Committee conclusions and recommendations
3.1
Fully informed decision-makers are essential to governments delivering funding that appropriately supports policy objectives. The advice provided to Ministers, as well as supporting documentation, forms the basis for which funding is approved. The Commonwealth Grants Rules and Guidelines (CGRGs) set out the minimum mandatory requirements the Government expects for departments providing advice to Ministers approving funding expenditure.
3.2
Given the significant role of Ministers in approving grant funding, it is of concern to the Committee that the ANAO found departments’ advice to Ministers was deficient, including instances of non-compliance with the CGRGs. The Committee wishes to highlight that advice to Ministers must be accurate, complete and contain sufficient information to comply with the Government’s grants policy framework.
3.3
The Committee notes the ANAO’s observation that in its experience of auditing against the CGRGs, ‘the quality of the advice to the Minister does involve rankings and recommendations that are based on the outcomes of the assessment done under the guidelines’. Departments’ written advice should always include information that clearly: outlines the application and selection process undertaken (including the criteria used to select potential grant recipients); indicates whether the assessment process followed the published programme guidelines; shows which applicants have been assessed as eligible; and specifies application assessment results. Application assessment results should include the assessed degree of merit of the proposed grant/s relative to the grant programme’s guidelines, so that Ministers can clearly see the extent to which respective applications met the selection criteria.
3.4
The Committee also recognises that inadequate record keeping was again highlighted by the audit findings (similar to the issues discussed in Chapter 2 regarding application and assessment processes). Departments must maintain contemporaneous records to support recommendations provided for funding, particularly where applicants were previously assessed as unsuccessful in an earlier phase of a grant program. Further, retaining signed briefs of the total amount approved, without supporting records detailing project approvals, does not provide adequate assurance as to the specific projects/activities that have been approved or make clear the terms of that approval. The Committee urges better attention to good administrative practice dictated by the CGRGs.
3.5
Appropriate templates, training (including maintaining formal training registers) and supporting guidance are all tools that departments can develop, or further build upon to strengthen their compliance with the CGRGs. These mechanisms assist to mitigate the risks and associated consequences of providing inaccurate and incomplete advice to Ministers.
3.6
The Committee notes that the Grant Framework Working Group (led by the Department of Finance) is developing a suite of grant guideline and agreement templates, along with supporting documents, to improve application and decision-making processes. The Committee strongly supports the plan for these templates, once finalised, to become mandatory across the Commonwealth public service, particularly in-light of the Streamlining Grants Administration Initiative.
3.7
Notwithstanding the importance of templates and guidance, the Committee wishes to highlight that the evidence received and reviewed in this area of grants administration shows that the issues are not just system or process related, but are also cultural. The Committee finds this particularly concerning, as departments oversee the allocation of hundreds of millions of dollars in public grants funding. Accordingly, the Committee considers there is a need for departments to instil cultural change, so that newly strengthened practices, in particular with respect to record keeping, are strongly embedded and applied by staff within a short time-frame. Training, and monitoring whether staff have been formally trained, particularly in the Government’s grants framework, is one of the fundamentals to influencing cultural change and determining progress towards a department-wide cultural shift.
3.8
The Committee recommends that the Department of the Environment and Energy, the Attorney-General’s Department and the Department of the Prime Minister and Cabinet, ensure that they:
measure the number of staff formally trained with regard to the Commonwealth Grants Rules and Guidelines, including implementing where necessary, arrangements to conduct this activity; and
quickly rectify skills gaps so that sufficient expertise is retained so as to ensure compliance with the Commonwealth Grants Rules and Guidelines, including but not limited to record keeping requirements within the guidelines.
3.9
The Committee also notes that the ANAO made three recommendations, one for each of the respective departments, to ensure compliance with the CGRGs and address continuing deficiencies in their approach to: advising decision-makers about those grant applications that should be funded and those that should be rejected. The Committee is pleased that the respective departments are making progress against these recommendations, and emphasises that full implementation is critical. In Chapter 4, the Committee will recommend that each department separately report back to the Committee on further progress against these recommendations.
Review of the evidence
3.10
This section focusses on the evidence presented before the Committee regarding the advice to decision-makers provided by the:
Department of the Environment and Energy (DEE)—for the Award of Funding under the 20 Million Trees Programme (20 Million Trees);
Attorney-General’s Department (AGD)—for the Living Safe Together Grants Programme (LST); and
Department of the Prime Minister and Cabinet (PM&C)—for the Indigenous Advancement Strategy (IAS).
Award of Funding under the 20 Million Trees Programme–DEE
3.11
The objective of the ANAO’s audit into 20 Million Trees was to assess the effectiveness of DEE’s award of funding. To form a conclusion against this objective, the ANAO examined a number of the department’s activities, including whether the department provided appropriate information to the decision-maker to inform their funding decisions.
3.12
In examining this aspect, the ANAO identified that for three of the 20 Million Trees grant funding streams DEE’s advice to the then Minister addressed the ‘minimum requirements outlined in the CGRGs’, including clearly stating that the spending proposal considered for approval is a ‘grant’.
3.13
However, the ANAO concluded that while DEE addressed most of the minimum policy requirements in its advice to the then Minister, the department:
did not clearly outline the application and selection processes used; or
include other important information to better inform the decision-making process. For example, the advice did not clearly indicate that ineligible applications had been recommended for funding, nor that assessment processes differed from those in the published programme guidelines.
3.14
Specifically, the advice to the Minister for the 20 Million Trees competitive grants stream did not meet the CGRGs requirement that written advice to the Minister, at a minimum, must:
c. outline the application and selection process, including the selection criteria, that were used to select potential grant recipients.
3.15
The department’s advice to the Minister was contrary to the assessment process that had been undertaken. While the advice stated that the eligibility and merit assessment of applications was conducted in accordance with the Programme Assessment Plan, DEE did not follow the assessment plan with regard to Criterion 1, which was to be ‘weighted more highly than the other criteria’. The department advised the ANAO during the audit that at the time the advice was prepared, DEE was unaware that it had ‘failed to follow’ the assessment plan.
3.16
The ANAO also identified that the department did not take the opportunity to draw a number of key issues to the attention to the Minister, such that the Minister was not informed that:
17 applications that had not met eligibility criteria had been recommended to receive funding—ahead of other projects that had met eligibility criteria;
ineligible activity costs of $58 241 were included in the recommended funding amounts; and
17 recommended applications had failed due diligence checks and made false declarations on their application forms.
3.17
One of the ANAO’s two recommendations to DEE focussed on strengthening the department’s practices in this area. DEE should, when providing advice to decision-makers, draw to their attention important issues relating to grant assessment and selection processes, as well as ensuring that briefings contain accurate information.
3.18
The department agreed with the recommendation and submitted that it is ‘committed to… ensuring that decision makers receive accurate briefing… [and that] the report’s findings in this area have informed the way officers provided advice to decision-makers for other grant programs administered in the Department’. The department also informed the Committee that one of its priorities is to understand staff culture and how it can influence the culture surrounding grants administration, particularly adherence to the CGRGs.
3.19
In response to a request in the public hearing, the department provided the Inquiry with additional information on: the assurance processes in-place to ensure briefs to decision-makers contain complete and accurate advice; and specific training provided to assessment officers (Box 3.1 includes the key elements of DEE’s response).
Box 3.1: Assurance processes and training in DEE to support advice to decision-makers
The department’s assurance processes include:
consultation on key advice documents both within the Division and with other relevant areas in the department such as the Financial Services Branch. Key external parties such as the Moderation Panel and the Probity Advisor also assist in ensuring that the Minister receives accurate, complete and relevant advice on grant decisions.
A quality assurance process is being included in Round Three. A sample of application scores will be checked to make sure that the scoring formula has been correctly applied and therefore that the application rankings are correct.
The department requires that all assessors ‘must’ participate in training provided by the department, which includes ensuring that assessors:
[among other things]… understand and agree to follow the Assessment Plan
have a consistent understanding of the assessment and eligibility criteria
have a clear understanding of the Program Guidelines and CGRGs
have a clear understanding of probity principles and requirements, including as set out in the Probity Plan
understand how to assess Applications and allocate a score using the assessment scoring system and the Online Assessment Tool
understand the roles and responsibilities of support staff and decision makers
3.20
DEE does not however maintain a training register, and could not inform the Committee on the number of staff formally trained in the CGRGs.
Living Safe Together Grants Programme–AGD
3.21
The objective of the ANAO’s audit was to assess the effectiveness of the design of, and award of funding under, the LST. As part of this, the ANAO examined the funding recommendations and decisions for the LST and specifically whether the department appropriately briefed relevant Ministers on the assessment results for LST funding. The audit also analysed funding decisions with regard to their transparency and consistency with the published programme guidelines.
3.22
The ANAO’s findings were two-fold: firstly there was ‘a lack of alignment’ between the results of the merit assessment scoring processes and AGD’s funding recommendations; and secondly, the briefings provided for the programme’s two funding tranches did not ‘adequately outline the assessed merit of the applications’ recommended for funding.
3.23
The department’s first briefing recommended awarding 34 projects $1.6 million in grant funding. However, the briefing:
… incorrectly stated that the projects recommended for funding had satisfactorily addressed all of the selection criteria aligned to the policy objective.
3.24
The advice did not include application assessment results, nor did it indicate the assessed degree of merit represented by each in the context of the LST programme guidelines. The absence of these details meant that the Attorney-General was not informed of the applications’ relative merits, ‘nor able to distinguish between the competing applications’.
3.25
AGD’s second briefing, which recommended the Minister for Justice approve $365 122 in grant funding to eight projects, did not meet the minimum requirements of the CGRGs as—advice on how the applications had been assessed to have performed against the published criteria was not included. Four of the eight applications had not met one or more of the criteria.
3.26
AGD advised the ANAO in March 2016, that not providing advice as per the CGRGs was ‘inadvertent’.
3.27
Furthermore, the ANAO’s work revealed that there was a lack of transparency regarding how the eight applications approved in the second tranche were identified and reconsidered. The eight applications were part of the original 62 applications that were unsuccessful and were excluded from recommendation in the first tranche of funding.
Identification and assessment of the additional eight applications
3.28
AGD advised the ANAO that the eight applications, which had previously been assessed as not meeting the programme objectives were, ‘identified as being either a significant stakeholder or were now considered to meet the programme objective and if necessary, would be requested to resubmit their applications’.
3.29
The ANAO report found that AGD applied an ‘iterative process’ to identify these eight applications from the 62 unsuccessful applications from the first funding tranche, and that:
there was a ‘paucity of records to identify the basis on which it was decided why those applications would be progressed’. The ANAO found that during the original assessment, there were 19 applications that received a higher score than six of the eight recommended and approved in the second funding tranche; and
reassessments against the merit criteria were not documented until well after the department had sought and received funding approval from the Minister for Justice and: grant agreements entered into; and funding paid in full to the eight recipients.
3.30
There was interest in the public hearing for the department to offer more specific information outlining why those eight applications were approved, and how the selection process during the second round may have differed from the first round. Contrary to the ANAO’s reported findings, AGD submitted that its assessors were of the view that ‘all recommended applications met the necessary criteria and could be recommended as further funding had become available’. The department also provided the following details on the selection process for the eight potential grant recipients:
State and Territory governments were provided with an opportunity to advise AGD whether any of the 62 grant applications that were not funded warranted further consideration for funding.
AGD reassessed all 62 not funded grant applications against the eligibility and selection criteria and recommended to the Minister that eight of those applications be funded.
Information on the additional eight applications was captured in assessment templates for each of the supported applications. This information was collected from the original assessment sheets and an assessment table outlining how the applications met the LST policy objectives.
3.31
At the public hearing, AGD was asked to advise what information was conveyed to the Minister regarding the eight additional grants and the processes. AGD responded that the Minister was provided with an organisational overview of each applicant, the activities to be delivered, as well as the recommended funding amount. Further, the Minister was also advised that AGD was ‘conducting bona fides checks’ in consultation with State and Commonwealth law enforcement and security agencies, prior to offering any approved funding.
3.32
More broadly, the ANAO report identified that if AGD only recommended those applications that were eligible and had been scored as satisfactorily meeting the published merit criteria—only half (21 applications) of the 42 recommended and approved, should have been successful. Funding for these 21 applications would have totalled $1 million of the $1.9 million that was ultimately allocated.
3.33
Clarification was sought from the department, to determine why a total of $1.9 million was awarded under the program, when initial funding of $1.6 million was approved by the Attorney-General for the first funding tranche. AGD advised that the $1.9 million comprised of:
$1 million from the $13.4 million allocated over four years to build nation-wide CVE capability;
an additional $0.9 million, which was redirected from underspends in the portfolio.
3.34
Regarding the redirected funds, the department informed the Committee that after a process of identifying priority areas that would benefit from additional funding, the department put forward a proposal for additional funding to be directed to the LST.
3.35
At the public hearing there was interest in better understanding the breakdown and expenditure related to the $13.4 million in funding committed over four years (commencing July 2014) for the Countering Violent Extremism programme. AGD advised that the bulk of the funding has been prioritised towards the establishment of Jurisdictional Intervention Programmes, one of these being LST. Table 3.1 shows the allocation breakdown of the $13.4 million, with 72 per cent ($9.577 million) of the $13.4 million allocated to Jurisdictional Intervention Programmes, as well as the funding committed (as at May 2017).
Table 3.1: Countering Violent Extremism—breakdown of funding allocation
|
|
($million)
|
($million)
|
|
Departmental funding and programme administration
|
$1.669
|
$1.697
|
|
Jurisdictional Intervention Programmes (includes LST grant programme)
|
$9.577
|
$8.474
|
|
Community Awareness and Education
|
$1.455
|
$1.003
|
|
Online Safety
|
$0.66
|
$0.302
|
|
TOTAL
|
$13.361
|
$11.476
|
Source: AGD, Submission 4.2, Additional information regarding response to questions on notice, p. 1.
3.36
The department submitted that it is on ‘target’ to expend the full allocation of $13.361 million (over the four year period to 30 June 2018).
3.37
The ANAO made one recommendation in its report to AGD, which consisted of two parts. The second part stated the need for the department to effectively address the continued shortcomings in its approach to ‘advising decision-makers about those applications that should be funded and those that should be rejected’.
3.38
The department agreed with the recommendation and in its submission to the Inquiry outlined a number of actions taken to implement improvements in this area including:
an updated grants intranet page that now highlights the contents of the Department of Finance’s Resource Management Guide No. 412. The Guide provides both a better practice checklist for officials preparing grant guidelines, as well as a checklist of items that officials should consider when preparing briefs for ministers; and
specific requirements in relation to briefing decision-makers as part the development of mandatory staff checklists and guidance, which were circulated to the department’s grant programme areas on 5 September 2016.
Indigenous Advancement Strategy–PM&C
3.39
The ANAO’s audit into the IAS assessed whether PM&C had effectively established and implemented the strategy to achieve the Government’s outcomes. To form a conclusion against the audit objective, the ANAO examined a number of areas, including the department’s administration of grants for the IAS and compliance with the CGRGs.
3.40
The ANAO’s assessment of whether PM&C provided complete, accurate and timely advice to support the Minister in the role of decision-maker concluded that the list of projects recommended to the Minister for approval did not provide:
sufficient information to comply with the mandatory requirements of the CGRGs; or
support informed decision-making (and also contained administrative errors).
3.41
The department provided initial funding recommendations to the Minister on 1 March 2015, recommending 1278 projects for a total of $917 million. Revisions were made and presented to the Minister on 3 March 2015, which instead recommended funding of $844.8 million. The Minister received several more recommendations, as the department had to: correct administrative errors in funding amounts; fill service gaps; and supplement projects that had been provided insufficient funding. These recommendations were:
… substantively completed by June 2015, and the total value of the adjustments was approximately $240 million.
3.42
A spreadsheet listing the projects was the format used to present the department’s recommendations. The spreadsheet contained descriptive information such as project locations and electorates. However, the ANAO highlighted several ‘significant shortcomings’. Inconsistent with the minimum requirements of the CGRGs, there was an absence of assessment information informing the Minister of the extent to which the projects met each of the five Strategy selection criteria. The department advised the ANAO that ‘assessment’ and ‘need’ scores were provided to the Minister in its initial $917 million recommendation brief. The department was not able to provide the supporting evidence.
3.43
Furthermore, the ANAO concluded that the department:
did not retain adequate records of the information it provided to the Minister. For example, the ANAO was provided with lists of recommendations for several key briefs, however, were later advised that they were incorrect. The recommendations were ‘not as described in the relevant brief’, or ‘did not match the values listed in the relevant brief’; and
did not maintain adequate records of Ministerial approval for grant funding. The ANAO outlined that while signed briefs containing the total approved funding amount were retained, adequate records of the supporting attachments which detailed project approvals were not kept. As a result, there was a lack of assurance as to the specific projects (and project amounts) that were approved, making the terms of those approvals ‘unclear’.
3.44
The ANAO’s report made four recommendations, one of which targeted PM&C providing sound advice to the Minister for Indigenous Affairs about the IAS, such that PM&C:
a.
clearly and accurately outlines the basis for funding recommendations; and
b.
documents the outcomes of the decision-making process.
3.45
The department agreed with the ANAO’s recommendation and informed the Committee that since the IAS’ initial funding round improved grant assessment processes have been implemented. In response to this recommendation, PM&C specifically stated that:
Each brief submitted to the Minister for consideration includes a range of information to support funding recommendations. Standardised briefing templates have been established for briefing purposes to achieve consistency.
3.46
The department further submitted that these standardised Ministerial/briefing templates and supporting guidance were:
developed with reference to the CGRGs, Public Governance, Performance and Accountability Act 2013, the IAS Guidelines and where applicable, application kits; and
cleared through PM&C’s Legal Services Branch.
3.47
PM&C, as a member of a number of government committees, is part of the Grant Framework Working Group (led by the Department of Finance). PM&C further submitted to the Committee that the working group is developing (in consultation with government and non-government stakeholders) a suite of templates to improve grants application and decision-making processes. The finalised templates ‘will become mandatory’ across Commonwealth departments.