The audit objective was to assess the administrative effectiveness of the Department of Education, Employment and Workplace Relations(DEEWR), Department of Human Services (DHS) partnership arrangement in supporting the delivery of employment programs.



1. The Australian Government funds a range of employment programs providing income support payments and services such as job search facilities, counselling and training opportunities to working age people. The Department of Education, Employment and Workplace Relations (DEEWR) has overall responsibility for these employment programs and makes use of several different approaches to deliver services. Some employment services are delivered by Employment Services Providers under contract to DEEWR. However, income support and related services are delivered through a partnership between DEEWR and the Department of Human Services (DHS). In 2012–13, DHS will deliver an estimated $19.8 billion of payments for programs administered by DEEWR (approximately 13 per cent of all DHS payments).1 The employment program known as Working Age Payments accounts for $14.8 billion of this amount.

2. The partnership between DEEWR and DHS is supported by a formal agreement: the Bilateral Management Arrangement (BMA). Cross-agency agreements are an important mechanism for supporting collaboration and coordination between agencies. These agreements provide a framework for governance and operations by: establishing individual and joint roles and responsibilities; outlining agreed structures and processes; and providing for transparency and accountability of administration and outcomes. DEEWR has had several cross-agency agreements with Centrelink, and now DHS, for the delivery of employment programs since 1998.2 On 1 July 2009, DEEWR and Centrelink entered into a partnership arrangement, which replaced the previous purchaser-provider arrangement between the agencies.3 A key element of the current DEEWR–DHS partnership arrangement, which took effect in November 2009, is that almost all of the funding for service delivery under the BMA is now directly appropriated to DHS.4 This direct funding arrangement is intended to offer operational efficiencies in service delivery, including a reduction in red tape, and allows DEEWR and DHS to enter into a partnership arrangement that is genuinely collaborative.

The Bilateral Management Arrangement between DEEWR and DHS

3. The BMA aims to achieve five outcomes, including: integration of policy design and service delivery; shared understanding of, and responsibility for, program outcomes and improved program management; and collective responsiveness to government and a collaborative approach to priorities. The BMA specifies the payments and services to be delivered by DHS for programs administered by DEEWR, and the conditions applying to their delivery. It also defines the individual and joint responsibilities of DEEWR and DHS under the partnership arrangement.5 The BMA is supplemented by 48 Policy Advices for programs and payments issued by DEEWR to DHS.

4. The BMA establishes cross-agency governance and operational arrangements, which include:

  • a governance structure, comprising executive, relationship management and program management level committees, and an Issues Resolution Framework;
  • nine Protocols, and other procedures and documents, which support collaboration and information sharing; and
  • a confidence framework and associated reporting to monitor the relationship between the departments and provide assurance that policy and program outcomes are being achieved under the partnership.

5. DEEWR and DHS each appoint a Relationship Manager to oversee the administration of the BMA, its Protocols and relationships between the departments. The Relationship Managers are also a primary point of contact for issues under the BMA. Both DEEWR and DHS have a team that supports the Relationship Manager and assists coordination between relevant departmental staff responsible for different aspects of policy, program and service delivery.

Previous Australian National Audit Office audit

6. A 2008–09 Australian National Audit Office (ANAO) performance audit examined the then DEEWR–Centrelink Business Partnership Agreement (BPA).6 The ANAO concluded that the BPA provided a workable model under which DEEWR and Centrelink operated to implement working age programs and services. However, in practical terms, the effectiveness of the BPA was lessened as a result of several gaps and limitations in essential frameworks, documentation and administrative practices.7 The audit report recommended that DEEWR and Centrelink strengthen issues resolution; complete and maintain documentation supporting the BPA; develop transparent and cohesive business assurance and risk management approaches; and improve performance measurement, including by aligning Key Performance Measures (KPMs) to cover all outcomes and outputs relevant to the BPA.8 While recognising there have been some changes in roles and responsibilities between the departments since 2008–09, the recommendations of the previous audit remain largely relevant under the current BMA.

Audit objective and criteria

7. The audit objective was to assess the administrative effectiveness of the DEEWR–DHS partnership arrangement in supporting the delivery of employment programs. To form a conclusion against the objective, the ANAO assessed DEEWR’s and DHS’ performance against three high-level criteria:

  • governance arrangements established under the BMA support effective cross-agency management of employment programs;
  • business practices follow sound principles, agreed policies and guidelines; and
  • monitoring arrangements, including Key Performance Measures (KPMs), provide accurate and useful information to assess performance under the BMA.

Overall conclusion

8. In 2011–12 over $14 billion in working age payments were made to eligible people under the Working Age Payments program, which is supported by the Bilateral Management Arrangement (BMA) between DEEWR and DHS. As at June 2012, over one million people received these payments and related employment program services.9 In this respect, the effective operation of the BMA is important to facilitate the accurate and timely delivery of payments and services to large numbers of people. To provide for efficient delivery of these benefits to the community, the operational relationship between the two departments needs to be characterised by strong collaboration and coordination.

9. DEEWR’s and DHS’ administration of their respective roles under the partnership arrangement to support the delivery of employment programs is reasonably effective, with scope to further develop cross-agency collaboration. Under the BMA, appropriately structured governance arrangements have been put in place to oversee and support the partnership and the resulting delivery of employment programs. DEEWR and DHS have in place a range of Protocols and tools to guide governance and operational arrangements between the departments, although, in practice, they have been applied to varying degrees. Quarterly reporting through the BMA committees results in a focus on operational and service delivery performance and issues, and frequent formal and informal interactions between staff at multiple levels facilitate collaboration and coordination between the departments in designing and delivering employment programs.

10. The BMA has been in place since November 2009. The BMA differs significantly to the previous cross-agency agreement in that it is now a partnership rather than a purchaser-provider arrangement, with DHS directly appropriated almost all of the funding for service delivery, including benefit payments to eligible people. This partnership approach means that the departments need to negotiate and agree service delivery strategies that meet the intended outcomes of the BMA and acknowledge each department’s operational priorities. To give effect to a more collaborative approach, DEEWR and DHS need to consistently apply the agreed outcomes and work practices under the BMA. This would assist the resolution of key issues for employment program delivery in a timely manner. Particular areas for attention are:

  • better utilisation of the BMA governance structures, including to support timely issues escalation and resolution, and strengthening the central coordination role played by the Relationship Managers;
  • ensuring sufficient flexibility to negotiate and adjust service delivery strategies in response to operational issues, and in accordance with the shared outcomes established in the BMA;
  • the currency of Protocols, supporting procedures and documents, and Policy Advices, as the arrangements established in these documents form an agreed approach to collaboration and coordination between the departments;
  • consistently following the administrative processes outlined in the BMA and its Protocols, including to support joint risk management and business assurance activities, and the development of new policy proposals; and
  • improvement in the coverage and quality of BMA performance monitoring to provide for a stronger focus on the extent of achievement of relevant program objectives and government outcomes.

11. The audit highlighted the tensions and challenges for DEEWR and DHS in managing the cross-agency delivery of employment programs when both departments also have clearly articulated charter responsibilities. While there have been positive developments in the clarification of governance structures and processes since the ANAO’s 2008–09 audit of the previous arrangements between DEEWR and Centrelink, further effort is required to strengthen the operation of the current DEEWR—DHS partnership and manage the relationship between these two very significant departments. The ANAO has made three recommendations directed towards DEEWR and DHS: escalating and resolving operational issues in a timely manner; pursuing more consistent and coordinated work practices; and jointly managing risks to the delivery of payments and services under the BMA, as envisaged in the BMA’s operational arrangements. Strong executive leadership will be critical to the effective implementation of these recommendations, which are designed to support the departments’ complementary program and service delivery responsibilities.

Key findings by chapter

Overseeing the partnership and managing issues (Chapter 2)

12. DEEWR and DHS have established a three-tiered governance structure to manage the BMA. This governance structure is formalised through executive, relationship management and program management level committees. The committees provide a sound basis for oversight of the partnership. In addition, there are a large number of interactions between staff in DEEWR and DHS as part of the day-to-day management of employment programs, and delivery of associated payments and services. However, the DEEWR and DHS Relationship Managers could more actively oversee the implementation of agreed work practices; monitor the maintenance of Protocols and Policy Advices; and resolve and escalate issues.

13. Each of the BMA committees used action items to support issues identification, and to track the progress of management actions. There was also evidence of the committees considering and seeking to address key issues under the partnership arrangement. However, in practice, the Issues Resolution Framework set out in the BMA has generally not been followed, and resolution of key issues has not always been integrated or timely. For example, DHS adjusted its operational priorities following various natural disasters in January 2011, which led to a reduction in the number of debts raised for income support payments, affecting income support program performance. Under current plans, this debt raising issue will not be resolved until mid-2013. While DEEWR and DHS have worked together to identify and resolve the issue, it was not escalated through the BMA governance structures in accordance with the agreed issues resolution process and timeframes. The departments should escalate and resolve issues in a more timely manner by ensuring that departmental managers apply a practical Issues Resolution Framework.

Strategies to support operational collaboration (Chapter 3)

14. The BMA outlines ‘shared outcomes’, which are goals for how DEEWR and DHS will work together.10 The BMA also clearly identifies roles and responsibilities, and establishes funding arrangements and a shared risk management approach. However, these mechanisms could be better applied to enable the departments to work through operational issues and reach agreement on service delivery strategies. In practice, the priorities of the departments in relation to some job seeker assessments have differed since September 2010. During this period, DEEWR has pursued greater use of face‑to-face discussions with vulnerable job seekers to improve their employment prospects; whereas DHS has sought efficiencies in service delivery through greater use of electronic channels for customer transactions. The issue has not yet been resolved to the satisfaction of both departments highlighting the tensions that need to be managed to harmonise different strategies that may legitimately be pursued by departments in discharging their respective roles.

15. The BMA is underpinned by nine Protocols, a range of other procedures and documents, and 48 active Policy Advices which are designed to support efficient and effective collaboration between the departments. At the time of this audit, some elements of the agreed Protocols, procedures and documents, and Policy Advices were out-of-date, not well understood by relevant managers, or not followed in practice. Clear and current Protocols, procedures and documents are necessary to establish consistent and coordinated processes. In addition, as envisaged under the BMA, an up-to-date set of Policy Advices would assist in addressing a key risk that policy and service delivery are not aligned.

Managing risk and providing assurance (Chapter 4)

16. The BMA identifies risks to policy and program outcomes, and risks to the success of the partnership. The BMA includes strategies to manage these risks and assigns associated responsibilities to one or both of the departments. It also establishes performance monitoring arrangements for the risks. However, DEEWR and DHS need to better support joint risk management at an operational level. A more collaborative risk management approach would involve strengthened alignment of the departments’ program level risk identification and management processes, including by monitoring key program risks as part of the Program Manager Meetings.

17. The BMA Business Assurance Framework includes Annual Assurance Statements between departmental Secretaries, a random sample survey (RSS) of income support payment accuracy, fraud control, management information approaches, and internal audit. However, there were gaps in the development of components of the Business Assurance Framework in relation to BMA requirements. For example, the RSS Service Level Agreement (SLA) has not been updated since the introduction of the BMA in November 2009.11 DEEWR and DHS continue to negotiate the finalisation of this agreement to reflect DEEWR’s requirements rather than those of the former Department of Education, Science and Training.

Performance monitoring and reporting (Chapter 5)

18. The performance information framework in the BMA provides for the use of qualitative information to monitor key aspects of the relationship between DEEWR and DHS; and KPMs that are primarily focused on operational and service delivery matters. A more structured approach could be taken to the development of KPMs to ensure an appropriate level of coverage across employment programs, payments and services. For example, at the time of the audit, there were no KPMs to assess performance for the Disability Employment Services program.

19. The intended outcomes of the BMA include ‘shared understanding of and responsibility for program outcomes and improved program management’. Quarterly reporting against the KPMs assists the BMA committees, Relationship Managers and Program Managers in identifying and responding to key operational and service delivery issues which affect program performance. However, this reporting does not address performance against relevant Key Performance Indicators established in the Portfolio Budget Statements, which provide information on the effectiveness of employment programs in achieving their objectives in support of respective government outcomes. There is scope for improvement in the quality and reliability of the information presented in the quarterly reports to the BMA committees.

Summary of agency responses

20. DEEWR’s and DHS’ summary responses to the audit are provided below. The agencies’ responses to the recommendations are contained in the body of the report following the relevant recommendation. The agencies’ full responses are included at Appendix 1.

Department of Education, Employment and Workplace Relations

21. DEEWR acknowledges that it has a key role in working with DHS to develop cross-agency collaboration to support the delivery of employment programs. The ANAO's report acknowledges that while DEEWR and DHS' administration of their respective roles under the partnership arrangements is effective there is scope to further develop cross-agency collaboration.

22. To support the partnership and the delivery of employment programs, DEEWR recognises that the co-ordination role played by the Relationship Manager is pivotal. The DEEWR Relationship Manager is already taking steps to more actively oversight the implementation of agreed work practices, in monitoring the maintenance of Protocols and Policy Advices and in resolving and escalating issues.

Department of Human Services

23. The Department of Human Services welcomes this report and will continue to work with DEEWR to enhance collaboration on the coordination of the delivery of employment programs.

24. The Department of Human Services agrees with the recommendations outlined in the report.


Set out below are the ANAO’s recommendations and the Department of Education, Employment and Workplace Relations’ and the Department of Human Services’ abbreviated responses. More detailed responses are shown in the body of the report immediately after each recommendation.

Recommendation No.1

Paragraph 2.18

To support departmental managers in the timely escalation and resolution of issues under the BMA, the ANAO recommends that DEEWR and DHS revise the Issues Resolution Framework, establish supporting procedures, and monitor the implementation of the framework.

DEEWR response: Agreed.

DHS response: Agreed.

Recommendation No.2

Paragraph 3.28

To support cross-agency collaboration and the alignment of policy and service delivery, the ANAO recommends that DEEWR and DHS implement a systematic process to ensure that the BMA’s Protocols, supporting procedures and documents, and Policy Advices are kept up-to-date and accurate.

DEEWR response: Agreed.

DHS response: Agreed.

Recommendation No.3

Paragraph 4.13

To support effective cross-agency collaboration and coordination in delivering government programs, the ANAO recommends that DEEWR and DHS:

  • better align program level risk identification and management processes to mitigate any significant risks; and
  • monitor program risks as part of the BMA Program Manager Meetings, and record the outcomes of the risk monitoring.

DEEWR response: Agreed.

DHS response: Agreed.


[1] Under the Human Services (Centrelink) Act 1997, DHS has responsibility for the delivery of Australian Government payments and services to clients. In addition to employment programs, DHS delivers education and childcare payments, referrals and services for programs administered by DEEWR. DHS also delivers payments and services for other Australian Government departments.

[2] Machinery of Government changes in July 2011 resulted in Centrelink becoming a part of DHS.

[3] Under the purchaser-provider arrangement, funding for employment program payments and services was appropriated to DEEWR. The funding arrangement was reflected in the then Business Partnership Agreement, with DEEWR adopting a compliance oriented approach to managing Centrelink’s service delivery.

[4] In the Commonwealth Budget, DHS received an appropriation of $19.8 billion to make payments for programs administered by DEEWR for 2012–13; and received an additional $155 million from DEEWR for the provision of services for these programs for 2012–13. Human Services Portfolio Budget Statements, 2013–14, pp. 17 and 18.

[5] BMA, 2012, p. 4. The BMA operates in the context of the overarching Multilateral Strategic Partnership for Services (MSPS) between DEEWR, DHS and the Department of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA). The MSPS provides high-level arrangements for the delivery of services by DHS for programs administered by DEEWR and FaHCSIA.

[6] ANAO Audit Report No.4 2008–09, The Business Partnership Agreement Between the Department of Education, Employment and Workplace Relations (DEEWR) and Centrelink.

[7] ibid., paragraph 19, p. 18.

[8] The recommendations made in the report are listed at Appendix 2.

[9] DEEWR reported that there were 1 178 872 recipients in total of Newstart Allowance, Youth Allowance Other, Parenting Payment (Single and Partnered), Mobility Allowance, Sickness Allowance, Partner Allowance and Widow Allowance (see DEEWR’s 2011–12 Annual Report, pp. 82 and 83).

[10] For example: integration of policy design and service delivery; and fostering a collaborative approach to government priorities.

[11] A revised RSS SLA has been in draft form since May 2012.