Background

1. An ‘interest’ is something related to an individual’s personal circumstances that may bring advantage to, or affect, that individual. Interests can include, but are not limited to: financial interests; relationships; employment, including past employment and outside employment; and memberships or affiliations.

2. A conflict of interest can occur when there is a conflict between the public duties and personal interests of a public official that could, or could be seen to, influence the decisions they make or advice they give. For example, an official may hold shares in a company that they are regulating or procuring goods and services from. Conflicts of interest can be real, apparent or potential. Real conflicts of interest occur when personal interests improperly influence officials in performing their public duties.

3. The Public Service Act 1999 sets out that the function of the Senior Executive Service (SES) is to provide APS-wide strategic leadership of the highest quality that contributes to an effective and cohesive APS.¹ SES officers should, by personal example and other appropriate means, promote the Australian Public Service (APS) Values and compliance with the Code of Conduct.² There are specific requirements for accountable authorities and SES employees in relation to the management of interests.³

Rationale for undertaking the audit

4. According to the Australian Public Service Commissioner, the public is entitled to have confidence in the integrity of public officials, and to know that the personal interests of public officials do not conflict with their public duties. Apparent conflicts can be just as damaging to confidence in public administration as real conflicts, so disclosure and effective management of real, apparent and potential conflicts of interest is an important element of the Australian Government’s integrity framework.⁴

5. This audit was conducted to provide assurance to the Parliament whether the selected entities are effectively managing SES conflict of interest requirements.

Audit objective and criteria

6. The objective of the audit was to assess the effectiveness of selected Commonwealth entities’ management of Senior Executive Service conflict of interest requirements.

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

• Have the entities developed appropriate arrangements to support the management of SES personal interests and conflicts of interest?
• Have the entities implemented effective controls and processes for managing SES annual declarations of interests in accordance with policies and procedures?
• Are SES officers effectively completing conflict of interest declarations for activities of heightened risk of conflict?

Conclusion

8. The Aged Care Quality and Safety Commission (ACQSC), the Australian Trade and Investment Commission (Austrade) and the Department of Home Affairs (Home Affairs) are managing conflicts of interest for SES officers in a largely effective manner. The entities’ management of conflicts of interest has generally improved since 2022. There are a number of initiatives underway to strengthen the framework for managing conflicts of interest across the Australian Public Service.

9. The audited entities have largely appropriate arrangements in place to manage the personal interests and conflicts of interest of SES officers. All entities have policies and procedures which identify interests as a matter requiring consideration. ACQSC and Austrade do not have documented procedures for managing accountable authority declarations to the relevant minister as required by the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule). Home Affairs introduced a procedure in March 2025. All entities identify responsibilities for managing interests. Internal reporting on the completion of declarations and risks arising from declarations has not been undertaken. All entities include conflicts of interest in their enterprise risk registers or fraud risks. Each entity provides training on conflicts of interest within their mandatory training modules. Entities do not adequately monitor completion of this training. All entities communicate information and guidance on conflicts of interest to staff.

10. All entities have implemented partly effective controls and processes for managing SES declarations of interests. Not all SES officers are making declarations. There are limitations in the completeness of information included in declarations by officers, and demonstrated managerial review only occurred for some declarations. Records documenting management plans were not maintained by ACQSC until early 2024. All entities monitor completion of declarations and follow up non-compliant individuals. Between 2022 and 2024, the accountable authorities of ACQSC and Austrade did not make declarations to relevant ministers, as required. The ACQSC’s new incoming accountable authority made a declaration to the relevant minister in January 2025 and the Austrade accountable authority made a declaration in November 2024 and March 2025. The Home Affairs accountable authority has made declarations as required. ACQSC and Austrade included conflicts of interest in assurance activities between 2022 and 2024, and Home Affairs last did so in 2020–21.

11. Entities are partly effective with respect to SES officers completing activity-based conflict of interest declarations. Entities have generally established a requirement for officers to declare conflicts of interest for procurement, recruitment and grants administration activities. The requirement is weakened when there is no requirement for all officers to make a declaration, including for officers with nothing to declare. The ANAO found that officers from ACQSC and Austrade were generally making declarations for procurement as required. Home Affairs officers were not. Officers from all entities involved in grants administration activities are declaring as required. Results were mixed for recruitment activities. No entities had adequate arrangements in place for conflict of interest risks related to post-separation employment.

Supporting findings

Governance

12. ACQSC’s and Home Affairs’ Accountable Authority Instructions (AAIs) follow the model AAI content from the Department of Finance on the disclosure of interests. ACQSC’s AAIs give additional organisational context. Austrade’s instructions do not include the model content and make limited reference to the management of interests. All entities have supporting policies and procedures. Home Affairs’ policies and procedures provide insufficient detail on the annual SES declaration process. None of the entities had procedures supporting accountable authority declarations to the relevant minister. Home Affairs introduced such a procedure in March 2025. (See paragraphs 2.1 to 2.39)

13. All entities have clearly documented responsibilities identifying that individuals are required to make declarations. ACQSC and Home Affairs identify additional responsibilities for other roles including supervisors, managers and business areas responsible for overall management of interests. There has been no internal reporting undertaken within the entities in relation to the completion of annual interest declarations processes, except ACQSC commenced reporting in January 2025 to its internal governance forum. None of the entities analysed declarations of interests to assess and report on emerging risks. (See paragraphs 2.40 to 2.60)

14. All entities have considered conflicts of interest as part of broader integrity or legislative compliance risks. While risks associated with conflicts of interest are considered by all entities, only Home Affairs has documented the controls and control owners associated with enterprise risks. ACQSC’s register includes risk owners. Appropriate documentation of controls and control owners is absent in ACQSC and Austrade. All entities have considered conflicts of interest as a factor within their fraud and corruption control plans. Home Affairs has assessed conflicts of interest as part of its fraud and corruption risk assessments. (See paragraphs 2.61 to 2.77)

15. All entities have training on conflict of interest within their mandatory annual training. This training is not being completed by all SES officers. To help remind SES officers to complete their annual declarations, each of the entities provide officers with reminders. Information and assistance to support officers to comply with their obligations is also available within each entity. (See paragraphs 2.78 to 2.109)

Annual declarations of interests

16. Not all SES officers are completing annual declarations, with completion rates varying across entities. For ACQSC, the completion rate was 92 per cent in 2024. For Austrade, it was 99 per cent (when taking into account long-term leave and departures) and for Home Affairs it was 84 per cent. Completion rates have varied over time. Declarations generally contain sufficient information to understand the nature and extent of a declared interest, however an explanation of how the interest relates to the ‘affairs of the entity’ is not always sufficiently described. The accountable authorities of ACQSC and Austrade did not make declarations of their interests to the relevant minister as required. (See paragraphs 3.3 to 3.31)

17. None of the entities require that all annual declarations made by SES officers are subject to review. If an officer makes a ‘nil’ declaration, none of the entities have required declarations be reviewed. Home Affairs introduced a requirement in December 2024. Only declarations including an interest are subject to manager review. Management plans developed by Austrade officers document managerial review. Evidence of managerial review was lacking for plans developed by ACQSC and Home Affairs officers prior to 2024. (See paragraphs 3.32 to 3.48)

18. All entities monitor the completion of declarations of interests by SES officers. Where SES officers had not completed declarations, there was a process to follow up with relevant officers and their managers. ACQSC and Austrade undertook assurance activity through the inclusion of conflicts of interest within internal audits between 2022 and 2024. (See paragraphs 3.49 to 3.58)

Declarations of conflicts of interest for activity-based activities

19. Each entity requires that SES officers involved in procurement declare conflicts of interest. For ACQSC the SES officers involved in procurement made declarations as required. Eleven of 14 Home Affairs SES officers did not make declarations as required. From March 2025, Austrade has required that all officers involved in procurement activities make conflict of interest declarations. Before this, only officers who had a conflict to declare were required to make a declaration. As such, there were no records for the two Austrade SES officers in the ANAO sample demonstrating that they had considered conflicts of interest. (See paragraphs 4.5 to 4.8)

20. Austrade does not have a policy specifically relating to making conflict of interest declarations for grants administration. Home Affairs requires officers to disclose and manage conflicts of interest, however, there is a lack of supporting process. The three Austrade SES officers involved in grants administration activities assessed by the ANAO had made conflict of interest declarations. The 13 Home Affairs SES officers involved in grants administration had also made declarations. (See paragraphs 4.9 to 4.13)

21. Each of the entities requires that SES officers involved in recruitment declare conflicts of interest, except Home Affairs does not have a documented policy where the recruitment is for an SES officer. Within ACQSC, 38 per cent of SES officers involved in recruitment activities assessed by the ANAO did not make a declaration as required. Austrade does not require officers to make declarations if they have nothing to declare — 44 per cent of SES officers involved in the recruitment assessed by the ANAO made no declaration. Ninety-seven per cent of Home Affairs’ SES officers involved in recruitment made a declaration. Where conflicts of interest were declared, appropriate officers at the three entities were not always reviewing these and management actions were not always being put in place. (See paragraphs 4.14 to 4.39)

22. None of the entities have adequate policies and procedures to support the identification, declaration and management of conflicts of interest related to post-separation employment. Austrade has a declaration addressing conflicts of interest in its cessation checklist. The checklist was not completed by all departing officers. In addition, there was a lack of evidence to demonstrate that such conflicts of interest were considered for SES employees who had departed. (See paragraphs 4.42 to 4.50)

Recommendations

Summary of entity responses

23. The proposed report was provided to ACQSC, Austrade and Home Affairs. Summary responses from the entities are reproduced below. Full responses are at Appendix 1. Improvements observed by the ANAO during the course of this audit are listed at Appendix 2.

Aged Care Quality and Safety Commission

The Aged Care and Quality Safety Commission (the Commission) welcomes the findings of the audit which align well with the uplift in our integrity policies and practices the Commission already had underway, and some of which were applied during the period of the audit.

The Commission agrees with the five recommendations relating to arrangements for the accountable authority to provide declarations to the Minister, monitoring compliance with mandatory training, ensuring declarations contain information about the person’s role and responsibilities, ensuring annual declarations are refreshed at regular intervals, updating our recruitment Conflict of Interest Form and updating policies and procedures to include post separation conflicts of interest.

The Commission had already commenced improving its conflict of interest processes as part of a wider integrity uplift prior to the audit and the learnings from this audit will continue to inform our integrity maturity uplift. Recommendations from the audit have been actioned with amendments being made to forms, policies and procedures.

Australian Trade and Investment Commission

The Australian Trade and Investment Commission welcomes the audit report and acknowledges the findings and recommendations made by the Australian National Audit Office in relation to the Management of the Senior Executive Services Conflict of interest requirements.

The Australian Trade and Investment Commission is committed to implementing the recommendations from the report. These improvements will further strengthen Austrade’s efforts to ensure all Senior Executive Service (SES) employees of the agency declare all conflicts of interest, and that all declarations are managed with integrity and consistent with legislative obligations.

Department of Home Affairs

All findings and recommendations are agreed. The Department of Home Affairs is committed to ensuring that appropriate processes are maintained for identifying and managing conflicts of interest. This is fundamental to maintaining public trust and confidence in our operations.

Mandatory training is currently in place for all staff and the department will establish follow up actions to ensure SES officers are meeting their mandatory training obligations within set timeframes. This will strengthen the current system of automatic reminders which are sent to both staff and their supervisors, and non-compliance reports that are provided to senior leaders.

The department has work underway to improve its conflict of interest process. This includes updating policies and guidance material and strengthening education. The department has already updated and strengthened procurement guidance and templates to ensure delegates are aware of their conflict of interest obligations throughout each stage of the procurement process. Formal procedures have also been implemented for the Senior Executive Service annual declaration of interest process.

Background

1. The National Office for Child Safety (NOCS) was established in July 2018 in response to the Royal Commission into Institutional Responses to Child Sexual Abuse (the Royal Commission). The Royal Commission had reported in December 2017. NOCS was initially located in the Department of the Prime Minister and Cabinet. It was moved in 2022 to the Attorney-General’s Department (AGD) as a result of the June 2022 Administrative Arrangements Order.

2. In October 2021, the Australian Government launched the National Strategy to Prevent and Respond to Child Sexual Abuse 2021–2030 (National Strategy).¹ The first phase of the National Strategy includes two four-year action plans (from 2021 to 2024): the First National Action Plan (NAP), to be delivered by Commonwealth, state and territory governments; and the First Commonwealth Action Plan, to be delivered by Commonwealth agencies.

3. NOCS is responsible for launching three new national support services. The provision of the three national support services is to be contracted. The approach to procuring service providers for NAP Measures 7, 10 and 21 was considered in the same procurement strategy, in which the department stated, ‘the three services are in varying stages of development and would likely be ready to approach the market at different times throughout 2023’. A Request for Tender (RFT) process has been undertaken for NAP Measures 10 and 21. Procurements have also been undertaken for the advisers and consultants to assist with the NAP Measure procurement processes as well as an evaluation provider for the NAP 10 and NAP 21 services.

4. There will be a lag between contracts being signed and services being provided to non-offending family members of child sexual abuse perpetrators (NAP 10) and persons at risk of offending or re-offending (NAP 21). The contractual arrangements that were the subject of the RFTs set out that there would be four phases to service delivery. The first two phases are, on the basis of the tender responses from the two preferred tenderers, expected to take at least five to six months. Those phases involving planning, design and establishing the infrastructure to enable service delivery (including the operation of the helplines and provision of websites) to commence in the third phase. Service delivery to citizens commences in the third phase. The offer periods were extended in January 2025 from August 2024 to April 2025 and the department advised the ANAO in April 2025 that the preferred tenders had agreed to further extend their offer periods (to 31 July 2025).

Rationale for undertaking the audit

5. The establishment of the new services is part of the response to the 2017 final report of the Royal Commission into Institutional Responses to Child Sexual Abuse. The timely conduct of the related procurements is intended to establish services that will provide support and advocacy for a cohort of secondary victims of child sexual abuse perpetration and protect children by intervening before an individual offends. The audit was conducted to provide assurance to the Parliament about the establishment of the two new national services, as well as the department’s approach to procurement.

Audit objective and criteria

6. The audit objective was to assess whether the Attorney-General’s Department’s conduct of the procurements relating to two of the new child sexual abuse-related national services employed open and effective competition and achieved value for money, consistent with the Commonwealth Procurement Rules (CPRs).²

7. The new child sexual abuse-related national services identified as needed by the Royal Commission and agreed by government are not being provided, with no contracts in place for the delivery of those services as at May 2025. The audit examined the conduct of the procurements up to the point at which preferred tenderers were selected as representing the best value for money, and did not examine the conduct of contract negotiations given they had not been completed.

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

• Were the procurement processes open, competitive, fair and non-discriminatory?
• Was the selection of preferred tenderers consistent with achieving value for money?

Conclusion

9. The Attorney-General’s Department’s conduct of the procurements for two of the new national services (NAP 21 and NAP 10) did not involve open and effective competition and the selection of preferred tenderers was not consistent with achieving value for money. There have been significant delays with the conduct of both procurements and the preferred tenders were not capable of being accepted by the department without further clarification and negotiation. The offer validity periods expired with substantive matters continuing to be negotiated with each preferred tenderer.³ While the department selected preferred tenderers in June 2024 (for NAP 21) and September 2024 (for NAP 10) as offering the best value for money through a competitive procurement process, since then it has, in effect, conducted limited tenders with the two preferred tenderers, in circumstances that do not satisfy the conditions for a limited tender set out in the Commonwealth Procurement Rules (CPRS).⁴

10. The Attorney-General’s Department (AGD) conducted a single-stage, open approach to market for each of the NAP 10 and NAP 21 services. In most respects, the Request for Tender (RFT) documentation for the NAP 10 and NAP 21 procurements identified the information required by the Commonwealth Procurement Rules. The procurement processes were not conducted in accordance with the Commonwealth Procurement Rules. Of note:

• Seven of the 11 tenders received for the NAP 10 and NAP 21 procurements were not compliant with one or more of the requirements set out in the RFTs. This included six tenders that did not provide all of the pricing information that the RFT stated was required to be submitted to inform evaluation. The department’s approach did not include any marking down of the evaluation of those tenderers against the price criterion to reflect that information required by the RFT had not been provided. The two preferred tenderers were in the cohort of seven.
• The procurement processes were not consistently conducted in accordance with ethical requirements. The engagement of the probity adviser was through a process that lacked probity, and the later engagement (without any competition) of the probity adviser to also provide strategic procurement advice adversely impacted the independence and objectivity of the probity adviser.⁵ The declaration and management of conflicts of interest was also not to an appropriate standard. This included ineffective management of a conflict the chair of the Evaluation Committee for the NAP 21 procurement had with the tenderer that emerged as the preferred candidate.

11. In relation to advisers and consultants to support the conduct of the NAP 10 and NAP 21 service procurements, competition was not employed for five of the nine engagements and the department did not evaluate candidates against the specified criteria for each of the procurements.

12. The procurements were not timely with the result that selection of preferred tenderers occurred later than planned, no contracts are in place as of May 2025 and services are not being provided. The approach to evaluation was not designed and conducted in a way that enabled the Attorney-General’s Department (AGD) to demonstrate achievement of value for money in the selection of preferred tenderers for the National Action Plan Measure 10 (NAP 10) and National Action Plan Measure 21 (NAP 21) procurements.

• Departmental records do not document how the budgeted funding amounts for services were arrived at. Awarding the contracts to tenders that were less than the budgeted funding was an important element of procurement planning yet the price criterion was not one of the weighted evaluation criteria. The budgeted amounts played an important role in the outcome of the procurement process for the NAP 10 procurement.
• While tender evaluation plans were in place prior to the closing date for the NAP 10 and NAP 21 tenders, they did not adequately address how the department planned to evaluate the pricing information tenderers were required to include. The department also admitted into evaluation tenders that had not provided all of the required pricing information (including from the two preferred tenderers).
• The conduct of the tender evaluation for the NAP 10 and NAP 21 procurements was not timely. It was also not consistent with approach to market documents.
• The department’s evaluation records do not clearly demonstrate that the preferred tenderers for the NAP 10 and NAP 21 procurements provided the best value for money.

13. The processes to engage the consultants and advisers to support the NAP 10 and NAP 21 procurements also did not demonstrate value for money. This was due to an absence of competition and/or value for money not being assessed, or the successful candidate not being assessed as providing the best value for money.

Supporting findings

Open and competitive procurement

14. Open tender approaches to market were employed to engage the service providers for the NAP 10 and NAP 21 services. The procurement approach to engage the evaluation provider was a panel procurement, which involved approaching 12 candidates to respond to a RFQ. When procuring advisers and consultants to assist with the NAP 10 and NAP 21 procurements, the department’s processes involved some competition for less than half of the engagements and no competition for more than half of the engagements, which is inconsistent with the Commonwealth Procurement Rules. (See paragraphs 2.3 to 2.16)

15. In most respects, the RFT documentation for the NAP 10 and NAP 21 procurements issued by AGD identified the information required by the CPRs. This included the conditions for participation, minimum content and format requirements and evaluation criteria. AGD did not clearly identify the relative importance of each of the criteria to be applied in the evaluation processes. (See paragraphs 2.17 to 2.34)

16. With one exception, all tenders accepted for evaluation had been lodged by the specified closing date. ( See paragraphs 2.35 to 2.36)

17. Six of the tenders received for the NAP 10 and NAP 21 procurements were not compliant with the requirements of the RFT. The two preferred tenderers were not compliant with all of the requirements set out in the RFT, as neither had submitted all of the pricing information that the RFT had said was required. In addition, for the NAP 21 procurement, for the preferred tenderer the evaluation report identified 24 items related to service delivery, the solution/technical issues, legal/contract issues and pricing issues for which additional information was required by the department before a contract negotiation directive could be prepared. The department’s approach also did not satisfy the requirement of the CPRs that further consideration only be given to submissions that meet minimum content and format requirements. Three of the tenders for the NAP 10 and NAP 21 procurements that did not meet those requirements were progressed to evaluation before the department sought to address the situation. (See paragraphs 2.37 to 2.43)

18. Tenders for the NAP 10 and NAP 21 procurements were not fully and fairly evaluated against each of the criteria. In relation to the price criterion, tenderers were required to provide information under three scenarios (low, medium and high call volumes). The department did not evaluate tenders under each of the three scenarios because not all tenderers provided the required information. For the NAP 21 procurement, the department analysed the high volume call scenario whereas, for the NAP 10 procurement, the medium call volume scenario was used. The department’s approach reflects that it accepted for evaluation tenders that had not provided all the required price information and so it used the call volume scenario in each tender where it had a response from all tenderers. The approach to evaluation did not include any marking down of the evaluation against the price criterion for the tenderers that had not provided all of the required information.

19. In relation to the evaluation provider procurement, a second evaluation panel had to convene to re-evaluate responses after the department became aware it had not evaluated all four of those received.

20. For one of the procurements of advisers, the department’s evaluation did not address a mandatory requirement such that it had to retract its advice that the candidate assessed as offering value for money was preferred after it eventuated that the candidate did not meet the requirement. (See paragraphs 2.44 to 2.91)

21. The department did not conduct all tender clarification and collaboration activities in a fair and transparent manner as required by the Commonwealth Procurement Rules. (See paragraphs 2.92 to 2.105)

22. The department’s procurement processes did not demonstrate ethical conduct as required by the Commonwealth Procurement Rules.⁶ This included the approach employed to procuring the probity adviser. The department did not have an effective approach to the declaration, and management, of conflicts of interest. (See paragraphs 2.106 to 2.151)

Demonstrating achievement of value for money

23. Departmental records do not document how the budgeted funding amounts for services were arrived at. (See paragraphs 3.2 to 3.8)

24. There have been significant delays with the department’s conduct of the procurements with the result that the services aimed at protecting children from sexual abuse by intervening before an individual offends or re-offends, and at providing nationally available free support to non-offending family members of child sexual abuse perpetrators, are not yet available. The Requests for Tender (RFTs) were issued later than had been planned by the department. It also took longer than planned to evaluate the tender responses, select the preferred tenderers (who were notified in June 2024 and September 2024) and enter into contract negotiations. The offer validity periods expired with substantive matters continuing to be negotiated with each preferred tenderer. Should contract negotiations be successful, the department expects that services will not begin to be provided until mid-2025, which would be four years and eight months after the National Strategy was released. (See paragraphs 3.9 to 3.19)

25. Tender evaluation plans were in place prior to the closing date for the NAP 10 and NAP 21 tenders. The evaluation plans had not been signed off by the probity adviser. The evaluation plans did not adequately address how the department planned to evaluate the pricing information tenderers were required to submit. (See paragraphs 3.20 to 3.30)

26. The conduct of the tender evaluation for the NAP 10 and NAP 21 procurements was not timely and was not consistent with approach to market documents. (See paragraphs 3.31 to 3.44)

27. The department’s evaluation records do not clearly demonstrate that the preferred tenderers provided the best value for money.

• Each of the two preferred tenderers had not provided all of the information the RFT had identified as being required.
• For the NAP 21 procurement, after it was selected as the preferred tenderer, the department obtained significant additional information from the tenderer related to service delivery, the solution/technical issues and legal/contract issues. The need for this information was not identified in the tender evaluation report.
• For the NAP 10 procurement, the tenderer that scored highest against the weighted criteria was excluded from participating further in the tender process in favour of the second highest scoring tenderer. There were also departures from the RFT in terms of the evaluation criteria that were applied, and the approach taken to putting in place a performance guarantee with the successful tenderer. Further, the tender evaluation report did not identify that the department considered there were areas requiring clarification relating to pricing issues and solution/technical issues, including a concern that the tenderer’s pricing for the medium and high call volume scenarios exceeded the budgeted amount for each year of service delivery. (See paragraphs 3.45 to 3.60)

28. The roles and responsibilities of individuals involved in the NAP 10 and NAP 21 procurements set out in the evaluation plans provided for an appropriate separation of duties between the spending delegate and the Evaluation Committees. The probity adviser was not independent of the procurement processes as it also performed the role of strategic procurement adviser. (See paragraphs 3.61 to 3.65)

29. Appropriate procurement records were partly maintained. While available records addressed the requirement for the NAP 10 and NAP 21 procurements, evidence to support key decisions was not maintained. In addition, the tender evaluation report did not accurately reflect the evaluation process that was employed or satisfactorily demonstrate that value for money had been achieved. There are no records evidencing how the department arrived at the budgeted amounts for the two services. (See paragraphs 3.66 to 3.71)

30. Contracts for the two new services have not been signed, meaning the requirement to report on AusTender has not been triggered. The department met its obligation to report the evaluation provider contract accurately within the 42 day deadline. The department was also required to report on AusTender a number of the adviser and consultant contracts it entered into for the purpose of assisting with the main procurements. There were delays and inaccuracies in reporting of six of the eight contracts that required reporting on AusTender. (See paragraphs 3.72 to 3.74)

Recommendations

Summary of entity response

31. The proposed audit report was provided to the Attorney-General’s Department and an extract of the proposed report was provided to Astryx Pty Ltd. The Attorney-General’s Department’s summary response is reproduced below.

Attorney General’s Department

The department appreciates the opportunity afforded from the ANAO audit process to improve future procurement practices and accepts the ANAO’s key finding in the Section 19 Report. This includes all six of the ANAO’s recommendations, along with the opportunities for improvement identified throughout. The procurement processes being reviewed were complex in nature and the department made genuine efforts to ensure correct process was followed and ethical requirements were met throughout. The department has already taken steps to improve current procurements being run the by the National Office for Child Safety (NOCS) based on discussions with the ANAO, and is also committed to implementing departmental-wide improvements. The department thanks the ANAO for its audit of the conduct of procurements relating to two new child sexual abused-related national services, and is confident that procurement practices of NOCS, and across the whole of the department, will be improved as a result.

Background

1. Reducing the disparity between Indigenous and non-Indigenous economic outcomes has been a longstanding goal of Australian governments. The National Agreement on Closing the Gap aims to strengthen economic participation and development of Aboriginal and Torres Strait Islander people and their communities.¹ Increasing opportunities for Indigenous economic participation has also been an area of interest for the Australian Parliament.²

2. The Indigenous Procurement Policy (IPP) was established in 2015 with the objective ‘to stimulate Indigenous entrepreneurship, business and economic development, providing Indigenous Australians with more opportunities to participate in the economy’.³ One of three elements of the IPP are the mandatory minimum requirements (MMRs), which are targets for minimum Indigenous employment and/or supply use for Australian Government contracts valued from $7.5 million in certain specified industries.⁴ The National Indigenous Australians Agency (NIAA) is responsible for administering the IPP, including the MMRs.

Rationale for undertaking the audit

3. The stated policy objective of the MMRs is to ‘ensure that Indigenous Australians gain skills and economic benefit from some of the larger pieces of work that the Commonwealth outsources, including in Remote Areas’.⁵ Compliance with the MMRs is mandatory for non-corporate Commonwealth entities. The MMRs were established in July 2015 and became binding on contractors from 1 July 2016.

4. Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements was undertaken to provide assurance that the MMRs were being effectively administered and selected entities were complying with them.⁶ The audit concluded that while the MMRs were effectively designed, their administration had been undermined by ineffective implementation and monitoring by the policy owner and insufficient compliance by the selected entities.⁷ The audit made six recommendations to improve administration of and compliance with the MMRs, which were all agreed to.

5. Auditor-General reports identify risks to the successful delivery of government outcomes and provide recommendations to address them. The tabling in the Parliament of an agreed response to an Auditor-General recommendation is a formal commitment by the entity to implement the recommended action. Effective implementation of agreed Auditor-General recommendations demonstrates accountability to the Parliament and contributes to realising the full benefit of an audit.⁸

6. This audit examines whether the NIAA; Department of Defence (Defence); Department of Education (Education); Department of Employment and Workplace Relations (DEWR)⁹; Department of Home Affairs (Home Affairs); and Department of Infrastructure, Transport, Regional Development, Communications, Sport and the Arts (Infrastructure) have effectively implemented agreed recommendations from Auditor-General Report No. 25 2019–20. Entities’ implementation of agreed recommendations will help provide assurance to the Parliament about whether the MMRs are meeting the objective of stimulating Indigenous entrepreneurship, business and economic development and providing Indigenous Australians with opportunities to participate in the economy.

Audit objective and criteria

7. The audit objective was to assess whether selected entities effectively implemented agreed recommendations from Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements.

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

• Did the NIAA implement recommendations related to the administration of the MMRs?
• Does the NIAA manage exemptions to the MMRs effectively?
• Did selected entities implement recommendations related to their compliance with the MMRs?

Conclusion

9. Almost five years after the recommendations were agreed to, entities had partly implemented recommendations from Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements. Although the NIAA had improved guidance for entities and sought to increase MMR reporting compliance, a recommendation for the NIAA as the policy owner to implement an evaluation strategy was not completed. The NIAA has not demonstrated whether the MMRs are improving Indigenous economic participation. A risk related to the inappropriate use of exemptions was not managed. Recommendations intended to address the risk that reporting on MMR contracts is incomplete and inaccurate were partly implemented by audited entities. Reforms to the Indigenous Procurement Policy were announced in February 2025 without a clear understanding of the policy’s effectiveness.

10. The NIAA largely implemented two of three recommendations relating to its administration of the MMRs: to develop guidance on the MMRs for Australian Government entities and contractors; and to implement a strategy to increase MMR reporting compliance. The NIAA did not complete a third recommendation as it developed but did not implement an MMR evaluation strategy. Additional commitments made by the NIAA in response to two recommendations were not met.

11. Contracts subject to the MMRs may be exempted by entities for valid reasons established in the Indigenous Procurement Policy. The inappropriate use of exemptions impedes achievement of the Indigenous Procurement Policy’s objectives. The NIAA’s management of exemptions has been partly effective. Systems have been set up to allow potentially invalid exemptions. There is a lack of guidance and assurance over the appropriate use of exemptions.

12. Defence, Education and Home Affairs largely implemented the agreed recommendations relating to compliance with the MMRs. The NIAA, DEWR and Infrastructure partly implemented the agreed recommendations. The MMRs are relevant to the approach to market, tender evaluation, contract management, reporting and finalisation phases of a procurement. Compliance with the MMR requirements was higher in the approach to market, tender evaluation and contract management phases than in the reporting and finalisation phases. All entities could do more to ensure contractors’ compliance with MMR targets and to gain assurance over reported MMR performance.

Supporting findings

Administration of mandatory minimum requirements

13. Auditor-General Report No. 25 2019–20 recommended that the NIAA develop tailored guidance on managing the MMRs throughout the contract lifecycle in consultation with entities and contractors. The NIAA published updated guidance on managing the MMRs in July 2020, following stakeholder consultation. The guidance included complete information for nine of 14 topics identified as requiring additional guidance in Auditor-General Report No. 25 2019–20. Guidance included incomplete information on MMR exemptions, managing MMR performance reporting, and obtaining assurance over contractors’ MMR performance reporting. As at March 2025, guidance had not been updated since July 2020 despite changes to MMR reporting requirements. A commitment to publish guidance tailored for Indigenous businesses was not met. (See paragraphs 2.5 to 2.22)

14. Contractors must report on, and Australian Government entities must assess, performance in meeting agreed MMR targets. Auditor-General Report No. 25 2019–20 recommended that the NIAA implement a strategy to increase entity and contractor compliance with MMR reporting requirements to ensure information in the Indigenous Procurement Policy Reporting Solution (IPPRS) is complete. The NIAA planned and undertook activities aimed at increasing contractors’ compliance with MMR reporting requirements and entities’ management of reporting non-compliance. These included improvements to the IPPRS and monitoring reporting compliance in Australian Government portfolios. The NIAA closed the ANAO recommendation before planned changes to the IPPRS were implemented. As at February 2025, the IPPRS did not fully support contract managers to meet reporting requirements for all types of MMR contracts. User feedback indicated ongoing access and support issues. While reporting compliance increased between 2022 and 2024, as at June 2024, entities and contractors were not fully compliant with MMR reporting requirements and information in the IPPRS was incomplete. Reforms to the IPP announced by government in February 2025 included potentially increasing transparency of suppliers’ performance against MMR targets. (See paragraphs 2.23 to 2.32)

15. Auditor-General Report No. 25 2019–20 recommended that the NIAA implement an evaluation strategy for the MMRs that outlines an approach to measuring the impact of the policy on Aboriginal and Torres Strait Islander employment and business outcomes. Although an evaluation strategy for the MMRs was finalised, it was not implemented. The NIAA has not met requirements to review the effectiveness of a procurement-connected policy every five years. There is no performance monitoring and limited public reporting about the MMRs. (See paragraphs 2.33 to 2.54)

Exemptions from mandatory minimum requirements

16. Between July 2016 and September 2024, 63 per cent (valued at $69.3 billion) of all contracts recorded in the Indigenous Procurement Policy Reporting Solution (IPPRS) were exempted from the MRRs by relevant entities. The proportion of contracts exempted by entities from the MMRs has increased over time. The IPPRS has been set up by the NIAA to allow entities to record reasons for exemptions. The reason categories in the IPPRS mainly align with the Indigenous Procurement Policy, however include a category called ‘other’ that does not align. Of exempted contracts, 34 per cent (valued at $30.2 billion) used the exemption category ‘other’. The NIAA advised the ANAO that some contracts exempted for ‘other’ reasons were exempted because they are in practice non-compliant with the Indigenous Procurement Policy. Entities’ use of the ‘other’ exemption category for non-compliant contracts obscures the degree of non-compliance with the MMRs and is not appropriate. The NIAA does not provide complete guidance on the use of exemptions, or assurance over the legitimacy of exemptions. The NIAA has not considered the strategic implications of exemption usage for the achievement of policy objectives. (See paragraphs 3.1 to 3.13)

Compliance with mandatory minimum requirements

17. Auditor-General Report No. 25 2019–20 recommended that all audited entities review and update their procurement protocols to ensure procuring officers undertaking major procurements that trigger the MMRs comply with required steps in the procurement process.

• As at December 2024, all entities updated their procurement protocols for MMR requirements. One component of this was the development of detailed internal guidance. As at December 2024, Defence, Education, Home Affairs and Infrastructure’s guidance identified key MMR requirements for the approach to market to contract management phases of the procurement lifecycle. DEWR’s guidance and the NIAA’s internal guidance did not identify all key MMR requirements.
• Aside from Home Affairs, all entities’ contracts were largely compliant with the MMRs at the approach to market, tender evaluation and contract management phases of the procurement lifecycle. Home Affairs’ contracts was partly compliant. Defence’s compliance was poorer for contracts resulting from panel procurements.
• All audited entities could improve tender evaluation processes by including an IPPRS search on tenderers’ past MMR compliance.
• In summary: Defence, Education, and Infrastructure largely implemented the 2019–20 recommendation, and the NIAA and DEWR partly implemented it. Home Affairs’ guidance was appropriately updated, however it has not consistently ensured that procuring officers undertaking major procurements that trigger the MMRs comply in practice with the required steps. (See paragraphs 4.3 to 4.18)

18. Auditor-General Report No. 25 2019–20 recommended that all audited entities establish processes, or update existing processes, to ensure contract managers and contractors regularly use the IPP Reporting Solution (IPPRS) for MMR reporting.

• Defence, Education and Home Affairs’ internal guidance identified key IPPRS reporting requirements, while the NIAA, DEWR and Infrastructure’s internal guidance did not identify all key requirements.
• For a sample of contracts, the NIAA’s MMR reporting was timely and based on accurate IPPRS data. For the other five entities, there were issues with both timeliness and accuracy. None of the five entities consistently followed up on late contractor reporting.
• When a contract variation is published on AusTender, IPPRS data is not consistently updated. This means a contract may be identified as on track to meet the MMR target based on incorrect values or a contract may move to the finalisation step prematurely as the end date is inaccurate.
• In summary: Defence, Education and Home Affairs largely implemented the 2019–20 recommendation, and the NIAA, DEWR and Infrastructure partly implemented it. (See paragraphs 4.19 to 4.37)

19. Auditor-General Report No. 25 2019–20 recommended that after guidance has been provided by the policy owner, all audited entities establish appropriate controls and risk-based assurance activities for active MMR contracts.

• As the policy owner, the NIAA published guidance in July 2020 that has a short overview on how MMR performance information could be verified.
• All six entities established at least some controls and arrangements to gain assurance over contractors’ MMR performance reporting. Controls and arrangements were more developed in Education and Home Affairs.
• For a sample of contracts examined, none of the entities consistently undertook assurance activities to verify contractor performance reporting. Defence undertook the most assurance activity.
• In summary: all entities partly implemented the 2019–20 recommendation. (See paragraphs 4.38 to 4.59)

Note a: Based on 161 contracts where an assessment outcome was reported as at 30 September 2024.

Note b: Joint Standing Committee on Aboriginal and Torres Strait Islander Affairs, Inquiry into economic self-determination and opportunities for First Nations Australians (2024), pp. 13–19, 39–40.

Recommendations

20. This report makes eight recommendations.

Summary of entity responses

21. Extracts of the proposed audit report were provided to the NIAA, Defence, Education, DEWR, Home Affairs and Infrastructure. Entities’ summary responses are provided below. Entities’ full responses are provided at Appendix 1.

National Indigenous Australians Agency

The National Indigenous Australians Agency (NIAA) welcomes the findings of the audit.

The primary purpose of the Indigenous Procurement Policy (IPP) is to stimulate Indigenous entrepreneurship, business and economic development, providing Indigenous Australians with more opportunities to participate in the economy. The Mandatory Minimum Requirements (MMR) are a key component of this policy.

Prior to the implementation of the policy in 2015, Indigenous businesses secured limited business from Commonwealth procurement. The policy has significantly increased the rate of purchasing from Indigenous businesses.

The NIAA is proud to take the lead on behalf of the Commonwealth in providing advice on how to best meet the requirements of the IPP. The NIAA provides advice to Commonwealth entities through its many publications and its dedicated IPP team. Within the resources available, the NIAA has also invested in providing ICT tools and support to assist Commonwealth entities with their responsibility to ensure accurate reporting on targets and MMRs.

As with all other elements of the Commonwealth Procurement Rules, it is the responsibility of each Commonwealth entity to meet the obligations of the IPP. The NIAA welcomes the ANAO’s recommendations on how it can improve the advice it provides to entities to meet their obligations.

Department of Defence

Defence welcomes the ANAO Audit Report assessing whether selected entities effectively implemented the agreed recommendations from Auditor-General Report No. 25 2019–20 Aboriginal and Torres Strait Islander Participation Targets in Major Procurements.

Defence agrees to the recommendation directed at all audited entities to establish or strengthen processes to ensure contract managers undertake appropriate activities to ensure contractors’ compliance with the mandatory minimum requirements (MMR) targets and verify that reported MMR performance information is accurate.

As the Commonwealth’s largest procurer, Defence is proud of its significant commitment towards supporting the long-term growth and sustainability of the Indigenous business sector, and will continue working with the National Indigenous Australians Agency to improve the monitoring and reporting of the MMR targets.

Department of Education

The Department of Education welcomes this report. The report recognises the significant efforts the department has made to implement changes recommended by the ANAO’s performance audit of February 2020, however the department acknowledges the need to continue its efforts to strengthen its processes to ensure contract managers undertake appropriate activities to ensure contractors’ compliance with mandatory minimum requirements (MMR) targets and verify that reported MMR performance information is accurate.

Education is already making progress towards meeting the report’s recommendation, including working with contract managers to ensure that assurance activities are performed more consistently, and that contract managers regularly review and verify contractor reports. Education will continue to engage with departmental contract managers to ensure that MMR contracts are actioned in the IPPRS within the audit’s recommended timeframes.

Education notes the audit’s broader messages to all entities on the importance of strengthening procurement processes to ensure tenderers’ Indigenous Participation Plans are assessed and that assessments are appropriately documented. Education has added additional information to its intranet guidance on the process required when evaluating tender responses for MMR contracts, and its guides on approaching the market and evaluating and selecting suppliers. In addition, Education has updated its Evaluation Plan templates to include MMR requirements as part of the evaluation process, where applicable.

Education are regular participants in the Commonwealth Procurement and Contract Management Community of Practice and participate in networking opportunities across the Australian Public Service, including informal knowledge sharing across entities.

Department of Employment and Workplace Relations

The Department of Employment and Workplace Relations (DEWR) acknowledges the Australian National Audit Office’s (ANAO) report detailing the outcomes of the follow up audit of Targets for minimum Indigenous employment or supply use in major Australian Government procurements.

DEWR is committed to delivering compliant procurement processes that deliver the expected business outcomes. This includes ensuring compliance with the Indigenous Procurement Policy and that our high value (as defined by the Indigenous Procurement Policy) contracts are properly managed and reported on. Starting from a low maturity level, we have been on a continuous journey of improvement since the Department’s creation in July 2022 (following a Machinery of Government change). We acknowledge and accept the ANAO’s findings and commit to implementing their recommendations as part of our broader procurement maturity program of work.

Department of Home Affairs

The Department of Home Affairs is committed to the implementation of the Government’s policy objective to drive growth in Aboriginal and Torres Strait Islander businesses and employment.

The Department agrees with the two recommendations made by the Auditor-General aimed at improving the Department’s compliance with mandatory minimum requirements (MMR) of the Indigenous Procurement Policy throughout the procurement and contract management phases, and will strengthen its processes, guidance, reporting and assurance activities to achieve this.

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

The department supports the policy objectives of the Indigenous Procurement Policy and the achievement of the Mandatory Minimum Requirements (MMR) as a key element of the IPP. This follow up audit, which examined all five of the department’s procurements that triggered the MMR, has highlighted the need for further improvement in aspects of the department’s arrangements for meeting the MMR. The department is committed to making the necessary improvements to its processes.

Background

1. Established by the Disaster Ready Fund Act 2019, the Disaster Ready Fund (DRF) is described by the Australian Government as its flagship disaster resilience and risk reduction initiative. To be eligible for funding, projects must fall under one of two eligible streams: infrastructure project or systemic risk reduction project.¹

2. The National Emergency Management Agency (NEMA) is responsible for administration of the DRF. While anyone can develop a DRF proposal (an ‘applicant’), only state and territory governments are eligible to submit projects to NEMA for potential funding through the ‘lead agency’ in that state or territory. Lead agencies were responsible for coordinating, reviewing, evaluating and submitting applications to NEMA on behalf of project proponents. Lead agencies could also develop project proposals. In addition, payments for projects awarded funding were made by NEMA to the relevant state and territory lead agency, including where the project proponent was not a state or territory entity. The choice to conduct the DRF funding rounds in this way meant that the DRF was not subject to the Commonwealth Grants Rules and Principles and required that the cost of administering the DRF be shared between NEMA and the state and territory lead agencies.

3. NEMA was responsible for conducting an initial eligibility review of applications received from the state and territory lead agencies. Eligible projects were then referred to the DRF Assessment Panel (chaired by NEMA). The panel was to assess applications individually against the published selection criteria, rank proposals and make funding recommendations to the Minister for Emergency Management (the minister) through NEMA’s Coordinator-General.

4. Up to $1 billion in DRF funding has been announced as available over five years from 1 July 2023 to 30 June 2028 to fund projects. As of January 2025, two funding rounds have been conducted and a third is underway.

Rationale for undertaking the audit

5. The $1 billion DRF is described by the Australian Government as its flagship disaster resilience and risk reduction initiative. This performance audit was conducted to provide assurance to the Parliament about whether the award of DRF funding is effective and consistent with the published guidelines.

Audit objective and criteria

6. The objective of this audit was to assess whether the award of funding under the DRF was effective and consistent with the published guidelines.

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

• Were appropriate guidelines in place?
• Was an appropriate approach taken to assessing candidate projects?
• Were funding decisions appropriately informed and documented?

8. The audit examined the awarding of funding under the DRF across the first two rounds. For the first criterion, the ANAO planned to also examine the development of the Round 3 guidelines. As those guidelines were not finalised and published until 22 January 2025 the ANAO analysis against the first criterion (as set out in Chapter 2) relates to the first two rounds only, so as to meet tabling commitments to the Parliament.

Conclusion

9. The award of funding under the Disaster Ready Fund was largely effective. Across the first two rounds, $402.15 million in funding was awarded to 362 projects with projects in the systemic risk reduction stream receiving the most funding (ahead of those in the infrastructure stream or those that applied under both streams). The aggregate scores against the three published criteria were a key factor used to decide which applications would be recommended for funding, an approach that is consistent with awarding funding on merit. Improvements to program design and, in particular, strengthened assessment arrangements, would provide greater confidence that the approved projects are those that will make the greatest contribution to the Fund achieving its objectives.

10. Funding guidelines for the first two rounds were in place. The publication of the guidelines was not timely. The guidelines were largely appropriate. The guidelines:

• outlined the way in which funding candidates would be identified;
• set out relevant and appropriate eligibility requirements and appraisal criteria;
• set out how applications would be scored and how the scoring results would be used, albeit with some relevant information about assessment processes not being published;
• identified some, not all, assessment and decision-making responsibilities; and
• identified assessment and decision-making responsibilities in relation to applications assessed as ineligible. The guidelines lack clarity in relation to assessment and decision-making responsibilities for aspects of eligibility checking, and in relation to the co-funding requirements.

11. The approach taken to assessing candidate projects was partly appropriate. The assessment and scoring of applications against the three published selection criteria were the primary input into the ranking of applications and identification of which projects would be recommended for funding. The approach to assessment meant that:

• the processes by which members of the assessment panel are appointed were not open, and the membership was not disclosed in the published guidelines;
• conflicts of interests for those involved in the assessment processes were not consistently identified, declared and managed;
• requests for waivers to the applicant co-contribution requirement were not assessed and decided prior to those applications proceeding to merit assessment; and
• the full panel did not undertake a detailed merit assessment of all applications with adjustments to total scores made during panel meetings not identifying which criteria were affected.

12. Funding decisions were appropriately informed and documented through written briefings. In each round, a clear recommendation was provided to the minister as to which applications should, on the basis of the panel’s assessment report, be approved for funding. The minister agreed with the recommendations received.

Supporting findings

Program guidelines

13. Guidelines for the first two rounds were developed, approved and published. There were two key shortcomings in NEMA’s approach:

• in both rounds, changes were made to the guidelines after they had been provided to NEMA’s probity adviser for sign-off, and also after the guidelines had been approved by the minister, without NEMA obtaining updated probity sign-off or ministerial approval of the changes; and
• publication was not timely. For the first round, one jurisdiction had opened its application process by the time the guidelines were released. For the second round, one jurisdiction had opened and closed its application process by the time the guidelines were released. The guidelines for the third round were publicly released on 22 January 2025. (See paragraphs 2.3 to 2.18)

14. The guidelines clearly outlined that a closed competitive application process was being employed. This included identifying the key role to be played by state and territory lead agencies to coordinate proposals in each jurisdiction, and for submitting applications to NEMA on behalf of the jurisdiction. It was up to lead agencies to decide how they would seek and coordinate proposals. For the first round, some jurisdictions released guidance and opened public submission and participation processes prior to the release of the DRF guidelines. For the second round, one jurisdiction had opened and closed its application process by the time the guidelines were released. Ministers had decided that NEMA should use the Business Grants Hub in the second round. NEMA procured an off-the-shelf commercial product for that round. (See paragraphs 2.19 to 2.22)

15. Relevant and appropriate eligibility requirements and appraisal criteria were established. (See paragraphs 2.23 to 2.29)

16. The guidelines set out how applications would be scored and how the scoring results would be used. NEMA also developed internal assessment framework documents for each round. There were some differences and/or additions between the internal documents and the published guidelines. (See paragraphs 2.30 to 2.31)

17. The program guidelines did not fully identify assessment and decision-making responsibilities for each round. (See paragraphs 2.33 to 2.36)

18. An evaluation strategy was developed in March 2024, which was after the first round had been completed and after the application stage for the second round had been undertaken. No evaluations are planned until at least 2026. (See paragraphs 2.37 to 2.41)

Assessment of candidate projects

19. Of the 44 applications in the first two rounds assessed as ineligible, 18 (41 per cent) were removed from consideration. The remaining 26 applications assessed as ineligible proceeded to the panel assessment stage, with one removed after the panel identified it as ineligible. (See paragraphs 3.1 to 3.6)

20. Appointments to the DRF Assessment Panel were not open or transparent. (See paragraphs 3.7 to 3.14)

21. Probity advice in the first round was compromised by the ongoing contracting by NEMA of the same firm to also provide advice on the design and conduct of the first two DRF funding rounds. NEMA did not take steps to ensure it was fully aware of, nor did it seek to manage, the potential impact and risk of this arrangement adversely affecting the independence of the probity adviser. (See paragraphs 3.17 to 3.26)

22. Internal NEMA processes for managing conflicts of interest centred around briefing participants on their probity requirements, collating conflict of interest declarations, and reliance on participants to update NEMA if information became available that required the individual to update their declaration. There was no active monitoring and management of potential or actual conflicts of interest beyond those declared by individuals. The conflict of interest registers for the first and second rounds were incomplete and inaccurate. The conflict of interest declarations required by the probity framework were not provided by a number of people in each round including from the Coordinator-General of NEMA in both rounds, the Deputy Coordinator-General in the second round and the lead probity adviser in the first round. There was no register of completed probity briefings. (See paragraphs 3.27 to 3.44)

23. The three appraisal criteria identified in the guidelines for the first two funding rounds were applied to assess the merit of competing candidate projects. The approach to assessment was not fully set out in the published guidelines, as it was not identified that a subset of the panel (four of six panellists in the first round, and three of 12 panellists in the second round) would undertake preliminary assessments of individual applications applying the individual criteria. The resulting average score for each application was provided to the full panel to consider individual applications against the merit criteria on an exception basis. There were shortcomings in the application of the documented assessment framework which meant that not all applications identified as achieving a ‘competitive’ preliminary assessment score were provided to the panel for full consideration. There were also gaps in the minutes of the panel meetings, with no record of decisions or discussion by the panel for 113 applications. Where there were records, it was common for the records to not explain score changes with relevance to the appraisal criteria, or explain the equity or diversity reasons for adjustments. (See paragraphs 3.45 to 3.71)

24. There were inconsistencies and anomalies in the assessment and decision-making in relation to requests from applicants for a waiver of the requirement that they provide a co-contribution of at least 50 per cent of eligible project expenditure. In the first round, the Program Delegate sought advice from the assessment panel, and waiver decisions reflected the panel advice. In the second round, no recommendations from the panel were recorded for 24 of the 60 requests for waivers. Of the 89 requests for a full or partial waiver received across the two rounds 80 were assessed, with 44 of the requests granted. The projects approved for DRF funding included 20 where a full or partial wavier was granted. (See paragraphs 3.73 to 3.84)

25. Applications were placed into three lists, a recommended for funding list, a suitable (but not recommended) list, and a list of not suitable projects. Projects were ranked within those lists. This approach was consistent with the requirement in the program guidelines that projects be ranked after they had been assessed against the three published selection criteria. (See paragraphs 3.85 to 3.100)

Funding decisions

26. Timely and clear funding recommendations were provided in writing each round to a delegate of the Coordinator-General. The recommendation was to endorse (in the first round) and approve (in the second round) the recommendations of the panel as set out in its assessment report. (See paragraphs 4.2 to 4.9).

27. Timely and clear funding recommendations were provided to the minister in each of the first two rounds. The recommendations reflected the results of the assessment process, as recorded by the panel in its assessment report for each round (the guidelines required that the recommendations be based on advice from the panel). (See paragraphs 4.10 to 4.17)

28. The minister recorded agreement in full to the funding recommendations in each round. The minister recorded the basis for the funding decision in the format provided by NEMA, referencing the Disaster Ready Fund Act 2019, and confirmed satisfaction that the expenditure was a ‘proper use of money’ in each round (the test set out in the PGPA Act). (See paragraphs 4.19 to 4.24)

29. Distribution of the award of funding in each round was commensurate with scale of applications from each jurisdiction, and the intent of the guidelines to support jurisdictions to achieve baseline funding thresholds. There was no evidence of political factors influencing the distribution of funding. (See paragraphs 4.25 to 4.32)

Recommendations

Summary of entity response

30. The proposed audit report was provided to NEMA. Extracts of the proposed report were also provided to: Maddocks, Australian Government Actuary, Natural Hazards Research Australia, Dr Mark Crosweller and Dr Jessica Weir. The letters of response that were received for inclusion in the audit report are at Appendix 1. Summary response from NEMA is below.

National Emergency Management Agency

The National Emergency Management Agency (NEMA) welcomes the audit and is committed to strengthening its delivery of the Disaster Ready Fund (DRF) in accordance with legislative requirements, government policies and better practice.

In awarding funds for over 350 projects, valued at $400 million, the first and second rounds of the DRF have supported communities across Australia to reduce disaster risk and build resilience. NEMA welcomes the overall conclusions of the audit the award of funds was largely effective, funding guidelines were largely appropriate and funding decisions were appropriately informed and documented.

NEMA notes six recommendations have been made to improve aspects of program delivery. Of these, NEMA agrees with Recommendations one and five, agrees in part with Recommendations two, three and four and notes Recommendation six.

NEMA also notes various findings throughout the report, several of which are premised on different interpretations of requirements and weightings of principles to those applied by NEMA. While NEMA acknowledges the ANAO’s views and will consider these in designing future rounds, NEMA disagrees with some findings and maintains its approach was consistent with a pragmatic interpretation of guideline requirements and struck an appropriate balance between better practice principles.

Background

1. The Australian Human Rights Commission (AHRC or the Commission) was established in December 1986 by the Australian Human Rights Commission Act 1986 (AHRC Act). The AHRC is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013.

2. The Commission’s key goal related to complaint handling set out in its Corporate Plan is ‘improving enjoyment of human rights by all, supporting access to justice and remedies for people and communities whose rights are breached.’¹

3. AHRC’s Investigation and Conciliation service (ICS) is responsible for delivery of complaint investigation and conciliation. ICS also operates two information services (the National Information Service and Respect@Work National Information Service) to provide information about AHRC’s complaint handling function and respond to enquiries from the general public.

Rationale for undertaking the audit

4. AHRC is Australia’s national human rights institution. The handling of complaints is central to its purpose, which is to ensure that Australians have access to effective, independent complaints handling and public inquiry processes on human rights and discrimination matters, and benefit from human rights education, advocacy, monitoring and compliance activities. The AHRC has reported that, in 2023–24, it received 2,708 complaints. This performance audit was conducted to provide independent assurance to the Parliament that AHRC’s handling of complaints is efficient and effective.

Audit objective and criteria

5. The objective of this audit was to assess the efficiency and effectiveness of AHRC’s handling of complaints.

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

• Are AHRC’s complaint handling arrangements designed in a way to support the effective management of complaints?
• Is AHRC’s handling of complaints efficient?
• Is AHRC’s handling of complaints effective?

Conclusion

7. The AHRC’s handling of complaints is partly efficient and partly effective.

8. The AHRC has designed its complaint handling arrangements to support effective management of complaints with two exceptions. The two key shortcomings relate to it not having conducted a recent procurement for, or having a contract in place for, an information technology system to assist with the management of complaints, and not having developed a formal approach to obtaining assurance over the handling of individual complaints.

9. The timeliness of complaints handling has been declining, with the Commission not meeting its performance indicator (consistent with its enabling legislation) to finalise 85 per cent of complaints within 12 months in 2023–24. A significant backlog has developed and, although the backlog has stabilised, it remains high. Resource efficiency improved over the four years up to and including 2021–22, a trend that did not continue in 2022–23 and 2023–24.

10. A lower proportion of complaints are being conciliated by the Commission, with the Commission not meeting its related performance indicator for the last three years. A greater proportion of complaints are being terminated or discontinued. Data on complainant and respondent satisfaction with the AHRC’s complaint handling is not reliable.

Supporting findings

Complaint handling arrangements

11. Complaints mechanisms and processes are clear and accessible. (See paragraphs 2.2 to 2.13)

12. Suitable systems and processes are, in most respects, in place for complaints handling. From a random sample of 137 complaints examined by the ANAO, no systemic deviations from legislation or existing procedural guidance were identified. The main shortcomings relate to the AHRC not having appropriate contractual arrangements in place for its electronic complaints management system and the absence of a formalised quality assurance process. Since 2021, multiple reviews initiated at the request of the Australian Government to achieve savings have recommended changes to the complaints management system to improve operational efficiency. The recommended changes have not been made. (See paragraphs 2.14 to 2.52)

Complaint handling efficiency

13. AHRC has implemented systems and processes to capture input and output data which can be used to calculate basic measures of efficiency. There are issues with the reliability of complaints data that adversely affects the Commission’s management of complaints handling and its performance reporting. (See paragraphs 3.2 to 3.15)

14. Complaints handling by AHRC is not timely.

• A significant backlog in complaints developed between the first quarter of 2019–20 and quarter 3 2021–22. With fewer complaints received in 2023–24 and some additional resources, the backlog has stabilised. It remains around double what it was prior to 2019–20.
• The proportion of complaints being finalised within 12 months (one of AHRC’s performance measures, consistent with the Commission’s enabling legislation) has been declining, with AHRC not achieving its target for 2023–24. Further, this performance measure is not focused on measuring performance from the perspective of parties to the complaint.
• Complaints identified as a priority by the AHRC are typically finalised more quickly than those not prioritised. Notwithstanding this, the duration of both standard and priority complaints has increased.
• Complaint handling delays are primarily a result of delays in an accepted complaint being allocated to a case officer (rather than delays in the first stage, between complaint receipt and acceptance, or in the final stage, progressing the complaint to finalisation). The increasing time taken to allocate matters to case officers has coincided with a decrease in the number of complaints conciliated and increase in the number of discontinued complaints. (See paragraphs 3.16 to 3.41)

15. AHRC has not established a target and does not measure the resource efficiency of its Investigation and Conciliation service. The efficiency of the Investigation and Conciliation service, measured both in terms of the direct cost per finalised complaint and ratio of complaints finalised per staff member, improved over the four years up to and including 2021–22. That trend did not continue in 2022–23 and 2023–24 as a result of fewer complaints being finalised and, for 2023–24, some additional resources being provided to stabilise the backlog in complaints.

16. AHRC has not prioritised resourcing ICS in line with demand for its complaints handling services. AHRC has not developed an activity-based costing model to demonstrate the effect of the demand driven complaints workload or inform its internal allocation of resources despite an earlier recommendation from consultants in August 2021. (See paragraphs 3.42 to 3.60)

Complaint handling effectiveness

17. It has become less likely for complaints to be conciliated and more likely for complaints to be discontinued, terminated or declined by the AHRC.

• An increasing number of complaints have been assessed as suitable for conciliation and an increasing number of conciliations have been held over the last seven financial years (reflecting the higher complaint numbers overall). The proportion of complaints recorded as resolved through conciliation has decreased from 46 per cent of complaints in 2017-18 to 33 per cent in 2023-24. The Commission did not meet its target of conciliating 40 per cent of complaints in 2021-22, 2022-23 or 2023-24, notwithstanding the additional resources provided through the October 2022 Budget.
• The proportion of complaints terminated, declined or discontinued has grown, increasing from 40 per cent of complaints finalised in 2017–18 to 58 per cent of complaints finalised in 2023–24. (See paragraphs 4.4 to 4.34)

18. The AHRC is not obtaining reliable data on the extent to which complainants and respondents are satisfied with its complaint handling process.

• Parties’ measured level of satisfaction with Commission’s complaint handling processes has been decreasing over time. Overall satisfaction decreased from 91 per cent in 2017–18 to 85 per cent in 2023–24.
• Respondents and their representatives report higher levels of overall satisfaction than complainants do with AHRC complaint handling processes. Respondents also report higher levels of agreement that Commission processes are timely and fair.
• The results of the surveys reported by the Commission are not demonstrably reliable and unbiased. Of note is that 61 per cent of participants were not sent the satisfaction survey over the seven years examined. Satisfaction surveys were most often sent to participants with conciliated (53 per cent of complainants and 51 per cent of respondents) and terminated or declined outcomes (53 per cent of complainants and 52 per cent of respondents). Complainants who withdraw their complaints or complainants whose complaints are discontinued by the AHRC were less likely to be surveyed. (See paragraphs 4.35 to 4.51)

Recommendations

Summary of entity response

19. The proposed audit report was provided to AHRC. The AHRC’s summary response is reproduced below. The full response from the AHRC is at Appendix 1. Improvements observed by the ANAO during the course of this audit are listed at Appendix 2.

Providing people and organisations across Australia with a free, accessible and effective dispute resolution process for discrimination and human rights complaints is one of the Australian Human Rights Commission’s key statutory functions. It is also a core component of the Commission’s vision of an Australian society in which people’s human rights are respected, promoted and protected.

The Commission welcomes the ANAO’s report and agrees or agrees in principle with its five recommendations to improve our complaint handling function.

The Commission acknowledges that currently our complaint handling function is not timely. The COVID-19 pandemic generated an unprecedented rise in complaints. Complaint numbers have remained around 30% higher than pre-pandemic levels. This continues to adversely impact timeframes. Reducing these timeframes by ensuring the Commission’s complaint function is appropriately resourced is a key priority.

Implementing the recommendations will also strengthen the Commission’s collection and analysis of complaint performance information and public reporting.

The Commission acknowledges the professionalism, integrity and empathy of our staff who deliver our information and complaint handling services. They have supported thousands of Australians over the 7-year audit period to access justice on discrimination and the human rights issues affecting them.