO notes (para 2.40):

The advice to the minister did not provide a rationale for the decision to set the funding amount for PTM services at $35 million. A December 2018 ministerial brief stated that ‘independent financial modelling’ confirmed the proposed base annual rate to be paid to the NT Government to manage Australian Government leases. However, the ANAO examined the financial modelling and found that the cost of PTM services was estimated at between $53.3 and $76.6 million annually. Australian Government funding to the NT Government for PTM services under NPARIH and NPRH averaged $42 million annually between 2013–14 and 2017–18. [emphasis added]

 

An objective observer can only conclude that PMC/NIAA either misled the Minister, or were complicit in creating a document intended to create a false narrative. Either alternative deserves to be clearly and unequivocally criticised. Yet the ANAO says nothing, and merely reports without comment the PMC/NIAA advice in response (more accurately described as a non-sequitur) that ‘PTM funding for PTM services was constrained by the available total funding envelope of $110m a year’ (para 2.40). Unsurprisingly then, the performance of the NTG’s reported PTM performance has steadily declined between 2019 and 2021, with the NTG meeting all six performance measures in 2019, but only two of the six in 2021 (table 3.2). The ANAO outlines the NIAA assessment process (my two word summary: ‘process oriented’), and reports neutrally that NIAA requested ‘additional information’ where there was a shortfall between PTM results and targets (see table 3.3).

 

Of course, the more fundamental issue here is that the Commonwealth is the underlying owner of the assets, that are scheduled to revert to direct Commonwealth control in 2023. Yet it is deliberately underinvesting in the PTM, which means that the assets degrade faster than they should, will need to be replaced earlier than should, and the tenants (real families with real needs) will continue to live in sub-optimal conditions longer than they should. These are the nuts and bolts of structural racism, laid out in plain view by the ANAO, but not reflected in its findings or recommendations.

 

The ANAO report also documents the role for the land councils in the management of the program (paras. 4.11 to 4.16), albeit within a structure that may not always deliver them timely information (paras 3.8 and 4.16). The ANAO notes that in response to claims from NIAA that the land councils provide a ‘broad assurance’ of the ‘progress and quality of PTM services and capital works’ given their involvement in communities,  the land councils have expressed concerns that they do not have the capacity to collect feedback at a detailed level so as to provide more than a general level of assurance (paras. 3.28; 4.16). It is difficult not to interpret the NIAA claims regarding the land councils as an attempt to shift blame or responsibility.

 

The more fundamental issue for the land councils arising from accepting a role in oversighting the program is that they run the risk of being complicit in ongoing underperformance. The slow progress in delivering housing is one example. The PTM example above is another. Similarly, the lack of progress on the leasing and land servicing reviews included in the National Partnerships original design (see paras. 4.31 to 4.37), and still not completed despite numerous meetings between the two governments and the land councils is a further case in point.

 

The more general point here is that the land councils must invest in developing and sustaining the capability to proactively and substantively participate in the governance of what is an extremely complex program, recognising that they are not the ultimate policymakers (notwithstanding the inevitable government rhetoric on co-participation). They would be wise to always retain the right to advocate publicly on issues of concern. Similarly, they should resist the temptation to support government antipathy to greater program transparency. For Indigenous interests, transparency is a significant ally in ensuring governments operate in the public interest, particularly in contexts that do not always gain consistent attention in public debate. Finally, while the benefits of participation in program governance are huge and not to be ignored, the risks of co-option are also substantial, and require specific and ongoing attention within land councils and other Indigenous stakeholders.

 

Conclusion

The ANAO report on remote housing in the NT is an extraordinary resource for those interested in understanding the current state of remote housing provision. It is also a flawed document. It under-emphasises the levels of serious mismanagement of the program by NIAA; documents, yet downplays, instances where Ministers were misled or badly advised; documents poor program design, and most importantly identifies, but then under-emphasises the extraordinary delays and shortfalls in program delivery and the underinvestment in PTM which protects a Commonwealth asset base and ensures safe housing for tenants.

 

In the world of program delivery, a program delay is a program cut, and there is an in-built incentive for governments to make the initial announcement and then go slow and run the clock down. The losers in this game are Aboriginal and Torres Strait Islander peoples, and in particular the tenants of severely overcrowded housing. The fact that this process can occur in a program providing housing services to one of the most disadvantaged segments within Australian society is extraordinary.

 

The ANAO should sharpen its analytical focus. I assess their report as ‘partly effective’. And NIAA should lift its game. I assess their performance as ‘entirely ineffective’.