Background

1. The Australian and state and territory governments have committed to address suicide through two national agreements.

• The July 2020 National Agreement on Closing the Gap (Closing the Gap Agreement) includes socio-economic outcome 14: ‘Aboriginal and Torres Strait Islander people enjoy high levels of social and emotional wellbeing’; and target 14: a ‘significant and sustained reduction in suicide of Aboriginal and Torres Strait Islander people towards zero’.¹ Under the Closing the Gap Agreement, governments committed to work in full and genuine partnership with Aboriginal and Torres Strait Islander people in policy development including in relation to ‘social and emotional wellbeing (mental health)’.
• The March 2022 National Mental Health and Suicide Prevention Agreement (National Agreement) includes the objective to implement whole-of-government approaches to suicide prevention, including beyond the mental health system, to progress the goal of zero lives lost to suicide and to deliver a suicide prevention system that is comprehensive, coordinated, consumer focused and compassionate to benefit all Australians.²

2. The Australian Government Department of Health, Disability and Ageing (DHDA) is responsible for administering the National Agreement, providing policy advice on suicide prevention, and administering specific suicide prevention measures.

Rationale for undertaking the audit

3. In 2024, there were more than 3,300 deaths by suicide in Australia. Suicide is the leading cause of death for Australians aged 15 to 44 years. The suicide rate for Aboriginal and Torres Strait Islander people is more than double the rate for non-Indigenous Australians and is increasing.

4. Reducing suicide deaths is a public health priority for all Australian governments. Under the National Agreement, the Australian Government has a national leadership role in suicide prevention. The Closing the Gap Agreement includes a target of a significant and sustained reduction in suicide of Aboriginal and Torres Strait Islander people towards zero. From 2022–23 to 2025–26, Australian Government expenditure on suicide prevention measures was approximately $1 billion.

5. This audit provides assurance to the Australian Parliament over whether Australian Government suicide prevention measures have been informed by robust policy advice and are effectively monitored and evaluated.

Audit objective and criteria

6. The audit objective was to assess whether DHDA effectively developed and monitored suicide prevention measures.

7. To form a conclusion against the objective, the ANAO adopted two high-level audit criteria.

• Has DHDA provided robust policy advice on suicide prevention measures?
• Has DHDA effectively monitored and evaluated suicide prevention measures?

Conclusion

8. DHDA’s development and monitoring of suicide prevention measures was partly effective. The Australian Government committed to address suicide through two national agreements. DHDA did not fully support these commitments through robust policy development, including in genuine partnership with Aboriginal and Torres Strait Islander people, or effective performance monitoring. While new suicide prevention measures were implemented, DHDA has not established arrangements to determine whether outcomes are being achieved.

9. Policy advice on two national suicide prevention strategies and six suicide prevention measures was not fully robust. Advice lacked consideration of program logics, implementation, stakeholder input, evaluation findings, and performance measurement and monitoring. Policy advice included consideration of how the proposed measures would be evaluated. Australian Government commitments to develop policy in partnership with Aboriginal and Torres Strait Islander people were partly met. A lack of clear roles and responsibilities impacted on policy development effectiveness, including the way in which the policy was developed in partnership with First Nations peoples.

10. DHDA’s monitoring and evaluation of suicide prevention measures was partly effective. Nearly four years after the National Mental Health and Suicide Prevention Agreement, and over five years since the National Agreement on Closing the Gap, government objectives to reduce suicide have not been achieved. An appropriate performance measurement framework for suicide prevention agreements, measures and grants was not established. Monitoring and reporting was incomplete, compliance focused, based on unverified performance information and provided little insight into the achievement of intended outcomes. Although evaluations are planned and underway, a lack of fit-for-purpose performance data limits DHDA’s ability to conduct robust evaluations of suicide prevention measures. As a result, there is limited information available to DHDA and the public about the extent to which Australian Government investment in mental health and suicide prevention is contributing to reducing suicide.

Supporting findings

Policy advice

11. In 2019 and 2021, the Australian Government committed to developing two national strategies for suicide prevention: the National Suicide Prevention Strategy and the National Aboriginal and Torres Strait Islander Suicide Prevention Strategy. The National Suicide Prevention Office and Gayaa Dhuwi (Proud Spirit) Australia (Gayaa Dhuwi), respectively, were responsible for developing the strategies. DHDA did not establish clear roles for all parties in the development and approval of the strategies, which impacted DHDA’s ability to effectively advise government and contributed to delays in the strategies being finalised. DHDA’s advice to government on the development of the strategies was not always complete. DHDA’s guidance and instructions to the National Suicide Prevention Office were not fully aligned with its advice to government, and its guidance and instructions to Gayaa Dhuwi were unclear or inconsistent with a commitment to work in partnership. The strategies were initially intended to be finalised in 2021 and 2023 but were released in 2024 and 2025 respectively. As at September 2025, there was no implementation plan and DHDA had not provided advice to government on implementation of either strategy. (See paragraphs 2.4 to 2.28)

12. Policy advice on the establishment or expansion of six suicide prevention measures between April 2021 and March 2022 was aligned with government objectives. Advice did not present stakeholder feedback and largely did not present relevant evaluation evidence, options or specific benefits. Regulatory impact statements were completed for each measure and regulatory costs were estimated for five of six measures. Legal and reputational risks were identified, however proposed mitigations were incomplete. Implementation risks were identified for two of six measures. Between April and October 2024, DHDA advised government on possible extension of four of the suicide prevention measures. Despite having access to evaluation evidence for three of the four measures, the advice to extend provided limited evidence from evaluations. (See paragraphs 2.29 to 2.43)

13. DHDA developed program logics for the six suicide prevention measures examined. None were completed in time to inform policy advice to government and the quality of the models was inconsistent. Advice on the six measures contained limited information on how the measures would be implemented. Advice proposed that all six measures would be evaluated and sought evaluation funding. Advice did not include information on how performance would be monitored or how DHDA would measure success. Evaluation plans were subsequently developed for all six measures. (See paragraphs 2.44 to 2.54)

14. The Social and Emotional Policy Partnership (Policy Partnership) was established in part to reduce Aboriginal and Torres Strait Islander suicide rates. DHDA is the lead Australian Government entity for developing and supporting the Policy Partnership. DHDA put in place governance and funding arrangements for the Policy Partnership that were not consistent with the principles of strong partnership and shared decision-making. As at September 2025, DHDA had not effectively ensured that the Policy Partnership was a genuine partner in suicide prevention policy development. A suicide prevention measure, Culture Care Connect, is an advisory arrangement funded under a grant agreement with the National Aboriginal Community Controlled Health Organisation (NACCHO). By helping to build the Aboriginal community-controlled sector, it contributes to the achievement of Closing the Gap Priority Reform 2, however it does not meet the criteria of a policy partnership. (See paragraphs 2.55 to 2.84)

Monitoring and evaluation

15. Performance indicators for suicide prevention activities at the national agreement and enterprise level have improved and are continuing to develop. For the six suicide prevention measures examined, performance indicators were established for four measures. In addition, performance indicators for grantees were established in grant agreements with third-party providers for four measures. Established indicators largely focus on the delivery of activities and outputs and provide limited information about the impact and effectiveness of that work. Performance indicators in grant agreements are not verifiable due to a lack of a clear measurement and reporting methodology. Overall, there was no performance measurement framework to guide DHDA in its measurement, monitoring and reporting on the Australian Government’s contribution to achieving suicide prevention objectives. (See paragraphs 3.3 to 3.13)

16. DHDA has established arrangements for monitoring and reporting on suicide prevention measures at the agreement and enterprise levels. Arrangements at the program level are largely incomplete and arrangements at the provider level focus on compliance. In practice, DHDA’s monitoring and reporting at the agreement and enterprise level does not provide insight into the achievement of outcomes. DHDA did not monitor or report on program-level performance for the six suicide prevention measures examined. Provider-level performance information was collected but not verified. DHDA evaluated or was evaluating all six measures. Completed evaluations showed some evidence that short-term outcomes were being achieved but identified a lack of fit-for-purpose performance data. DHDA did not publish evaluation findings. (See paragraphs 3.14 to 3.36)

Recommendations

Summary of entity response

17. The proposed audit report was provided to DHDA. An extract of the proposed audit report was provided to the National Indigenous Australians Agency (NIAA), Gayaa Dhuwi (Proud Spirit) Australia (Gayaa Dhuwi), and the National Aboriginal Community Controlled Health Organisation (NACCHO). DHDA’s summary response is reproduced below. Full responses from DHDA and NACCHO are in Appendix 1. NIAA did not provide comments and Gayaa Dhuwi did not provide a letter of response. Improvements observed by the ANAO during the course of the audit are listed at Appendix 2.

Department of Health, Disability and Ageing

The Department of Health, Disability and Ageing (the department) welcomes the findings in the report. The department agrees with three recommendations and agrees in principle with three recommendations. The department is committed to effective implementation of Australian National Audit Office recommendations and is already taking steps to address some of the issues identified in this audit.

The audit identified opportunities to strengthen governance, planning and accountability when developing and monitoring suicide prevention measures. To address these findings the department will clarify suicide prevention responsibilities with the National Suicide Prevention Office, provide advice to government on implementation of national suicide prevention strategies, and develop and embed stronger suicide prevention performance monitoring and reporting frameworks.

The audit also identified opportunities to improve empowerment and decision-making in relation to Aboriginal and Torres Strait Islander stakeholders. The department is committed to working in partnership with First Nations Australians and will prioritise actions to achieve this goal within the scope of the department’s policy remit. The department will also continue to support the delivery of social and emotional wellbeing and suicide prevention initiatives led and designed by Aboriginal and Torres Strait Islander people.

Background

1. The Australian Government (the government) is aiming to reduce Australia’s emissions by 62–70 per cent below 2005 levels by 2035 and to achieve net zero by 2050. It is also aiming to increase the proportion of electricity from renewable sources to 82 per cent by 2030.

2. In October 2022, the government committed $222.43 million over four years from 2022–23 for the Community Batteries for Household Solar program (the program).¹

• The Department of Climate Change, Energy, the Environment and Water (DCCEEW) received $30.6 million to deliver 58 community batteries at pre-determined locations. It engaged the Business Grants Hub (BGH) to run four rounds of grants from 30 January 2023 to 8 November 2024.
• The Australian Renewable Energy Agency (ARENA) received $188.5 million to deliver 342 community batteries. It ran two rounds of grants — the first ran from 31 March 2023 to 29 March 2024, and the second round ran from 17 March 2025 to 1 September 2025.

3. The program aims to lower household electricity costs; contribute to lower emissions; support the electricity network; increase solar hosting capacity; and share benefits with households without solar installations.

Rationale for undertaking the audit

4. The government funded the program in 2022 to contribute to the target of net zero carbon emissions by 2050, and the target of 82 per cent of electricity from renewable sources by 2030.

5. Previous ANAO audits of grants programs administered by DCCEEW or ARENA have found the entities did not always have appropriate arrangements in place to evaluate and report on the achievement of program outcomes.

6. The audit was conducted to provide assurance to the Parliament as to whether DCCEEW and ARENA are effectively managing the program.²

Audit objective and criteria

7. The objective of the audit was to assess the effectiveness of DCCEEW’s and ARENA’s delivery of the Community Batteries for Household Solar program.

8. To form a conclusion against the objective, the following high-level criteria were adopted.

• Was the program effectively designed and planned?
• Were funding decisions made appropriately?
• Have effective monitoring, evaluation and reporting arrangements been established?

Conclusion

9. Delivery of the program by DCCEEW and ARENA is largely effective, consistent with the government’s policy intent and stakeholder feedback. Program planning, assessment and decision-making have largely occurred in accordance with requirements, however, program evaluation was not adequately considered during planning. The program is expected to deliver more than the planned 400 batteries. The program has experienced delays, with 66 per cent of the DCCEEW-funded projects having extended their project end dates by an average of 40 weeks. As at January 2026, 41 DCCEEW-funded and 17 ARENA-funded batteries were operational.

10. Program design and planning was largely effective. DCCEEW and ARENA largely had regard to required program design considerations and developed grant guidelines that largely reflected the government’s policy intent. DCCEEW did not provide the Australian Government with advice on the appropriateness of the pre-determined locations announced during the election. DCCEEW and ARENA did not fully coordinate to consider how different program approaches may influence the overall program outcomes. Both entities took into account stakeholder feedback and legal advice in designing and planning the program, and prepared program probity plans.

11. DCCEEW’s and ARENA’s assessment and decision-making was largely appropriate. Both entities considered external technical advice, in accordance with the grant opportunity guidelines and probity advice. For both entities, there were deficiencies in the management of conflicts of interest. DCCEEW did not assess grant applications against an agreed provision related to the cost per kilo-watt hour (kWh) of battery capacity, potentially impacting value for money.

12. DCCEEW and ARENA have partly effective arrangements to monitor, evaluate and report on the achievement of objectives and outcomes. Both entities are managing grant agreements in accordance with requirements. There have been delays with the delivery of batteries under DCCEEW’s program. Neither DCCEEW nor ARENA adequately prepared for program evaluation during program planning. In 2025, both entities developed approaches to program evaluation. There is a risk of duplicating evaluation effort. All grants must report on progress against program outcomes. ARENA has provided guidance for data collection. DCCEEW has not provided such guidance and it is not clear how reporting will be aggregated to provide evaluation of program outcomes. Public reporting on the program does not provide sufficient information about the effective and efficient delivery of the program.

Supporting findings

Design and planning

13. Program costs and benefits were determined by modelling commissioned by the Australian Labor Party when in opposition. DCCEEW tested this modelling through stakeholder feedback. It did not provide advice to the government on program costs and benefits, the suitability of pre-determined battery locations, or suggest alternative locations. A higher percentage of marginal electorates and Labor-held electorates received community batteries in pre-determined locations. DCCEEW advised the government on the risks to achieving stated program benefits. Grant opportunity guidelines reflected the government’s policy intent. DCCEEW ensured the legal basis for its delivery, had regard to the Commonwealth grants rules and guidelines (2017), and used lessons learnt to inform later grant rounds. DCCEEW did not finalise its probity controls until it assessed round 1 applications. (See paragraphs 2.3 to 2.48)

14. ARENA’s planning for the delivery of the program largely addressed the requirements of its Grants Management Policy. ARENA used stakeholder feedback to design the program, which resulted in some program parameters that differed from the government-approved implementation plan. ARENA and DCCEEW did not fully coordinate to consider how the different program delivery approaches may influence the overall program outcomes. ARENA advised the minister through their office of its intended program design. The minister was not formally advised on how ARENA’s decisions differed from the expected program design parameters. ARENA did not consider how success would be measured during program design. ARENA updated the guidelines in its second funding round based on feedback from round 1. (See paragraphs 2.49 to 2.83)

Funding decisions

15. All grants funded by DCCEEW met eligibility criteria, although grants were not assessed against all provisions in the grant opportunity guidelines, potentially affecting value for money. The average approved amount of grant funding per kWh of battery capacity was $1,586 and the maximum amount was $2,488 per kWh. This was against an agreed provision of $1,000 per kWh. DCCEEW appointed an external technical advisor to assist with grant application assessment. The decision-maker approved funding as recommended and in accordance with delegations, and all funding decisions were appropriately documented. DCCEEW staff involved in receiving BGH assessment recommendations completed conflict-of-interest declarations after receiving BGH’s assessment of round 1 applications, rather than as commencing program involvement. ( See paragraphs 3.3 to 3.34)

16. ARENA assessed applications in round 1 consistent with its core assessment principles of value for money, awarding grants on merit, and achieving program outcomes. Program-specific probity controls did not extend to decision-makers and one potential conflict of interest was not identified for the program. Decisions to award funding in round 1 were made by ARENA’s Board as required, and Board conflicts of interest were managed. ARENA’s Board approved projects for funding as recommended, based on merit and additionality considerations. The Board was provided with appropriate information and reasons for decisions were recorded. (See paragraphs 3.35 to 3.75)

Grants management and evaluation

17. DCCEEW’s ongoing management of grants is in accordance with its responsibilities under agreements with BGH, and DCCEEW’s grants policy. DCCEEW has approved all requested variations, in accordance with documented tolerances and delegations. At August 2025, there had been 78 variations across 58 grant agreements, 88 per cent of which include extensions to project end dates. The average total extension to end dates for DCCEEW projects is 40 weeks. BGH provides DCCEEW with a spreadsheet tracking variations and monthly reports on the progress of individual projects. DCCEEW uses this and information from grantees to track progress of the program against its targets. (See paragraphs 4.3 to 4.20)

18. ARENA’s ongoing management of grants is in accordance with its grants management and variations policies. Milestone payments have occurred following delegate approval of milestone reports. As at September 2025, ARENA had approved 45 variations across 16 grant agreements in accordance with its policy. At January 2026, four projects had extensions to project end dates. During 2025, ARENA established impact teams to improve its visibility over program management. (See paragraphs 4.21 to 4.34)

19. DCCEEW and ARENA have both established program evaluation approaches. There is a risk that evaluation performed by both entities will result in a duplication of effort. Performance measures are set out in the program implementation plan and DCCEEW’s evaluation framework (finalised in October 2025) should allow it to assess the program’s performance against these measures. It intends to evaluate the impact of both the DCCEEW and ARENA components of the program. ARENA did not plan for program evaluation during the design phase, as required by its internal policies. In July 2025, it prepared a program monitoring and evaluation plan and intends to evaluate the program in 2027–28. (See paragraphs 4.35 to 4.65)

20. DCCEEW receives end-of-project reports from grant recipients that contain information that is expected to assist DCCEEW evaluate delivery of the budget measure. Inconsistent methodologies implemented by grant recipients may result in difficulties in collating and validating the information. DCCEEW did not provide any guidance to grant recipients to encourage reporting that could be more effectively collated but expects that its evaluation framework will support qualitative analysis. Similarly, ARENA requires that grant recipients report on progress against program outcomes at milestones and the completion of the project. ARENA has provided guidance on data collection methodologies. Both entities produce a range of reporting. Public reporting does not include the operational status of batteries. (See paragraphs 4.66 to 4.92)

Recommendations

Summary of entity response

21. Relevant parts of the proposed audit report were provided to DCCEEW and ARENA. Summary responses are reproduced below, and full responses are at Appendix 1. Improvements observed by the ANAO during the course of this audit are listed in Appendix 2.

Department of Climate Change, Energy, the Environment and Water

The department acknowledges the ANAO’s audit report on the Community Batteries for Household Solar program and appreciates ANAO’s recognition that administration of the Community Batteries for Household Solar program has been largely effective.

The department is committed to continuous improvement and agrees with the two recommendations for the department. Actions to operationalise each recommendation are either in place or underway.

Australian Renewable Energy Agency

We are pleased the ANAO’s conclusion is that ARENA’s delivery of the program has been largely effective, with program design, assessment and decision-making largely appropriate, and with monitoring and reporting arrangements in place. ARENA accepts all recommendations and has commenced implementation.

Background

1. The purpose of the Department of Foreign Affairs and Trade (DFAT) is to make Australia stronger, safer and more prosperous, to provide timely and responsive consular and passport services, and to ensure a secure Australian Government presence overseas. In 115 posts across 86 countries, DFAT is responsible for ensuring a consistent and efficient use of government resources overseas, including managing properties, staff and conditions of service, health and safety, security, information and communications technology, and finance.

2. An overseas Australian Government presence has been identified as fundamental to Australia’s ability to meet strategic challenges, protect Australians overseas and advance Australia’s interests abroad. Reflecting this, managing the Australian Government’s overseas network is one of six key activity areas for the department.

3. The Auditor-General has previously examined the protection of missions and staff overseas in two audits.¹ DFAT received $394.3 million ($338.8 million in 2018–19 and $55.5 million 2020–21) to deliver the Security Enhancement Program (SEP). The SEP objectives were to satisfy the Government’s duty of care to provide a safe and secure environment for staff and visitors to Australia’s overseas missions. The SEP was described by DFAT as the ‘vehicle’ through which DFAT implemented the ANAO’s recommendations.

Rationale for undertaking the audit

4. The audit was undertaken because of the importance of the Australian Government’s overseas network. Implementation of the SEP involved significant procurement and contract management activity.

5. The audit provides independent assurance to the Parliament about whether DFAT obtained value for money in its procurement and contract management activities associated with the Security Enhancement Program, including by conducting procurement processes consistent with the principles and requirements set out in the Commonwealth Procurement Rules (CPRs).

Audit objective and criteria

6. The objective of the audit was to determine whether DFAT effectively conducted procurements for the SEP, achieving value for money and complying with the CPRs.

7. To form a conclusion against this objective, the following high-level criteria were applied:

• Were open and competitive procurement processes employed?
• Did the procurement processes demonstrate the achievement of value for money?
• Were the contracts managed appropriately to achieve the objectives of the procurement?

Conclusion

8. Procurements conducted by the Department of Foreign Affairs and Trade for the Security Enhancement Program (SEP) were partly effective in achieving value for money and partly complied with the Commonwealth Procurement Rules. Shortcomings in procurement and contract management affect the department’s ability to realise the intended program benefits.

9. DFAT largely conducted procurements for the SEP through approaches that involved competition. Of the 14 procurements examined by the ANAO, 64 per cent involved competition, including a number conducted via open tender. The remaining 36 per cent did not involve competition.

10. Procurement processes for the SEP have not consistently demonstrated the achievement of value for money. Two shortcomings were the department not including evaluation criteria in request documentation and procurement records not demonstrating that contracts had been awarded to the candidate assessed against evaluation criteria as representing value for money. DFAT did not conduct procurements to the ethical behaviour standards required under the CPRs.

11. Contract management by the department was partly appropriate. In four of the 14 engagements examined in detail by the ANAO, the department obtained the full scope of the contracted works/services, in the originally agreed timeframe and consistent with the cost estimated at the time the contract was signed. Effective management of contracts contributed to the department realising the expected benefits from the Security Enhancement Program. The management of other contracts where contractual outcomes varied in terms of scope, cost and/or timeframe detracted from the department’s ability to realise the expected benefits from the Program.

Supporting findings

Open and competitive procurement

12. Of the 14 arrangements examined in detail as part of the audit, five (36 per cent) originated through an open procurement approach. The absence of open competition did not place DFAT in a strong position to obtain, and demonstrate, the achievement of value for money. The extent of open competition employed by the department is not consistent with the principle of open competition espoused by the Commonwealth Procurement Rules. (See paragraphs 2.2 to 2.5)

13. Competitive procurement approaches were employed for nine of the 14 engagements (64 per cent). In addition to the five procurements that involved an open approach to the market, there were four procurements where DFAT offered the opportunity to more than one candidate. For five procurements (36 per cent) there was no competition. (See paragraphs 2.6 to 2.10)

Value for money

14. DFAT’s approach to evaluation criteria was not consistently in accordance with the CPRs as it did not include evaluation criteria in request documentation for four of the 14 procurements examined (29 per cent). This related to two procurements where there was no competition, and two procurements where there was limited competition. The department consistently included evaluation criteria in the approach to market where it undertook an open tender process.

15. Where evaluation criteria were advised to candidates, they were applied to evaluate the responses received. (See paragraphs 3.3 to 3.7)

16. For nine of the 14 engagements (64 per cent), the department’s procurement records demonstrated that contracts had been awarded to the candidate assessed against evaluation criteria as representing value for money. (See paragraphs 3.8 to 3.13)

17. DFAT did not demonstrate a consistent practice of maintaining records commensurate with the scale, scope and risk of the procurement. Shortcomings were most common in relation to the request documentation issued by the department to candidates (for example, for 29 per cent of engagements the request documentation did not identify the evaluation criteria that would be applied) and the records of the planning for, and conduct of, evaluation of candidates (there was no evaluation plan and no evaluation report for 86 per cent of engagements). ( See paragraphs 3.14 to 3.24)

18. DFAT did not conduct procurements to the ethical behaviour standards required under the CPRs. Probity plans did not exist for 13 of the 14 engagements (93 per cent) examined in detail by the ANAO. A probity adviser was appointed for five of those engagements (36 per cent). For eight of the 14 engagements (57 per cent), Conflict of Interest declarations were completed by all evaluation panel members and for one of the 14 engagements Conflict of Interest declarations were completed by all persons involved with tender evaluation. This meant that there were insufficient declarations covering evaluation processes for 13 of 14 engagements (93 per cent). There were also instances where persons had declared a Conflict of Interest with departmental records not evidencing any steps having been taken to manage the related risks. Completing and acting on declarations is not solely about recordkeeping; it enables possible threats to independence and potential actual bias to be identified and strategies put in place to manage the resulting risks. (See paragraphs 3.25 to 3.52)

Contract management

19. Of the 14 engagements examined in detail by the ANAO, there were four (29 per cent) where the contractual outcomes were fully effective in delivery having regard to the scope or works/services, cost and timeframe expected at the time the contracts were entered into. (See paragraphs 4.3 to 4.39)

20. DFAT did not meet the AusTender reporting requirements specified in the Commonwealth Procurement Rules in 26 of 62 instances (42 per cent) examined by the ANAO. Deficiencies related to both not meeting the timeframes specified in the Rules, as well as inaccurate/incomplete reporting. (See paragraphs 4.40 to 4.45)

Recommendations

Summary of entity response

21. The proposed audit report was provided to DFAT. The letter of response that was received for inclusion in the audit report is at Appendix 1. DFAT’s summary response is provided below.

The Department of Foreign Affairs and Trade appreciates the ANAO’s independent review of its procurement and contract management practices. The department remains committed to refining these processes, so they ensure value for money, proper handling of probity risks, and successful completion of contracted projects or services. As part of a larger compliance uplift program, the department has already taken steps to address issues, including those identified through this audit.

Background

1. Department of Defence’s (Defence) Land Combat Vehicle System comprises 211 Boxer combat reconnaissance vehicles (Land 400 Phase 2) and 129 Redback infantry fighting vehicles (Land 400 Phase 3). They replace now obsolete vehicles and reflect the 2023 Defence Strategic Review’s call for Army to be transformed for littoral manoeuvre operations from Australia.

Rationale for undertaking the audit

2. With approved project expenditure (at 30 June 2025) of $7.3 billion, the Land 400 Phase 3 project is one of the largest capability acquisition projects in the history of the Army. This audit has been undertaken to provide the Parliament with independent assurance of the effectiveness to date of Defence’s acquisition and contract management of the project.

Audit objective and criteria

3. The objective of the audit was to assess the effectiveness to date of Defence’s procurement of infantry fighting vehicles (Land 400 Phase 3).

4. To form a conclusion against the audit objective, the following high-level criteria were adopted:

• Did Defence conduct an effective tender process?
• Have effective contracting arrangements been established with the contractor to support the achievement of value for money outcomes?

Conclusion

5. Defence’s procurement of infantry fighting vehicles (IFVs) through Land 400 Phase 3 has been partly effective, reflecting trade-offs made between delivery timeframes, future upgrade potential and risk. Defence moved away from its original intent to address an identified capability gap by pursuing a platform with high technical readiness, instead progressing a more developmental acquisition approach that increased exposure to integration and schedule risk. These risks were not clearly communicated to government, nor consistently reflected in tender evaluation and contracting decisions. Defence-mandated integration requirements and moving to design solutions that were not mature and proven in a vehicle of this nature and size have had implications for Defence’s ability to deliver the capability as planned. Consequently, as at February 2026, very high technical risks related to the vehicle’s mobility and lethality capabilities require resolution.

6. Defence’s management of the tender process was partly effective. The process demonstrated broad compliance with procurement requirements and probity controls were adequate at the project level. Defence did not clearly document or communicate to government how its acquisition approach evolved over time, including in response to the developmental nature of the tendered solutions, nor did it provide advice on the presence of vehicle models and components already available on the market.

7. The tender evaluation process was weakened by inconsistent treatment of risk and price adjustments, as well as the absence of clearly articulated weighting or prioritisation of evaluation criteria in the tender documentation. While Defence documented its rationale for certain cost treatments during evaluation, these approaches were not applied consistently or transparently across tenders. Collectively, these factors reduced the transparency and defensibility of the value for money assessment and limited the extent to which the tender process supported fully informed decision-making.

8. Defence established partly effective contracting arrangements with Hanwha Defence Australia (HDA) to support the delivery of intended contract outcomes. However, there are a number of very high risks to core elements of the vehicle, the impact of which on the long-term project schedule, cost and overall capability are unknown at this stage.

9. The contract includes appropriate arrangements for Defence to assess contractor performance and monitor project progress. Notwithstanding this, Defence has waived certain contractual requirements and is managing contract progress through remediation actions, which overstates the extent to which the project is on schedule. Defence has also not made timely payments to HDA, resulting in a total of $483,929.39 in penalty interest payable by Defence to HDA.

Supporting findings

Land 400 Phase 3 tender

10. Defence complied with process requirements for the development and issuing of the request for tender (RFT) documentation, and the initial screening of tenders. However, the RFT did not provide potential tenderers with a clear and consistent basis for responding to Defence’s documented risk posture and acquisition strategy. Defence’s planning documents consistently indicated a preference to avoid bespoke or developmental outcomes. (See paragraphs 2.4 to 2.18, and paragraphs 2.24 to 2.30)

11. While the RFT stated that Defence was pursuing a ‘mature, proven technology’, it did not define this term, specify minimum system maturity thresholds, or include evaluation criteria addressing system readiness, integration risk or design maturity. Instead, the structure of the RFT — including requirements for non-recurring engineering, system integration and future growth activities — was consistent with outcomes involving material design development. Defence did not document how this approach aligned with its earlier acquisition planning or explain the implications for risk, schedule and cost. As a result, all tender submissions involved varying levels of development and integration risk. (See paragraphs 2.19 to 2.23)

12. Defence’s evaluation criteria were not weighted or prioritised in the published tender documents, reducing transparency and limiting the extent to which Defence’s priorities were communicated to potential tenderers. Although Defence placed greater emphasis on price and capability during the evaluation, this was not documented in the RFT — as required by the Commonwealth Procurement Rules (CPRs). This limited tenderers’ ability to effectively tailor their responses and represented a shortcoming in the procurement process. Defence did not assess tenders more favourably for being non-developmental, nor did it adjust its overall risk posture when all tendered platforms were assessed as developmental to varying extents. (See paragraphs 2.40 to 2.63)

13. Inconsistent application of pricing adjustments between tenderers introduced uncertainty into value-for-money assessments, understating HDA’s cost at Stage 3 by $852.6 million. These factors impacted the reliability of the value for money assessment and the cost per unit of capability, which was a key factor in the final recommendation. By not specifying explicit system-maturity requirements, including the extent to which a non-developmental outcome was sought, Defence did not clearly signal its expectations to the market and was subsequently limited in its ability to adjust risk settings when only developmental solutions were received. (See paragraphs 2.64 to 2.91)

14. Defence established a probity framework for Land 400 Phase 3, requiring personnel to declare any potential conflicts of interest arising from association with potential tenderers and adhere to strict confidentiality obligations. In 13 instances, declarations were reviewed by the probity adviser and additional measures taken (such as statutory declarations to reinforce confidentiality obligations). At the project level, all but one of 174 relevant personnel completed a declaration. In signing declarations, personnel acknowledged a continuing obligation to declare any potential conflicts of interest that might arise in the future. (See paragraphs 2.92 to 2.101)

15. SES/Star ranked personnel were additionally required to complete annual declarations of personal and financial interests. Where a potential conflict of interest existed, personnel were required to outline a strategy to manage it and have this endorsed by their supervisor. Across the six-year period examined by the ANAO, just over half (51.2 per cent) of SES/Star ranked officers fully complied with the requirement to complete an annual declaration. (See paragraphs 2.102 to 2.113)

16. The ANAO did not identify any serious breaches of the policy prohibiting hospitality, gifts or benefits. (See paragraphs 2.114 to 2.117)

17. Contrary to successive Defence procurement reviews, Defence did not provide government with advice on potential mature and proven options for Land 400 Phase 3, even though it possessed this information. Submissions to government omitted reference to the earlier acquisition strategy for a military-off-the-shelf (MOTS) solution and did not discuss the existence or potential cost advantages of MOTS options, nor that all tenders received were developmental. Advice to the Minister for Defence Industry (the Minister) similarly did not address these options, with only limited updates noting the developmental status of prototype vehicles. Progress reporting to the Minister was limited. Progress reporting to senior Defence leadership was regular, but quarterly reports and monthly narratives were limited to project milestones. (See paragraphs 2.118 to 2.127)

Contracting arrangements

18. Defence’s governance arrangements with HDA provide a clear path for escalation and direction on the management of risks and issues to the Land 400 Phase 3 project. There are two very high risks related to the core elements of the vehicle, of which Defence was aware during the Risk Mitigation Activity (RMA). These risks are impacting the project schedule and cost. (See paragraphs 3.5 to 3.33)

19. Defence was advised by independent reviewers that (see paragraphs 3.34 to 3.40):

• delivering the capability within the required compressed schedule is extremely challenging, given there is limited time for issue remediation; and
• it will be a significant, if not impossible, challenge to deliver 129 fully capable IFVs by the end of 2028.

20. Defence’s lack of implementation of recommendations from independent reviews to mitigate technical risks has resulted in delays to the schedule that are yet to be defined. The Land 400 Phase 3 project has also recently been included on the Capability Acquisition and Sustainment Group’s Watch List.¹ (See paragraphs 3.41 and 3.42)

21. The contract includes adequate provisions that allow Defence to monitor and assess HDA’s performance and project progress. Defence has waived certain contractual requirements in order to keep the project on schedule, despite independent advice against this approach. This has resulted in a large number of action items that remain open and remediation action, which has caused delays to the completion of several milestones by agreed dates. Defence has instructed HDA to proceed with contract milestones despite issues with the quality and accuracy of contract deliverables and HDA’s advice to Defence of challenges and risks. Defence is managing contract progress through remediation actions, which obscures underlying schedule slippage. (See paragraphs 3.43 to 3.76)

22. The payment terms included in the December 2023 contract with HDA were noncompliant with government policy. In March 2024, Defence updated the contract to align with the government policy payment terms. Between contract execution and 30 June 2025, 19 (of 83) invoices were paid late, resulting in a total of $483,929.39 in interest penalties payable by Defence to HDA. As at 31 October 2025, Defence had paid HDA a total of $148,129.37, leaving $335,889.48 outstanding for penalties on invoices that were not paid in accordance with the government policy. (See paragraphs 3.77 to 3.93)

Recommendations

Summary of entity response

23. The proposed audit report was provided to Defence. Defence’s summary response is provided below. The full response is reproduced at Appendix 1.

Department of Defence

Defence acknowledges the findings contained in the Auditor General’s report.

Following a rigorous tender evaluation process, the Hanwha Redback Infantry Fighting Vehicle was selected. In 2023, following the Defence Strategic Review, the project was accelerated to deliver the vehicles two years ahead of the original schedule. This required a risk-based delivery approach in partnership with Australian industry.

The acquisition strategy articulated an open approach to market. Military-Off-The-Shelf options were not the agreed acquisition strategy, nor Defence policy at the time.

Defence acknowledges the ‘very high’ risks identified in the report and notes that these risk are subject to mitigation action by the project.

The preferred tenderer offered the best capability to meet Defence’s requirements and the best Value for Money.

Audit objective

1. The audit objective was to assess the design and implementation of the Safer Local Roads and Infrastructure Program (SLRIP). To form a conclusion against the objective, the ANAO examined the following criteria:

• Was the SLRIP designed to support project delivery and achieving value for money?
• Has the SLRIP implementation resulted in improved administration and performance?

Audit conclusion

2. The Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts’ (Infrastructure) design of the SLRIP was largely effective. In response to expert review recommendations, Infrastructure consolidated two sub-programs and introduced five design changes. Early implementation was partly effective. Infrastructure took steps to launch the program and maintain continuity with the previous sub-programs using existing administrative processes. The establishment of a new initiative such as the SLRIP provides opportunities for entities to embrace best practice and strengthen mechanisms to achieve administrative efficiency and such opportunities remain available to Infrastructure. Further improvements in defining value for money considerations, strengthening mechanisms to achieve efficiencies, managing risk, and improved measuring of performance would enhance ongoing delivery of this new program.

Supporting findings

3. The design of the SLRIP was largely effective in supporting project delivery and achieving value for money. Expert reviews were commissioned in 2023 to improve the sustainability and project delivery of the Infrastructure Investment Program (IIP) and its sub-programs. Infrastructure implemented the recommendation from one of these reviews to combine two sub-programs into one, with the SLRIP commencing on 1 July 2024 with five design changes. Infrastructure could have further improved the design and early implementation by applying the lessons from broader IIP reform findings, in particular around risk management, streamlining data systems and managing cost escalation.

4. The SLRIP guidelines set out how Infrastructure will determine value for money for individual projects, based on merit-based criteria. The process could be strengthened by: further consideration of project cost relative to the other criteria; the opportunity to validate and assess applicant information; and consideration of relative need and benefit across the selected projects. The moderation component of the assessment undertaken for tranche two was not referred to in the SLRIP guidelines.

5. The early implementation of the SLRIP was partly effective in improving administration and performance. Infrastructure’s administrative processes for SLRIP applications were processed the same as under the Bridges Renewal Program and the Heavy Vehicle Safety and Productivity Program (including the Heavy Vehicle Rest Area initiative) and it does not adequately track internal assessment and approval timeframes to manage internal efficiencies, with timeframe targets not met for tranches one and two. Risk management of the SLRIP could be improved, particularly through tracking individual project risks and their impact on overall program risk. The SLRIP’s current agreed budget will require careful management to ensure it is expended in line with project funding agreements. Infrastructure has a program logic and draft evaluation framework in place. The outcomes in these documents do not align and the project data being collected will need to be improved to support an outcomes-based evaluation.

Recommendations

6. The ANAO made four recommendations aimed at Infrastructure achieving:

• further transparency in how projects selected achieve value for money (see paragraph 2.51);
• improved tracking and managing the timeframes of funding assessment and approvals (see paragraph 3.6);
• improved risk management (see paragraph 3.23); and
• better use of data to monitor performance and measure outcomes (see paragraph 3.51).

Rationale for undertaking the audit

7. The SLRIP aims to ‘strengthen investment to support the delivery of safer and more productive roads across Australia’. This performance audit provides assurance to Parliament on whether the design and early implementation of the SLRIP is achieving value for money and delivering the expected outcomes.

Audit approach

8. This audit focused on the design and early implementation of the SLRIP to support improvements to future funding rounds and ongoing management of the program. The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $240,000. The team members for this audit were Rowena Thomson, Thea Ingold, Jessica Bracken, Lachlan Rowe, Anne Rainger and Ben Siddans.

Summary of entity response

9. The proposed final report was provided to Infrastructure. The summary response from Infrastructure to the report is provided below. The full response is at Appendix 1.

10. The Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (the department) welcomes the finding that the design of the Safer Local Roads and Infrastructure Program (the Program) was largely effective. The department notes the finding that the Program’s early implementation was partly effective and has asked the ANAO to consider the factual basis and emphasis given to some of the findings and commentary in the report.

11. Notwithstanding the above, the department agrees there are opportunities to further improve some aspects of the program’s implementation. The report’s recommendations will be considered in the review and development of any future program documentation and as part of the program’s outcomes evaluation.

Background

1. The Settlement Engagement and Transition Support (SETS) program is an early intervention program intended to contribute to humanitarian entrants and other eligible vulnerable migrants and communities achieving full participation in Australian society as soon as possible, reducing the chance of long-term welfare dependency and isolation. The objectives of the SETS program are to:

• equip and empower humanitarian entrants and other vulnerable migrants with the tools to address their settlement needs and improve social and economic participation, and community integration;
• build the capacity of small and/or ethno-specific organisations to better support their local communities; and
• foster a whole-of-community approach to achieve settlement and integration outcomes.

2. SETS commenced on 1 January 2019 as a revised version of the Settlements Grants program. The Settlement Grants program had commenced on 1 July 2006.

3. Funding has been awarded to SETS service providers primarily through two funding rounds, with 205 grants awarded worth $579 million across the two rounds.

4. Most providers who have received SETS grants have a long history with the program (see paragraph 1.3). Continuing providers have received a greater share of the available funding than new providers both in the transition to SETS and comparing the second and first SETS funding rounds.

Rationale for undertaking the audit

5. The Home Affairs portfolio is responsible for significant grants programs. Reflecting this, grants administration is an area of ANAO audit focus for the portfolio. SETS is a long standing and high value grant program for the department. The audit provides assurance to Parliament over the effectiveness of the management of the grants in achieving the objectives of the SETS program.

Audit objective and criteria

6. The objective of the audit was to assess whether the management of funding under the Settlement Engagement and Transition Support program was effective in achieving the program objectives and consistent with the Commonwealth Grant Rules and Principles (CGRPs).¹

7. To form a conclusion against the objective, the following high-level audit criteria were applied.

• Are appropriate grant agreements in place?
• Has there been active management to support effective delivery of the grant agreements?
• Are the services being provided to humanitarian entrants and vulnerable migrants?

Conclusion

8. The management of funding under the SETS program has been partly effective in achieving program objectives and partly consistent with the Commonwealth Grant Rules and Principles. The management of grant funding awarded under the SETS program has not placed Home Affairs in a sound position to assure itself that the program has been effective in assisting humanitarian entrants and vulnerable migrants to achieve full participation in Australian society as soon as possible, thereby reducing the chance of long-term welfare dependency and isolation. With the next round of program funding due to commence in July 2027, there is an opportunity to improve the design and administration of the program in pursuit of its objectives.

9. Grant agreements are in place for each grant that was awarded and accepted by the applicant. The signed grant agreements are not appropriate, as they do not:

• include each of the key performance indicators (KPIs) that the grant opportunity guidelines stated would be used to assess service provider performance; and
• clearly and directly link grant payments to the progress with, and performance of, the funded grant activity by each service provider.

10. Variations to the agreements, particularly the variation to extend first round funding by two years, did not adequately address how value for money would be achieved.

11. The approach to managing grant agreements has not been effective in ensuring that service providers consistently meet the requirements of the grant agreements.

• A consistent feature of program administration has been late reporting and data quality issues with reports when they are received. For example, for 11 or more of the 13 reporting periods to date, performance reports submitted by the majority of providers either failed to meet the reporting requirements or required follow up to address service delivery and data quality issues.
• 94 per cent of critical incidents are not reported to Home Affairs, including circumstances where SETS clients have died. Critical incident reporting identifies possible program issues and is a risk management measure which supports the achievement of program outcomes. Home Affairs’ approach has given insufficient weight to the insights that can come from a robust approach to critical incident reporting, instead focussing on reputational risks relating to critical incidents being associated with the program.
• Rollover of annual funding amounts has been common, with less than 35 per cent of service providers reporting that they had fully spent grant funding to provide services to clients each year. In addition, $1.1 million of unspent first round funding was rolled over to the 2024–25 financial year for 28 providers (36 per cent), following which $4.44 million was then rolled over from 2024–25 to 2025–26 for 42 providers (41 per cent). Rollover processes did not seek to identify opportunities to redistribute funding to providers who were fully spending their grant with the potential to then assist further clients.
• 55 per cent of planned assurance visits to providers did not occur. This included visits not occurring for providers identified as having recurring issues with their reporting, and/or as high risk. Where they have been conducted, the visits do not often result in action items being directed to service providers to improve performance. No action items have been directed to any service provider since 2021–22.

12. Services are being provided across Australia, with individual clients primarily located in major cities. Program data indicates that the program has become less successful at targeting recent humanitarian entrants and other vulnerable migrants. There has been mixed performance in aggregate for the program, and within service providers, in relation to key program metrics relating to the clients being assisted and the events/services being provided for the grant funding that was awarded. Performance has also been mixed in terms of the extent to which the data demonstrates the program is improving client independence, participation in Australian society and wellbeing.

Supporting findings

Grant agreements

13. Grant agreements are in place for each grant that was awarded and accepted by the applicant. There were delays in having grant agreements in place for each round. The amount of grant funding specified in the grant agreements varies considerably, with a small number of large providers (or lead entities in a consortium arrangement) receiving a significant proportion of the grant funding. In the first funding round administered by DSS, the obligation to report to the Finance Minister a decision by the Minister to award funding to a not recommended application was not met. (See paragraphs 2.1 to 2.16)

14. Grant agreements have not included a fit-for-purpose framework of measurable deliverables and performance indicators. The approach taken provided benefits for DSS in terms of ease of management of the grant agreements. It was not consistent with the grant opportunity guidelines and does not place Home Affairs, as program owner, in a sound position to assess whether service providers are performing satisfactorily and, consequently, whether program objectives are being met and intended outcomes are being achieved.

15. Under the terms of the grant agreement, an Activity Work Plan (AWP) is to be agreed to identify how the grant activity will be delivered and to measure the success and outcomes achieved for the funded grant program. For the second round, 33 per cent of AWPs were identified by Home Affairs to be missing important information relating to deliverables and timeframes for services to be provided. There have also been delays in AWPs being finalised. (See paragraphs 2.17 to 2.29)

16. Appropriate payment arrangements have not been established. The approach taken does not clearly and directly link grant payments to the progress with, and performance of, the funded grant activity by each service provider. As a result, it does not support proper use and management of relevant money. (See paragraphs 2.31 to 2.44)

17. Value with relevant money was not appropriately addressed in considering and approving grant agreement variations. (See paragraphs 2.45 to 2.62)

Management of grant agreements

18. Grant administration is not ensuring that the grant recipients have met, and are meeting, their reporting obligations.

• Performance reports: Most performance reports (on average 80 per cent) submitted by the grant recipients are incomplete, and/or reveal service delivery or data quality issues. In the 13 reporting periods to date across both rounds, no more than 10 per cent of performance reports have been assessed as receiving a pass. For five of the 13 reporting periods, more providers failed to meet their reporting obligations than were assessed to have met them. Issues have persisted, highlighting that follow up action has been ineffective.
• Milestone reports: Reports are consistently late. For example, 27 per cent of Activity Work Plans (AWPs) have been provided late and 37 per cent of AWP progress reports have been late.
• Critical incident reporting: This reporting was introduced in the first SETS round following a review of the predecessor program. The design of the reporting obligation, and its administration, for that round undermined the intent of, and value from, this reporting. For the second round, the grant agreements did not include a requirement to report critical incidents. Most (94 per cent) critical incidents are not reported to Home Affairs, including circumstances where SETS clients have died. (See paragraphs 3.1 to 3.33)

19. Administration of payments has not been in line with the grant agreements. The most significant issue relates to the rollover of unspent grant funds, with less than 35 per cent of service providers reporting that they had fully spent grant funding for each financial year of the term of the agreement. Rollovers are common across each year covered by the grant agreements for the two rounds. In addition, and at odds with the published grant opportunity guidelines for the second round, Home Affairs allowed $4.44 million of unspent first round funding to be rolled over to the 2025–26 financial year for 42 providers. (See paragraphs 3.34 to 3.55)

20. The arrangements in place provide inadequate assurance over the accuracy and completeness of performance data reported by grant recipients. Following a 2020 internal audit, an April 2021 strategy to address identified data quality issues was not fully and effectively implemented, with data quality issues continuing to be identified in a 2023 evaluation commissioned by Home Affairs and in the ANAO’s Performance Statements Audit work.

21. A key assurance activity for each round was to be a program of site visits to providers. More than 55 per cent of site visits that should have been conducted between 2019–20 and 2024–25 have not been conducted. The planned but not conducted site visits include those to providers where the departments have identified ‘serious governance/service delivery issues’ and some with a history of low quality/late reports. Where they have been conducted, the engagements do not often result in action items being directed to service providers to improve performance. No action items have been directed to any service providers in 2022–23, 2023–24 or 2024–25. (See paragraphs 3.56 to 3.73)

Provision of services to humanitarian entrants and vulnerable migrants

22. The grant agreements included the service locations to be covered by each service provider, with service providers engaged to provide coverage planned for all states and territories. Service provider reporting indicates that services are being provided across Australia, with individual clients primarily located in major cities. Rather than specifying the type and quantum of services to be provided, program design involved the departments identifying key indicators against which service provider performance would be assessed by benchmarking each provider’s performance against other similar providers. Data reported by service providers indicates that over the six years to June 2025, one million individual sessions and nearly 202,000 group sessions were provided to 192,618 clients through 651 service provider outlets. (See paragraphs 4.2 to 4.9)

23. The data reported by grant recipients reveals mixed performance against the performance indicators specified in their grant agreements. It also shows considerable variability in the extent to which service providers, and the program more broadly, appear to have assisted humanitarian entrants and other vulnerable migrants to participate in Australian society. (See paragraphs 4.10 to 4.54)

Recommendations

Summary of entity response

24. The proposed audit report was provided to the Department of Home Affairs and the Department of Social Services. The departments’ summary responses to the report are provided below. Appendix 1 includes the full responses. Changes to program administration that Home Affairs advised the ANAO it had made during the course of the audit are at Appendix 2.

Department of Home Affairs

The Department of Home Affairs agrees with the recommendations of the Australian National Audit Office (ANAO) and welcomes the assurance and insights provided through this audit. The Settlement Engagement and Transition Support (SETS) program has provided critical early-intervention support to more than 200,000 refugees and vulnerable migrants since 2019. A number of enhancements have been implemented as part of the second round of SETS funding which commenced in 2024, including embedding the Refugee and Humanitarian Entrant Settlement and Integration Outcomes Framework, addressing findings from the 2023 evaluation, and streamlining program administration.

In 2025, the Department strengthened data quality through a new attestation process for the Data Exchange (DEX) system and increased engagement with providers through the national Community of Practice to drive consistent, best-practice service delivery. Work is underway to implement the 2026-27 Settlement Grants Quality Assurance Strategy, which will enhance oversight of provider performance and align grant management with the Commonwealth Grants Rules and Principles 2024. The Department is also considering how to embed the audit’s findings into broader grants administration processes.

The Department will continue to work closely with DSS Community Grants Hub to ensure full implementation of all recommendations and continuous improvement in program stewardship.

Department of Social Services

The Department of Social Services (the department) welcomes the insights and opportunities for improvement outlined in the Australian National Audit Office (ANAO) report on the Settlement Engagement and Transition Support (SETS) Program.

The department acknowledges the ANAO’s conclusion that the management of funding under the SETS program has been partly effective, with lessons for the department in strengthening program design and in how best to ensure there is a robust performance framework in grant agreements to support measurement of program objectives.

The department agrees with the two recommendations relevant to it and will take steps to address the suggested opportunities for improvement.

Background

1. In June 2022 the Auditor-General presented for tabling Auditor-General report No. 42 2021–22 Procurement of Delivery Partners for the Entrepreneurs’ Programme¹, and in September 2023 Auditor-General report No. 5 2023–24 Trade Measurement Compliance Activities.² These reports identified deficiencies in the procurement practices and administration of regulatory responsibilities by the Department of Industry, Science and Resources (DISR).³

2. The Entrepreneurs’ Programme provided grants for expert advice and financial support. The audit found that DISR did not comply with Commonwealth Procurement Rules, failed to demonstrate value for money or ensure open competition and did not manage contracts effectively for timely delivery or quality review before payment. The report made 10 recommendations.

3. The National Measurement Institute (NMI) division administers trade measurement laws and undertakes compliance activities. The audit found DISR was partly effective in administration of trade measurement compliance activities due to shortcomings in risk-based governance, reduced monitoring and untimely or ineffective responses to non-compliance. The report made six recommendations.

Rationale for undertaking the audit

4. The appropriate and timely implementation of agreed recommendations is an important part of entities realising the full benefit of an audit or parliamentary inquiry and for demonstrating accountability to parliament. Auditor-General reports identify areas where administration can be improved and make recommendations to improve the delivery of outcomes. Once entities have agreed to implement performance audit recommendations, implementation in line with the intended outcome of the recommendation is important in achieving the full impact of the recommendation.

5. The Joint Committee of Public Accounts and Audit recommended that the ANAO conduct follow-up audits on DISR’s implementation of recommendations on procurement reforms and trade measurement compliance (see paragraphs 1.8 to 1.14). This audit assessed the effectiveness of DISR’s governance arrangements for monitoring and implementing agreed ANAO performance audit recommendations. It provides assurance to parliament that DISR has implemented agreed recommendations appropriately.

Audit objective and criteria

6. The audit objective was to examine whether DISR implemented a selection of agreed Auditor-General recommendations.

7. To form a conclusion against the objective, the ANAO adopted one high-level criterion:

• Did DISR implement agreed recommendations appropriately and within any required timeframes?

8. For the purposes of this audit, an agreed recommendation is agreed in full or in part or agreed in principle with a commitment to undertake a specific action.

Conclusion

9. DISR largely implemented the recommendations examined by this audit to meet the intent and address the underlying findings. It undertook implementation activities to close the recommendations, but in some areas further work is required to ensure the practice is embedded and full benefits are realised. DISR could strengthen aspects of its implementation process, including by incorporating into its procedures consideration of Auditor-General recommendations across the enterprise.

10. DISR largely implemented the agreed recommendations appropriately and within its documented timeframes. It has a process for implementing agreed Auditor-General recommendations within 12 months of report tabling. This covers reporting on progress and endorsement of extension where relevant and closure. DISR followed this process to implement the recommendations but did not meet its agreed timeframe for one recommendation. Of the 16 agreed recommendations across two ANAO reports, it implemented 12 recommendations, largely implemented three and partly implemented one. For the implemented recommendations DISR fully addressed the recommendation intent. DISR closed the recommendation assessed as partly implemented before the NMI had fully implemented Resource Management Guide 128: Regulator Performance (RMG 128), with activities continuing during the audit.

Supporting findings

Implementation of recommendations

11. DISR has a documented process for planning and monitoring implementation of Auditor-General recommendations made to the department. It covers responding to published report recommendations, and reporting on implementation progress and closure. DISR’s procedures should document how it assesses and applies the findings from Auditor-General recommendations across the enterprise. (See paragraphs 2.3 to 2.13)

12. DISR closed all Entrepreneurs’ Programme recommendations and five of the six NMI recommendations within established timeframes. For one NMI recommendation it exceeded the extended timeframe. DISR could document a process to confirm that its implementation activities have achieved the intended outcomes and ensure it realises the full benefits across the enterprise. (See paragraphs 2.16 to 2.29)

13. DISR implemented 12 of the 16 recommendations, largely implemented three and partly implemented one. For the Entrepreneurs’ Programme recommendations DISR took an enterprise-wide approach to implementation and uplift of its procurement practices. DISR could have improved its approach to implementation of the NMI recommendations by ensuring it fully addressed intent before closure, with it finalising activities for one closed recommendation during the audit. DISR introduced or updated several controls to implement the recommendations and following closure established ongoing internal assurance processes, particularly in enterprise-wide procurement assurance activities. This assurance indicates that DISR has opportunities to continue monitoring on a risk basis to address the recommendation intent, fully rectify the deficiencies identified and ensure improvements are embedded. (See paragraphs 2.30 to 2.97)

Recommendation

Summary of entity response

14. The ANAO provided the proposed final report to DISR. Its summary response to the report is provided below. The full response is at Appendix 1.

Department of Industry, Science and Resources

The Department of Industry, Science and Resources (the department) welcomes the ANAO’s findings that the department:

• has largely fit for purpose processes for managing implementation of recommendations.
• has fully or largely implemented 15 out of 16 recommendations that were assessed as part of this audit.
• has undertaken activities at the enterprise-wide level to address specific Entrepreneurs’ Programme recommendations, and continued enterprise-wide assurance and improvement activities past closing the recommendations.

The department acknowledges the findings of the audit, which identified opportunities to strengthen aspects of our procurement and probity practices. The department has increasingly taken an enterprise-wide approach to implementing the Auditor-General’s recommendations. Since the audit, continued work has been undertaken to enhance governance arrangements, improve consistency of practice, and build procurement capability across the department, including embedding key requirements into system-based procurement workflows where appropriate. The department recognises that reviewing and strengthening procurement practices is an ongoing activity and will apply a risk-based approach to target effort where it will have the greatest impact and to support effective and compliant procurement outcomes.

The department notes the ANAO’s assessment of the implementation of Trade Measurement Compliance Activities recommendation 6 as partly implemented. The department acknowledges that the recommendation closure documentation did not include a deliberate mapping to RMG 128; we note that the intent of the recommendation was substantially addressed as actions were either completed or well advanced at the time endorsement for closure was sought. Both the Statement of Expectations and the Statement of Intent have since been published.

The department remains committed to ensuring timely and fulsome implementation of all ANAO recommendations.

Background

1. The National Collaborative Research Infrastructure Strategy (NCRIS) provides national research infrastructure (NRI) grants to selected Australian universities, publicly funded research agencies, and private companies.¹ NRI is defined as ‘nationally significant assets, facilities and services that support leading-edge research and innovation’ (for example, see Case study 1, a full list of NCRIS funded projects is at Appendix 3).

2. NCRIS was established in 2006 in response to the March 2004 Final Report of the National Research Infrastructure Taskforce, which stated:

The consensus across all Australian Governments and research institutions is that, while decisions on research themes or projects might be made through a competitive process, investment in research infrastructure should be made in a strategic, collaborative manner.²

Rationale for undertaking the audit

3. From 2004–05 to 2028–29, NCRIS will deliver an estimated $5 billion in grants. NCRIS facilities are nationally significant assets, which are usually too large to be funded by individual research organisations. This means that without effective Australian Government support, these facilities would not be available to researchers.

4. This audit was conducted to provide assurance to the Parliament over the effectiveness of Education’s administration of NCRIS.

Audit objective and criteria

5. The objective of this audit was to assess the effectiveness of the Department of Education’s administration of NCRIS in achieving the outcomes of the program.

6. To form a conclusion against the objective, the following high-level audit criteria were adopted:

• Does the administration of funding opportunities and funding decisions promote the proper use and management of public resources?
• Have appropriate arrangements been established to measure and assess the outcomes from grant funding?

7. The audit focused on NCRIS funding delivered from 2022 to 2025. This included all funding under the 2021 NCRIS Roadmap, except for the outcomes of the second funding round of 2025, which was still in progress at the time of the audit, with an anticipated completion date of early to mid-2026.

Conclusion

8. The Department of Education’s administration of NCRIS is partly effective. While strategic planning arrangements are a strength of the NCRIS program design, elements of this have not been effectively implemented under the 2021 Roadmap, and deficiencies in grant assessments and approvals undermine Education’s ability to demonstrate proper use and management of public resources. The development of an approach to program evaluation, and improved use of grant recipients’ reported performance information in public reporting of program performance could help Education understand if they are achieving the outcomes of the program.

9. Education’s administration of funding opportunities and funding decisions partly promotes the proper use and management of public resources. An effective planning process has been designed in the form of five-yearly roadmaps and two-yearly investment plans, but under the 2021 Roadmap, the investment planning process has not supported strategic planning of NCRIS investments. Processes to ensure probity and transparency in grant administration have not been fully established. The application assessment approach can be strengthened through more transparency and effective documentation of the process which meets requirements of the applicable Commonwealth Grant Rules and Principles (previously Commonwealth Grant Rules and Guidelines).

10. Education has established partly effective arrangements to measure and assess the outcomes from grant funding. Education has established processes for twice yearly reporting by NCRIS grant recipients. Key performance information does not always relate directly to grant purposes, and Education does not confirm the accuracy of information collected from grant recipients. Education does not monitor and evaluate progress against NCRIS roadmap priorities and recommendations. Education has worked to establish improved performance reporting in line with the Commonwealth Performance Framework by publishing more NCRIS specific performance information in its 2024–25 annual performance statements.

Supporting findings

Administration of funding

11. Education allocates NCRIS funding through closed non-competitive grants, supported by a strategic planning process designed to consist of five-yearly roadmaps and two-yearly investment plans. Investment plans under the 2021 Roadmap have not supported strategic planning of NCRIS investments, compared with previous investment plans released in 2018 and 2020. (See paragraphs 2.3 to 2.20)

12. Between 2022 and 2025, Education’s assessment and approval processes for grants did not meet all requirements of the Commonwealth Grant Rules and Principles (or previously, Commonwealth Grant Rules and Guidelines). Education’s process included additional assessment criteria not set out in guidelines, did not specifically document consideration of value for money in assessments and approvals and did not provide complete advice to grant approvers. (See paragraphs 2.21 to 2.39)

13. Arrangements to ensure probity and transparency such as conflict-of-interest declaration and management arrangements, have improved since mid-2025, but as of December 2025 have not been fully implemented. (See paragraphs 2.46 to 2.47, and Table 2.7)

Performance measurement and reporting

14. At the individual grant recipient level, Education has established reporting and information gathering arrangements with grant recipients to enable collection of performance information. Improvements to develop more relevant key performance measures at a grant recipient level are in progress. While this performance information provides a picture of performance at the level of individual grant recipients, it is not used to evaluate NCRIS program outcomes, to report on progress against NCRIS roadmaps, or to report overall program performance. Education assesses, but does not verify, reported information. (See paragraphs 3.4 to 3.23)

Recommendations

Summary of entity response

15. The proposed audit report was provided to the Department of Education. The summary response to the report is below and the full response is at Appendix 1. Improvements observed by the ANAO during the course of this audit are listed in Appendix 2.

Department of Education

The Department of Education (the department) acknowledges the Australian National Audit Office (ANAO) performance audit of the department’s administration of the National Collaborative Research Infrastructure Strategy (NCRIS).

NCRIS is a significant national investment supporting Australia’s research and innovation system. The department recognises the importance of transparent investment planning, robust grant administration and well evidenced decision making to ensure strong stewardship of the program.

Over the past three years, the department has undertaken substantial work to strengthen its administration of NCRIS. This includes clearer documentation of assessment processes, strengthened record keeping, enhanced probity arrangements and formalised conflict of interest processes. Work to address the opportunities identified by the ANAO commenced in 2025 and will continue to be progressively implemented as part of our ongoing commitment to strengthening program delivery.

The department notes that recent NCRIS investment rounds were informed by a strong strategic foundation, including the 2021 National Research Infrastructure Roadmap, NRIAG advice, expert committees, and step change priorities, with robust and transparent assessment and approval processes. The department acknowledges the value of clearly communicating forward planning for NCRIS, the rationale behind investment decisions, and how project level success relates to program level goals.

The department welcomes the three Recommendations and affirms its commitment to continuous improvement to support the effective long term delivery of NCRIS.

Background

1. The Freedom of Information Act 1982 (FOI Act) is the legislative basis for open government in Australia at the Commonwealth level. Each person has legally enforceable rights under and subject to the FOI Act to obtain access to government documents and to apply for the amendment or annotation of records of personal information held by government.

2. In 2024–25, 43,456 Freedom of Information (FOI) requests were received by agencies and ministers, a 25 per cent increase on 2023–24. FOI complaints and applications for review in 2024–25 also increased significantly (by 26 per cent and 21 per cent respectively). The Office of the Australian Information Commissioner (OAIC) stated in its 2024–25 Annual Report that:

• the percentage of FOI requests decided outside the applicable statutory timeframe in 2024–25 remained unchanged from the previous year at 27 per cent;
• of the 25,211 decisions made on FOI requests, 25 per cent were to refuse access in full, 54 per cent granted access in part and 21 per cent granted full access; and
• 62 per cent of Information Commissioner decisions ‘set aside’¹ the decisions under review. The OAIC stated that this ‘high set-aside rate indicates there is more work to do to embed a pro-disclosure approach. This work is important to ensure proper alignment with the objects of the FOI Act, to increase public participation in Government processes and to increase scrutiny, discussion, comment and review of the Government’s activities’.

Rationale for undertaking the audit

3. The purpose of the FOI Act is to give the Australian community access to Australian Government information. Parliament intended that the functions and powers under the FOI Act ‘are to be performed and exercised, as far as possible, to facilitate and promote public access to information, promptly and at lowest reasonable cost’. A December 2023 Senate inquiry report concluded that the ‘system is not working effectively and for some time has not functioned as it was intended.’²

4. The audit provides assurance to Parliament over the effectiveness of entity administration of FOI Act requests in achieving the objects of the FOI Act.³

Audit objective and criteria

5. The objective of this audit was to assess whether the selected entities’ administration of FOI Act requests is effective in giving the community access to Australian Government information.

6. To form a conclusion against the objective, the following high-level criteria were adopted:

• Did entities facilitate access to requested documents, promptly and at the lowest reasonable cost?
• Was decision-making transparent, accountable and pro-disclosure?

7. The ANAO audited three entities: the Department of the Prime Minister and Cabinet (PM&C); the Department of the Treasury (Treasury); and the Department of Infrastructure, Transport, Regional Development, Communications, Sports and the Arts (Infrastructure). The audit also engaged with the Office of the Australian Information Commissioner in light of the preliminary audit findings and potential recommendations.

8. The scope of the FOI requests examined was those seeking access to documents other than those containing the applicants own personal information, that were active at any time during 2024. ANAO identified 1,111 FOI requests within scope of the audit, across the three entities. When undertaking testing and analysis, ANAO applied a representative sampling methodology, in line with ANAO auditing standards.

Conclusion

9. The FOI system is recognised as a critical pillar of open government and robust democracy in Australia. Australian Government information is a national resource that should be available for community access and use. Administration of Freedom of Information Act (FOI Act) requests by the audited entities has been partly effective in giving the community access to information.

10. The administration of FOI Act applications by the audited entities resulted in a decision to provide some documents to the applicant for under half (43 per cent) of the requests examined by the ANAO. The audit identified a range of shortcomings with entity administration of FOI Act requests that are inconsistent with the pro-disclosure objects of the FOI Act, including:

• entities are not demonstrably meeting their obligations to take reasonable steps to assist applicants make FOI requests and to then find the requested documents. For 79 per cent of requests examined as part of the audit, the three entities had not met their own requirements to evidence the reasonableness of the searches they had undertaken to locate the requested documents;
• in addition to 57 per cent of requests not leading to the release of any documents to the applicant, public disclosure of released documents, via each entity’s disclosure log, has been incomplete. This has been the case notwithstanding that the FOI Commissioner has identified disclosure log reporting as a way that agencies to reduce the impact of FOI Act administration on their activities; and
• statutory timeframes for decision-making and disclosure are not consistently being met. For 63 per cent of the FOI requests examined departments decided to make use of one or more provisions in the Act allowing for a longer response period than 30 days. Even then, for 29 per cent of requests examined, the decision was taken outside the statutory timeframe (after allowing for any extensions and excluding those with insufficient records). Entity disclosure logs were also not being updated in accordance with statutory timeframes (23 per cent of disclosures were late).

11. Decision-making in the three audited entities was not consistently transparent, accountable and pro-disclosure. A key factor was the lack of records around decision-making with no record maintained of the advice to the decision-maker for 30 per cent of FOI requests examined by the ANAO. Records were also lacking in terms of the impact that consultation with minister’s offices was having on decision-making, including when they shouldn’t be.

12. Reviews of agency decision-making demonstrated do not evidence a pro-disclosure approach. Of the internal reviews within the three audited entities, 24 per cent resulted in a decision to provide more information to the applicant. For 54 per cent of reviews undertaken by the Information Commissioner, the result involved further information being provided to the applicant.

13. Requested documents were exempted, and/or information redacted, in 53 per cent of the FOI requests examined by the ANAO. There are inaccuracies in reporting by entities to the Office of the Australian Information Commissioner reflecting, among other things, inaccurate data held in entity case management systems. This included the outcome of the request advised to the OAIC (based on what was recorded in the case management system) being different to the outcome notified to the applicant in 19 per cent of requests examined.

Supporting findings

Administration of the Freedom of Information Act

14. The three audited entities do not have appropriate policies and procedures in place to meet their responsibilities under the Freedom of Information Act. Of the three audited entities, Treasury had no finalised policy or procedures in place, while Infrastructure and PM&C did. A number of shortcomings were evident in the documented policies and procedures in PM&C. (See paragraphs 2.3 to 2.31)

15. It is not evident that entities are meeting their obligation to take reasonable steps to assist applicants make FOI requests. None of the internal guidance of the entities outlined what the entities considered to be reasonable steps to assist applicants. This approach is not pro-disclosure. (See paragraphs 2.32 to 2.49)

16. The three audited entities are unable to demonstrate that they have met the obligation to take all reasonable steps to find requested documents. Entities are not maintaining adequate records of the searches they undertake in response to FOI applications to assure completeness. Entity records also do not consistently support decisions to refuse access because records could not be located or do not exist. (See paragraphs 2.50 to 2.65)

17. Charges were not often notified by the three audited entities. In 2024: PM&C did not notify any applicant of any charges; Infrastructure notified one applicant of two charges; and Treasury notified 26 applicants of 30 charges (10 per cent of requests received). In the case management systems of each of the audited entities, costs are not calculated for each application, nor are there time or effort records for each application. (See paragraphs 2.66 to 2.72)

18. A decision to provide some documents to the applicant was made for 43 per cent of the requests examined by the ANAO across the three audited entities. Documents are predominantly provided to the applicant by email (95 per cent of requests where the audited entity retained a record of release). (See paragraphs 2.73 to 2.77)

19. Public disclosure of released documents, via the disclosure log required under the FOI Act, was incomplete and not in accordance with the law. The websites used by each audited entity are variable in terms of the information provided and their useability. In addition, each entity’s disclosure log was incomplete (8 per cent of expected disclosures had not been made) and the logs were not being updated in accordance with statutory timeframes (26 per cent of disclosures were late). (See paragraphs 2.78 to 2.94)

20. The three audited entities are not maintaining adequate records to demonstrate compliance with statutory timeframes for processing FOI applications. Where records were available, statutory timeframes were not consistently met, particularly in relation to decision-making on requests.

• Notification to applicants that their request had been received: seven per cent of requests examined by the ANAO (where records were available) were outside the statutory timeframe.
• Decision-making notification to applicants: for 63 per cent of the FOI requests examined, the statutory response timeframe was greater than 30 days due to departments deciding to make use of one or more provisions in the Act allowing for a longer response period. After allowing for extensions, there were 28 per cent of requests examined by the ANAO (where records were available) that were outside the statutory timeframe. (See paragraphs 2.95 to 2.112)

Decision-making

21. Entities have in place delegations that assist with transparent and accountable decisions in relation to access under the FOI Act. The policies of the three audited entities vary on requirements of decision-making artefacts. No entity had in place policies that address all of the consultations they may undertake on FOI requests, including consultations not specifically provided for in the FOI Act (and the FOI Guidelines issued by the OAIC also do not address those consultations). (See paragraphs 3.2 to 3.16)

22. The poor state of recordkeeping around FOI decisions does not demonstrate that decisions are being adequately informed. In relation to the 498 FOI requests examined by the ANAO across the three audited entities:

• for 32 per cent there was no record maintained of the advice provided to the decision-maker;
• a record of the decision was not evident for 30 per cent; and
• the record of the decision provided to the applicant was not retained for 11 per cent. (See paragraphs 3.17 to 3.42)

23. Documents were exempted, and information was redacted, in 53 per cent of the sampled FOI requests. Decisions to exempt a document or redact information were often not recorded, beyond the decision notice to the applicant. It was not clear from entity records how decisions to exempt information were made, nor how decisions were made not to exempt information and release information where an exemption may have applied. Overall, entity records do not demonstrate a pro-disclosure approach to FOI requests. (See paragraphs 3.43 to 3.71)

24. Decisions taken were recorded by each of the three audited entities in their case management system. Decision notices issued to applicants were comprehensive, and consistent with templates each entity has in place. The notifications issued to applicants were largely consistent with the records of the decision. (See paragraphs 3.72 to 3.77)

25. The three audited entities appropriately engaged with complaints and review mechanisms. Each of the audited entities informed applicants of internal review processes that were available, and provided information on the complaints and review processes of the OAIC. Where there was a request for an Information Commissioner review of a decision, and there was a record of a revised decision or outcome from the OAIC, the decision was to provide further information in 54 per cent of instances. (See paragraphs 3.78 to 3.82)

26. Each of the three audited entities extract reports from their respective case management systems to provide information and statistics to the OAIC. These reports to the OAIC reflect the level of accuracy of the information. There are inaccuracies within each of the entity case managements systems. For example, in 19 per cent of sampled requests the outcome advised to the applicant did not match the outcome recorded in the case management system. Further, information in the case management system could not be verified to records in 47 per cent of sampled requests. (See paragraphs 3.84 to 3.92)

Recommendations

Summary of entity responses

Department of the Prime Minister and Cabinet

PM&C thanks the Australian National Audit Office (ANAO) for the opportunity to respond to its audit report on the administration of the Freedom of Information Act. PM&C acknowledges the findings and values the ANAO’s examination of agencies’ practices, noting the report will support improved administration of the FOI Act in support of its objects. PM&C recognises the findings were affected by insufficient record-keeping, particularly the need to clearly evidence searches and reasons for FOI decisions. PM&C agrees strong record-keeping is essential to meeting statutory obligations, supporting accountability, and enabling accurate reporting. Work is underway to improve record management and data quality. PM&C reiterates its commitment to accountability, transparency, and compliance, including proactively publishing information through the Information Publication Scheme (IPS). PM&C accepts the entity recommendations.

Department of the Treasury

Treasury welcomes the report on the administration of the Freedom of Information Act 1982 by selected entities. Treasury is committed to addressing the findings of the report and agrees with the recommendations directed at Treasury. Treasury considers the shortcomings identified by the report around our administration and record keeping offer opportunities for improvement, which Treasury will address.

Treasury’s FOI Policy has been updated to consolidate existing guidance and will shortly be considered by Treasury’s Executive Board. The Policy now more clearly articulates Treasury’s expectations, is more accessible to decision makers and will be reviewed annually to incorporate developments in the law and external guidance. Treasury has also commenced development of other supporting documents to further information request processing and improve assurance frameworks.

Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts

The department recognises the importance of the Freedom of Information Act 1982 in supporting open government and robust democracy and takes a continuous improvement approach to FOI processing. For example, we implemented an FOI specific Case Management System in July 2023, established an FOI Processing Framework in August 2024, and are building a catalogue of quick reference guides to support consistent and timely processing.

The department welcomes and appreciates the findings and improvements identified in the audit report and acknowledges the need to strengthen aspects of our FOI processing. This work is well underway as part of an ongoing program of uplift and continuous improvement.

Office of the Australian Information Commissioner

The FOI system is a critical pillar of open government and robust democracy in Australia. As an independent agency within the Attorney-General’s portfolio, the OAIC provides regulatory oversight of the operation of the Freedom of Information Act 1982 (FOI Act), including through the handling of complaints and conducting merits review of decisions of agencies and ministers under the Act. The OAIC’s role as a Commonwealth integrity agency is also secured by both the FOI Act and the Australian Information Commission Act 2010. In this regard FOI performance metrics under the Commonwealth Integrity Strategy are key indicators of the strength of the Commonwealth Integrity Framework.

The OAIC’s regulatory priorities include promoting compliance with the FOI Act and supporting public sector capability in the administration of the FOI Act. The OAIC will continue to exercise its regulatory powers and review and update the FOI Guidelines, Procedure Directions, guidance and education materials to reflect best practice and promote improved compliance with the FOI Act.

The OAIC supports, or supports in principle, recommendations that relate to the OAIC’s regulatory functions and will continue to consider the insights garnered from the audit.

Background

1. The Royal Australian Navy (Navy) operates a fleet of six Collins class submarines. These submarines are among the Australian Government’s key strategic military assets, providing anti-submarine warfare, anti-surface warfare, intelligence, surveillance and reconnaissance, mine warfare capabilities and support to special operations. The Collins class fleet entered service between 1996 and 2003. Each submarine has a design life (life of type) of 28 years and, without an extension, was scheduled to be withdrawn from service between 2026 and 2036.

2. The Collins Life of Type Extension (LOTE) project was established to avoid a submarine capability gap by extending the service life of the Collins class during Defence’s transition to a larger and more capable submarine fleet. At the time the LOTE was initiated, the program to replace the Collins class submarines — the Future Submarine Program — envisaged a conventionally powered replacement fleet. The program was announced in April 2016 and later designated the Attack class in December 2018. That program has since been superseded by the nuclear-powered submarines to be delivered under the AUKUS agreement.

3. Work to determine the scope of the Collins class LOTE commenced in June 2016, initially focused on extending the service life of three submarines — HMAS Farncomb, HMAS Collins and HMAS Waller. The LOTE project formally commenced in September 2018. In September 2021, the Australian Government announced that the service life of all six Collins class submarines would be extended by a further 12 years.¹ The original planned withdrawal dates and the amended planned withdrawal dates for each submarine are set out in Table S.1.

Table S.1. Original and amended planned withdrawal dates for the Collins class

Note: Defence’s initial LOTE planning was to extend the service life of the three oldest Collins submarines by an extra 12 years (10 years’ operating plus a two-year Full Cycle Docking). This was to avoid a capability gap until the new Attack class submarines entered service in the early-to-mid 2030s. Withdrawal dates are shown as calendar years, consistent with Defence planning documentation.

Source: Defence documentation.

Rationale for undertaking the audit

4. The Collins class submarines are a key strategic asset for Australia. Successful execution of the LOTE project is critical to maintaining Australia’s submarine capability during the transition to a future fleet of nuclear-powered submarines under the AUKUS partnership.² The LOTE project has an approved budget of $1.56 billion (2021–22 to 2031–32) and has been assessed by Defence as a ‘high’ risk project. Given ongoing parliamentary interest in the project, this audit provides independent assurance to Parliament on the effectiveness of Defence’s planning and implementation of the Life of Type Extension, including progress achieved to date.

Audit objective and criteria

5. The audit objective was to examine the effectiveness of Defence’s planning and implementation of the Life of Type Extension for the Collins class submarine fleet.

6. To form a conclusion against the objective the following high-level criteria were adopted.

• Did Defence effectively identify requirements and assess options?
• Has Defence established effective governance, oversight and risk management arrangements?
• Has Defence effectively undertaken the planning and implementation activities required to commence the life of type extension?

7. The audit examined Defence’s planning, governance, risk management and project management arrangements for the Collins class submarines Life of Type Extension, including implementation against agreed project plans and milestones, and the monitoring and reporting of progress. The audit did not examine Collins class submarines operations, the effectiveness of sustainment arrangements, or the management of capability upgrades.

Conclusion

8. Defence’s planning and implementation of the Collins class Life of Type Extension (LOTE) project was partly effective, with the project not managed in a way that was commensurate with its complexity, risk profile and strategic purpose. The project was intended to sustain Collins class capability and availability through the transition to the future submarine fleet. Against that strategic purpose, Defence’s approach to defining the scope, assessing options and advising government did not adequately adapt following the cancellation of the Attack class submarine program. As a result, substantial further expenditure has been incurred, delays have accumulated and capability risks have remained. This means that Defence is not well-placed, as at May 2026, to demonstrate that the project will achieve its intended capability outcomes or represent value for money.

9. Defence’s arrangements to identify requirements and assess options for the Collins class LOTE were partly effective. Defence identified a business need to avoid a capability gap by extending the service life of the Collins class submarines. The LOTE project was originally positioned to mitigate risks with Defence’s transition from the Collins class submarines to the Attack class. Defence did not ensure that emerging risks to the Attack class program, or the fact that alternative submarine capability options were being examined, were disclosed to the personnel making key LOTE scope, procurement and design decisions. Following the cancellation of the Attack class program, the LOTE became critical as the bridging capability to support the transition to the nuclear-powered submarines under the AUKUS trilateral partnership. This heightened the importance of robust option-setting and clear, timely advice to government when key assumptions changed.

10. From 2019, Defence shaped the scope and delivery approach for the LOTE around an explicit decision to align the LOTE with the Attack class submarine program. This alignment involved a major redesign of the Collins class submarines that required the replacement of key equipment and systems. This decision was driven by an expectation of cost and schedule benefits, from having common systems and as a method to mitigate risks in the Attack class program. Alignment of the Collins LOTE with the Attack class program was adopted without robust options analysis or a comprehensive risk assessment. This effectively foreclosed consideration of alternative delivery strategies and constrained advice to government at key decision points. Subsequent reviews found the decision to align the LOTE with the Attack class program transferred significant design, schedule and integration risks to the project.

11. When the Attack class program was cancelled in 2021, the rationale for the alignment strategy no longer held. Defence did not systematically reassess the scope, delivery strategy or available options for the LOTE, nor did it present alternatives or advise government of the risks in a timely way. In May 2026, Defence proposed, and the government agreed, to a revised delivery approach for the LOTE. This revised approach is centred on refurbishing and retaining existing systems and equipment to maintain availability of the Collins class submarines out to 2048.

12. Governance, oversight and risk management arrangements were partly effective. Defence had oversight mechanisms that supported senior visibility of project status and emerging risks. The governance and risk management settings did not provide commensurate assurance that key risks were being managed in line with the project’s complexity and risk profile. Capability development framework requirements supporting disciplined risk-based decision-making were not consistently met, including articulation of the risk tolerance and evaluation of whether controls and mitigation measures were operating effectively.

13. Oversight arrangements provided multiple avenues for risk reporting and senior visibility, supported by independent assurance activity and advisory scrutiny. These arrangements did not provide clear, centralised assurance that risk treatments and controls were effective, and several strategic risks remained above tolerance levels during the period examined. Weaknesses in the mandated risk reporting system also affected the reliability of risk information, requiring project personnel to implement workarounds to support data integrity.

14. Planning and implementation of the LOTE project has not been effective. Defence was slow to establish project and contract management arrangements commensurate with the scale, complexity and risks of the project. Key management artefacts were absent or delayed, and baseline controls were not established when design work was initiated and progressed, reducing Defence’s ability to manage delivery in a disciplined way during critical early phases.

15. Defence has committed substantial funding without demonstrating commensurate progress against contracted milestones. The system and detailed design contract, awarded in February 2022, has been amended 53 times and increased from $125 million to $813 million. By February 2026, Defence had spent $693 million on project definition and design activities, and related equipment procurements to replace key systems and extend the service life of the Collins class submarines. While the project was under its approved budget as at March 2026, this reflects missed milestones and scope reductions rather than delivery efficiencies.

16. Delays have accumulated and Defence has adjusted the delivery strategy and scope of the project to manage emerging risks. As at May 2026, Defence was not on track to install the LOTE updates on the first submarine in June 2026 as originally planned. Ten years after the initial decision to establish the LOTE project, Defence was also not well-placed to demonstrate that the project will achieve its objective to maintain Collins class capability and availability to 2048. In May 2026, Defence proposed, and government agreed to, an alternative service life extension strategy, changing the direction of the project after ten years of planning and design activity.

Supporting findings

Identify requirements and assess options

17. Defence identified that the business need for the Collins class LOTE was to maintain submarine capability and availability through the transition to the future submarine fleet. From 2019, however, Defence shaped the project scope to align the LOTE with the Attack class submarine program, including the adoption of common designs, systems and equipment. This approach established a significant interdependency and materially increased the scope’s complexity by introducing major system replacement and integration activities on an ageing platform before feasibility, whole-of-platform impacts and workforce requirements were well understood.

18. Following the cancellation of the Attack class program, Defence did not adequately reassess the project scope to reflect the changed circumstances. Subsequent scope reviews, revisions and reductions indicate that this interdependency altered the project’s risk profile and reduced the stability and defensibility of the scope approved at key decision points. ( See paragraphs 2.2 to 2.27)

19. Defence’s approach to identifying, assessing and evaluating options for the LOTE was constrained by its decision to align the project with the Attack class submarine program. Once adopted, this approach effectively foreclosed consideration of alternative delivery strategies. Defence did not present government with alternative options to deliver the LOTE, including after the cancellation of the Attack class program in 2021, and this constraint persisted despite the changed circumstances.

20. Although Defence undertook a LOTE project scope review in 2022, the review did not examine alternative delivery approaches or test whether continuing with major system replacement remained justified. Work to identify possible alternative approaches to deliver a life of type extension for the Collins class submarines commenced in June 2024, however Defence continued to progress major system replacement as the preferred approach until October 2025, when risks were unable to be reduced to an acceptable level.

21. In March 2026, Defence proposed an alternative option to deliver a life of type extension for the Collins class submarines. The recommended option was presented to government in May 2026 and involves refurbishing and maintaining existing systems instead of redesigning and replacing them for five of the six Collins class submarines. This is a fundamental shift in the delivery strategy for the project. (See paragraphs 2.28 to 2.43)

22. Prior to the cancellation of the Attack class submarine program, Defence’s advice to government and senior Defence leadership emphasised the anticipated benefits and opportunities associated with aligning the Collins class LOTE with the Attack class submarine program.

23. Following the cancellation of the Attack class program, Defence did not clearly advise government of the implications of continuing the original LOTE delivery approach. Nor was government presented at that time with alternative delivery options or a reassessment of the Life of Type Extension strategy. In contrast, senior Defence leadership was progressively informed of the significance, challenges and risks that had been transferred to the LOTE project. (See paragraphs 2.47 to 2.70)

Governance, oversight and risk management

24. Defence was slow to establish governance arrangements that reflected the project needs and risk profile. Governance forums included overlapping membership of key decision-makers, which provided redundancy and supported visibility of the risks and issues, yet these arrangements were not efficient in practice. Governance bodies largely operated as information sharing forums and decisions were largely made by individual authorised delegates. Delays in reporting, escalating and addressing high and very high risks occurred. Decisions were not recorded in a centrally managed register or captured in Defence’s enterprise task and action tracking tool, limiting transparency and Defence’s ability to monitor the implementation of decisions.

25. In contrast, the oversight arrangements were fit for purpose, with Independent Assurance Reviews conducted and recommendations largely implemented. Capability Manager Gateway Reviews and reporting from the Submarine Advisory Committee provided ongoing scrutiny and visibility to senior leaders of emerging and persistent risks. (See paragraphs 3.3 to 3.30)

26. Risk management arrangements were not mature and did not operate effectively. The project risk management plan was not approved until October 2022 and did not include a project risk appetite or tolerance statement as required. Strategic risks exceeded tolerance levels, and the mandated risk reporting system often lacked documented controls and assessments of control effectiveness. Deficiencies in the risk reporting tool and data governance affected the reliability of risk information and required the development of workarounds, limiting assurance that risk controls and treatments were effective. (See paragraphs 3.31 to 3.52)

Planning and implementation

27. Defence’s project and contract management arrangements were not commensurate with the LOTE project’s complexity and risk profile during critical early phases. Key project and contract management documents were absent or delayed, including the late establishment of baseline schedule controls and delayed approval of the integrated project management plan in June 2024. The system and detailed design contract has been amended 53 times, since it was awarded in February 2022, increasing from $125 million to $813 million. This indicates that scope, complexity, cost and risks were not well understood when the contract was awarded. (See paragraphs 4.2 to 4.24)

28. Defence has not achieved planned milestones and delays have accumulated over the life of the project. Only one of five key design reviews (contract milestones) was achieved on schedule, and Defence has modified milestone approaches and baselines as design issues emerged. The accumulated delays contributed to the decision to reduce the scope planned for installation on HMAS Farncomb, with design work for the full core work package not complete as at early 2026. ( See paragraphs 4.25 to 4.41)

29. A separate performance management framework for the Life of Type Extension (LOTE) project was not established, and no project-specific performance measures were included in either the In-Service Support Contract or the system and detailed design contract. Defence advised that LOTE performance is managed through the projects’ governance arrangements and milestone-linked profit payments, and that overall outcomes would be assessed through the In-Service Support Contract performance management framework. (See paragraphs 4.44 to 4.54)

30. In practice, these arrangements provided limited leverage over performance. Key design milestones were amended or replaced as delays accumulated, reducing the effectiveness of milestone-linked payments as an incentive for delivery. Project reporting did not provide an effective basis for oversight during earlier phases of the project and, in October 2022, was not adequate to support proper governance. Reporting arrangements improved from late 2024 following the transition to acquisition-project reporting requirements, with regular scope, cost, schedule, workforce and risk updates provided to Defence senior leadership and relevant governance committees. (See paragraphs 4.55 to 4.61)

Recommendations

Summary of entity response

31. The proposed audit report was provided to the Department of Defence. Defence’s summary response is provided below. The full response is reproduced at Appendix 1.

Defence acknowledges the findings of the Auditor-General’s report on the planning and implementation of the Collins class Life of Type Extension (LOTE).

The LOTE was undertaken as a deliberate force design risk-mitigation measure to maintain Australia’s undersea warfare capability and avoid a submarine capability gap during the transition to future nuclear-powered submarines. The strategic necessity of sustaining Collins class availability remained constant, while the delivery environment evolved significantly following changes to Australia’s future submarine program. In the event of strategic shifts impacting programs, Defence’s primary focus has been to maintain continuity of capability and avoid a capability gap, which has, in practice constrained the extent to which comprehensive reassessment of underlying assumptions, risks and alternative options could be undertaken. Defence is strengthening its processes to ensure that future strategic shifts trigger more structured and timely reassessment alongside continued delivery.

Defence will continue to engage industry through approaches consistent with Commonwealth and departmental legislative and policy frameworks and guidance.