On 19 March 2015, the following matters were referred to the Senate
Finance and Public Administration References Committee (committee) for inquiry
and report by 18 June 2015:
The impact on service quality, efficiency and sustainability
of recent Commonwealth Indigenous Advancement Strategy tendering processes by
the Department of the Prime Minister and Cabinet, with particular regard to:
the extent of consultation with service providers concerning the size,
scope and nature of services tendered, determination of outcomes and other
elements of service and contract design;
the effect of the tendering timeframe and lack of notice on service
collaboration, consortia and the opportunity for innovative service design and
the evidence base and analysis underlying program design;
the clarity of information provided to prospective tenderers concerning
service scope and outcomes;
the opportunities created for innovative service design and delivery,
and the extent to which this was reflected in the outcomes of the tender
the number of non-compliant projects, the nature of the non-compliance,
if and how they were assisted, and how many of these were successful;
analysis of the types, size and structures of organisations which were
successful and unsuccessful under this process;
the implementation and extent of compliance with Commonwealth Grant
- the potential and likely impacts on service users concerning service
delivery, continuity, quality and reliability;
the framework and measures in place, if any, to assess the impacts of
these reforms on service user outcomes and service sustainability and
the information provided to tenderers about how decisions are made,
feedback mechanisms for unsuccessful tender applicants, and the participation
of independent experts in tender review processes to ensure fairness and
the impact on advocacy and policy services across the sector;
factors relating to the efficient and effective collection and sharing
of data on outcomes within and across program streams to allow actuarial
analysis of program, cohort and population outcomes to be measured and
the extent of contracts offered, and the associated conditions, to
the effect of mandatory incorporation under the Corporations
(Aboriginal and Torres Strait Islander) Act 2006 on Indigenous organisations
receiving grants of $500,000 or more per annum;
the effect and cost impact of delays in the assessment process and the
extension of interim funding on organisations pending the outcome of the
Indigenous Advancement Strategy; and
- any other related matters.
The Senate subsequently granted an extension of the reporting date to
26 November 2015.
On 9 November 2015, the Senate granted an extension of time for reporting until
3 March 2016
which was subsequently extended to 16 March 2016.
Conduct of the inquiry
The inquiry was advertised in The Australian and on the
committee's website. The committee also contacted a number of relevant
individuals and organisations to notify them of the inquiry and invite
submissions by 30 April 2015.
The committee received 86 public submissions. A list of individuals and
organisations that made public submissions, together with other information
authorised for publication by the committee is at Appendix 1. The committee
held public hearings in Canberra on 29 June 2015 and 1 March 2016. A public
hearing was also held in Darwin on 16 February 2016. A list of witnesses who
gave evidence at the public hearing is at Appendix 2.
Submissions, additional information and Hansard transcripts of evidence
may be accessed through the committee website at: www.aph.gov.au/senate_fpa.
The committee thanks all the individuals and
organisations that made submissions to this inquiry and appeared at the public
Background to the Indigenous Advancement Strategy
Streamlining of the government's Indigenous programs was suggested as an
efficiency measure by the National Commission of Audit (NCA) in its Phase One
report of February 2014, which recommended:
...significantly consolidating and rationalising Commonwealth
Indigenous-specific programmes, bodies, committees, councils and boards, and
ensuring programmes and reporting are focussed on outcomes. The existing 150 or
so Commonwealth Indigenous programmes and activities should be consolidated
into no more than six or seven programmes.
The Department of the Prime Minister and Cabinet (PM&C or the
Department) told the committee that groundwork for streamlining Indigenous
programs had been carried out by the Australian National Audit Office (ANAO) and
the Department of Finance.
Ms Liza Carroll, Associate Secretary, Indigenous Affairs, PM&C, explained
that the ANAO report:
...found that since July 2007 a total of 820 organisations had
received funding from 84 different programs. On average each organisation had
4.5 funding agreements, and they were required to submit over 20,000 performance
and financial acquittal reports, and that is the key driver for the reform. We
acknowledge, though, that clearly it is a big step for organisations—in
particular, Aboriginal and Torres Strait Islander organisations—to make the
The 2014-15 Budget announced that all of the government's programs,
grants and activities for Indigenous Australians would be rationalised and
streamlined under the new Indigenous Advancement Strategy (IAS), which would be
administered by PM&C.
The 2014-15 Budget reported a $534.4 million saving to the Indigenous
Affairs portfolio through the rationalisation of Indigenous programs. According
to the 2014-15 Budget papers, the rationalisation would eliminate duplication and
Savings from the health portfolio measures were to be reinvested in the Medical
Research Future Fund, with the other savings redirect to repair the Budget
and fund policy priorities.
Implementation and objectives of
From 1 July 2014, over 150 programs previously delivered across a range
of government portfolios were consolidated into five IAS funding streams, administered
by PM&C, namely:
Jobs, Land and Economy;
Children and Schooling;
Safety and Wellbeing;
Culture and Capability; and
Remote Australia Strategies.
The stated objective of the IAS is to improve the lives of Indigenous
Australians, with a particular focus on achieving this by:
getting Indigenous Australians into work, fostering Indigenous
business and ensuring Indigenous people receive economic and social benefits
from the effective management of their land and native title rights;
ensuring children go to school, improving literacy
and numeracy and supporting families to give children a good start in life;
increasing Year 12 attainment and pathways to
further training and education (including higher education);
making communities safer so that Indigenous people
enjoy similar levels of physical, emotional and social wellbeing as that
enjoyed by other Australians;
increasing participation and acceptance of
Indigenous Australians in the economic and social life of the nation; and
addressing the disproportionate disadvantage in
The IAS is also intended to make the grants process
more efficient and effective for applicants. In July 2014, PM&C released
the IAS Guidelines to advise potential applicants for funding, which explained
The Strategy has been designed to reduce red tape and
duplication for grant funding recipients, increase flexibility, and more efficiently
provide evidence based grant funding to make sure that resources hit the ground
and deliver results for Indigenous people.
PM&C has stated that the IAS will be supported
by the establishment of a dedicated Regional office network in PM&C:
The IAS is supported by a new Regional office
network in PM&C, which positions senior decision makers close to the people
and communities they work with. Staff in the PM&C Network work closely with
funded providers and communities to develop and implement local solutions to
improve outcomes in the Government's priority areas.
The IAS Guidelines provide further detail about the nature and purpose
of this network:
Staff in the PM&C Network will engage with communities to
negotiate and implement tailored local solutions designed to achieve results
against government priorities. Implementation of the PM&C Network will
commence from 1 July 2014 with a 12-18 month transition period.
Further information on the network was provided in the submission from
PM&C which included a map of the regional network:
The Department has refocussed its regional Network to spend
more time working directly with communities to drive practical change. Network
staff will play an integral role in grants administration. The Network has moved
from a state and territory based structure to a regional model. The new model
comprises 12 regions across Australia reflecting regional similarities in
culture, language, mobility and economy.
The PM&C network comprises of a National Director, based in
Canberra, and Regional Managers based in each region. The National Director
oversees the Network. Network staff report to the National Director, through
their Regional Manager, ensuring greater responsiveness and quicker decisions.
Regional Managers have a leadership role in ensuring all activities support
improved outcomes in Indigenous communities, and that programmes are meeting
the objectives of Government.
There are 37 offices in capital cities, regional and remote
locations (Attachment C). The Network has an additional presence in
approximately 75 communities. The Network will work closely with communities
and other local stakeholders to ensure the implementation of tailored local
solutions to improve outcomes and support innovative solutions.
The Minister for Indigenous Affairs has overall
responsibility for administering the IAS, as outlined by the IAS Guidelines:
The final decision about grant funding will be made by:
the Minister on advice provided by the Department; or
the Department where the Minister delegates authority to the Department;
where funding is to perform representative body functions under the Native
Title Act 1993, by the Secretary of the Department.
PM&C is responsible for developing and
disseminating all information and application material for applicants to
funding rounds, in accordance with the aims and objectives of the IAS. The
Department is also responsible for administering the application process and
maintaining oversight of programs undertaken by successful applicants:
The Department will be responsible for
notifying applicants of the outcomes of any Grant Funding arrangement process
and will be responsible for responding to queries in relation to the
application process, and for resolving any uncertainties that may arise in
relation to application requirements. The Department will also manage the Grant
Funding arrangements under the Strategy and undertake all assessment processes.
The Department will also be responsible for all management and monitoring requirements
of successful applicants in any process under the Strategy, including managing
Grant Funding agreements.
Total amount of Indigenous funding
administered under the IAS by PM&C
The total Indigenous-specific funding currently managed
by PM&C is $8.5 billion, which consists of:
$4.8 billion over four years to the IAS;
$3.7 billion allocated through National Partnership
Agreements, Special Accounts, Special Appropriations.
The IAS Guidelines also make it clear that some
funding for Indigenous programs remain with other departments and PM&C
A significant level of grant funding is also
available through Indigenous-specific and mainstream programmes delivered by
other agencies, as well as PM&C Indigenous Portfolio bodies.
Accessing funding under the IAS
The IAS Guidelines state that funding for relevant
programs can be accessed 'through a variety of means and at various times
throughout the year'.
However, the guidelines make it clear that the 'bulk of funding' under the IAS
will be delivered by 'open competitive grants rounds' that will:
...open and close to applications at nominated dates, with
eligible applications assessed against the assessment criteria set out for the
relevant outcome in the application kit, and then prioritised against
competing, eligible application for the available grant funding.
The guidelines also outline some further funding opportunities that are
available under the IAS outside of the competitive grants rounds, namely:
targeted or restricted grant rounds where the Department approaches particular, potential applicant
or applicants and invites them to submit a proposal to deliver an outcome.
Targeted grant rounds may be open to existing grant funding recipients as well
as other entities. The targeted entities will be selected based on the
specialised requirements of the outcome/s required. Targeted rounds will be
open to a small number of potential providers based on specialised
direct grant allocation processes where the Department directly approaches a new provider or an existing
Grant Funding Recipient to expand their current service delivery and/or
undertake new service delivery. In these cases, the Department may assess the
grant funding recipients current performance and capacity to deliver an
expanded service, or capability to deliver a new service.
a demand-driven process
where applications may be submitted at any time and will be assessed on a value
for money basis against clear selection criteria.
Moreover, the guidelines also provide for PM&C to make 'one-off or
ad hoc grants that do not involve a planned selection process, but are designed
to meet a specific need, often due to urgency or other circumstances'.
The IAS contains a new stipulation that organisations receiving more
than $500,000 in a single year from an IAS grant must be incorporated under
Organisations receiving grants of $500,000 or more in a
single financial year from funding administered by the Indigenous Affairs
portfolio within the Department of the Prime Minister and Cabinet are required
to incorporate under Commonwealth legislation.
Under this stipulation, Indigenous organisations must incorporate under
the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI
Act), and other organisations must incorporate under the Corporations Act
2001 (Corporations Act).
The IAS Guidelines state that
organisations are permitted to apply for funding before becoming incorporated,
but must incorporate within six months of being awarded funding, unless granted
an exemption. The guidelines also make it clear that the costs of incorporating
must be met by the organisation:
Organisations will have six months from the date of execution
of the Agreement or contract variation to comply with the requirement. The
Department may consider longer transition periods for organisations that can
demonstrate that more time is required to comply with the requirement. Costs
associated with the administration and registration of organisations
transferring from one regulatory regime to another are to be met by the
Once incorporated, the IAS Guidelines stipulate that organisations
receiving any amount of funding from future IAS grant rounds must continue to
be incorporated bodies.
The PM&C website states that the requirement for incorporation is to
ensure organisations receiving Commonwealth funding for Indigenous programs
'have high standards of governance and accountability'.
However, the Minister can make exemption to the requirement for incorporation on
a 'case-by-case basis', taking into account 'information demonstrating that the
organisation is well-governed, high-performing and low risk'.
Timeline for the first IAS funding
The IAS commenced on 1 July 2014, when the government's 150 Indigenous
programs were consolidated into five IAS funding streams administered by
PM&C, as set out in the 2014-15 Budget.
PM&C released the IAS Guidelines on
1 July 2014, which set out the terms and conditions for applicants wishing to
On 8 September 2014, PM&C announced there would be a six-week open,
competitive grant round for funding under the IAS, commencing on Monday 8 September
2014 and closing at 2.00 pm AEST on Friday 17 October 2014.
In announcing the first IAS funding round, Senator the Hon Nigel
Scullion, Minister for Indigenous Affairs, stated:
This first round will provide funding for
activities that commence from January or July 2015 and provides the opportunity
for organisations with a current funding agreement expiring in the 2014-15
financial year to apply for future funding...It also gives the opportunity for
new organisations to apply for funding under the Indigenous Advancement
The minister commented that the application process made it easy for
applicants to apply for funding from more than one IAS stream:
Organisations will be able to apply for funding from one or
more of the IAS programmes through a single application, and receive a single
funding agreement...This will make it easier to apply and will reduce red tape
with one funding agreement for multiple programmes and deliverables.
The minister also noted that stakeholders could call the local
PM&C offices, on a 1800 telephone number if they had any questions about
The Department outlined that public consultation
was conducted throughout August and early September, and PM&C Network staff
ran a series of public information forums for key regional stakeholders. An
open information session was held at every location where the Department has an
Following the closing of the application period on
17 October 2014, PM&C noted there were a substantial number of non-compliant
applications received. The Department considered that the IAS would achieve a
'wrong outcome' if these applications were not included. Given this, the minister
decided that the non-compliant applications should be included.
On 24 November 2014, the minister announced that
more time was needed to assess the funding applications and that PM&C had
identified 75 service providers which may not have applied for funding through
the grant round. As a result the minister announced that organisations with contracts
expiring on 31 December 2014 would receive a six month funding extension and
outcomes from the round should be known in early March 2015.
Following the announcement of the funding outcomes ($860
million worth of funding allocated to 964 organisations to deliver 1, 297
projects) on 4 March 2015,
and while the negotiation of funding agreements was occurring, PM&C
undertook a 'gap filling' process where possible gaps in service provision were
conveyed through the following sources: negotiations with individual service
providers around their contract; regional managers; and
individuals/organisations which contacted PM&C directly. PM&C described
this last process as 'less systematic'.
It would also appear that as well as contacting PM&C directly some
individuals/organisations contacted the minister directly.
On 24 March 2015, the minister announced that a
list of organisations recommended for funding under the IAS had been published
on the PM&C website. The minister noted that that contract negotiations
were ongoing and funding amounts would be published when the negotiations are
complete and details of each grant will be listed within 14 days of each
agreement taking effect.
On 27 May 2015 the minister 'announced a number of
additional grants aimed at providing longer funding agreements and ensuring that
the service delivery gaps were filled'.
This announcement on
27 May 2015, increased funding by $240 million to $1 billion, with 996 organisations receiving funding for over 1, 350
projects. The minister stated
...the increase from the initial $860 million was
a result of the Government honouring its commitment to provide longer funding
agreements for important frontline services and ensuring that any gaps that
emerged as part of the round were filled as quickly as possible.
IAS funding was scheduled to commence on 1 July
2015. However, at the committee's hearing on 29 June 2015, PM&C told the
committee that while 72 per cent of the funding agreements had been executed,
90 per cent of the negotiations were complete.
In late June 2015, PM&C announced there would
be 'an external review of the IAS guidelines and the processes associated with
the 2014 IAS grant funding round', including consultation with key stakeholders
'over the coming months'.
The department also told the committee that an
internal review was being undertaken by an independent consultant during July
2015, which would consider the PM&C's 'internal processes' including the
planning and efficiency of the grants process, the Department's IT and system
infrastructure, and relevant internal communication and administrative
Structure of the report
The following chapters of this report cover the
Chapter 2 discusses the program design and delivery
Chapter 3 discusses the administration and
reviews of the first funding round.
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