The objective of this audit was to assess the administration and implementation of the drought assistance measures. The audit focussed on EC, including prima facie EC, and key aspects of the additional drought assistance measures.
The drought that started in 2002–03 has been particularly severe by historical standards. The consequences included a fall of more than 50 per cent in crop production in 2002–03.1 Flow-on effects contributed to a downturn for rural businesses and fewer regional employment opportunities.
When drought conditions prevail, it is initially the responsibility of the respective State or Territory Government to provide drought assistance, where appropriate, in the affected region. However, when a drought is rare and severe, and results in a severe and prolonged downturn in income, State and Territory Governments may apply to the Australian Government to have the region or specific industry(s) declared as qualifying for Exceptional Circumstances (EC) assistance.
Initially, the drought was addressed by the Australian Government through the arrangements for EC. EC provides targeted assistance in the form of family income support2 and interest rate subsidies for farm enterprises.3
As the severity and spread of the drought increased, prima facie4 EC was introduced by the Australian Government in September 2002.
With continuing spread of the drought, additional drought assistance measures were announced on 27 application November and 9 December 2002. The measures provided immediate income assistance and interest rate relief for eligible farmers5, and provided further time for State and Territory Governments to prepare EC applications.
The measures also included assistance for eligible small businesses for the first time, through the Small Business Interest Rate Relief program. Personal counselling services were provided, and funding was allocated to the Country Women's Association to assist it help and support those affected by the drought.
At December 2004, there had been 60 EC declarations since September 2002. Over $550 million in direct assistance has been provided, with more than $1 billion allocated until 2006–07.
The objective of this audit was to assess the administration and implementation of the drought assistance measures.
The audit focussed on EC, including prima facie EC, and key aspects of the additional drought assistance measures.
Contingency planning and responding to the drought (Chapter 2)
The Department of Agriculture, Fisheries and Forestry (DAFF) did not have a specific preparedness or contingency plan for drought, notwithstanding previous recommendations made by a Taskforce of Australian and State and Territory Government officials to this effect.6 DAFF advised that its preparedness was instead focussed through existing arrangements, primarily through arrangements for EC.
Planning by DAFF did identify some risks to delivery of EC, including poor understanding of EC and difficulties in targeting assistance. However, there were no specific treatment strategies identified, corresponding to these risks. Nor did risk plans identify the possibility that substantial additional measures might be needed if the drought worsened. DAFF advised this was because it is the responsibility of the State and Territory Governments to apply for EC declarations in a timely manner.
The drought had more wide reaching consequences than previous droughts. Greater structure in addressing risks, and their treatments, would have assisted in identifying and addressing some of the difficulties that subsequently arose in delivering drought assistance.
DAFF undertook a substantial amount of work to fulfil its responsibilities for responding to the drought. This included the establishment of an internal Drought Taskforce to, inter alia, assess and process EC applications from State and Territory Governments. DAFF also compiled a package of proposals for the additional drought assistance measures announced on 27 November and 9 December 2002, in consultation with other relevant agencies.
However, DAFF advised that it was not asked to undertake the role of a lead agency. The Taskforce was not charged with a broader role of inter¬departmental coordination of drought assistance measures. An Inter-Agency Group was established in November 2002 and met for a period of 11 months. The Group was chaired by the Department of Family and Community Services (FaCS), and focussed on the social aspects of drought recovery.
In the absence of a formal lead agency, there was no whole-of-government implementation plan, and some limitations in cross-departmental strategies. For example, there was no integrated communication strategy.
As well, there was no whole-of-government framework to support assessment of the implementation of the full range of drought assistance measures. Instead, assessment and reporting focussed on specific agency measures. This reporting varied in nature and detail between agencies, making it difficult to ascertain the overall success of the drought assistance measures, and opportunities for any refinement to such measures in the longer term to better achieve government outcomes. It also reduces transparency to stakeholders7 on outcomes achieved.
Promotion and Information (Chapter 3)
The Australian National Audit Office (ANAO) found that, overall, there was a large range of information on drought assistance available to farmers and businesses. DAFF and Centrelink undertook a wide range of activities to promote the drought assistance measures. Activities included: face-to-face advice for farmers at Centrelink Customer Service Centres; liaison with rural organisations to assist in promoting and targeting information to farmers; regional seminars and roadshow visits; information materials and websites; a dedicated drought assistance hotline; and advertising.
Australian Government departments also collaborated jointly with industry bodies and State and Territory Governments at seminars, conferences and field days, to promote the range of assistance available to farmers. For example, departments coordinated to attend the Australian National Field days in Orange in October 2003.
However, there was little regional advertising prior to February 2003, more than two months after the announcement of the additional drought assistance measures. During this period there was increasing concern in regional communities about the impact of the drought and eligibility for assistance. The peak period for regional advertising of the drought assistance measures was February and March 2003.
DAFF advised that a number of factors influenced the timing of advertising, including the time of year. There was also a significant amount of free press coverage in the period leading up to the commencement of formal Australian Government advertising.
In June 2003, several months after the peak period of promotion for the drought assistance measures, a Centrelink commissioned report8 found that local (and regional) newspaper advertisements and radio announcements were the most common sources of information for farmers. Farmers' associations, personal contacts and Government seminars also contributed to enhancing farmers' knowledge.
The report9 also suggested that the multiplicity of sources of information and range of drought assistance measures available may have increased confusion. These findings are consistent with comments from stakeholders during this audit.
Promotional and information strategies for any future significant drought occurrence would benefit from an assessment of the effectiveness of the promotion and information activities for the drought assistance measures to determine lessons learned and better practice.
Assessment of Exceptional Circumstances applications (Chapter 4)
It is the responsibility of the State and Territory Governments to prepare and submit an EC application to the Australian Government. EC applications are often prepared in conjunction with peak industry bodies, local Government or farmer organisations.
DAFF has an EC handbook, developed in consultation with State and Territory Government agencies, to provide guidance on the processes for applying for, and assessment of, EC.
However, the handbook has limitations, including lack of a clear standard for information required in an EC application. Stakeholders, such as peak industry bodies and farmer organisations, also commented that the amount of information required for an application was extensive. In some instances, the information was difficult to obtain, particularly for newer industries, such as stone fruit orchardists, suffering from the effects of the drought.
The ANAO examined a sample of EC applications. In the sample, the ANAO found that all required further information to be provided, after application to the Australian Government. As a result, there were often delays in the assessment process as additional information or clarification was sought. Such actions can delay the provision of drought assistance to farmers.
In response to the proposed audit report, DAFF advised that some EC applications were complete and required no further information. DAFF also advised that, to minimise delays in the assessment process, it consults with State and Territory Governments and industry representatives to discuss the information required and to expedite the provision of additional information, if requested.
The majority of applications have exceeded DAFF's internal eight week processing target. DAFF advised that timeliness is dependant on variables outside of its control. These include organising National Rural Advisory Council (NRAC) tours of affected areas, and obtaining further information from the State and Territory Governments.
There would be efficiencies gained in the EC process if there was greater clarity and shared understanding of the requirements for EC applications. Improved guidance could be provided through an enhanced EC handbook or other means.
The ANAO found that there were gaps in some documentation on DAFF files, including omissions from an internal documentation checklist. DAFF subsequently advised that all key documents are now contained on file.
A press release is the major source of information following an EC declaration, both for administration and for potential recipients. It outlines the EC area and any conditions on EC eligibility. The ANAO found that the distribution of press releases was extensive and timely.
There is no standard approach to describing EC areas in the EC applications (which is subsequently put into the press release). As a result, the descriptions of EC declared industries and regions were at times complicated. As well, some maps of
the EC declaration areas did not relate clearly with descriptions of the areas in the press release.
These factors have resulted in some confusion, and difficulties in determining eligibility for drought assistance, both for potential recipients and Centrelink Customer Service Officers, who process drought assistance applications. Overall, there is scope to improve clarity in descriptions and maps of EC areas and their corresponding maps.
Delivery of assistance to farmers (Chapter 5)
Farmers and stakeholders often regarded the process of applying for drought assistance as confusing, and had a limited understanding of many of the measures. This was due both to the number of different drought measures (including those offered by State and Territory Governments) and to differences between the application processes, and information and eligibility requirements, for the different measures.
Centrelink10 accordingly took steps to improve accessibility and to better inform farmers. For example, most Customer Service Centres: established outreach services, including visiting farms and holding seminars; set up counters specifically for farmers; and contracted dedicated ‘drought workers' to provide a support role within the community. These approaches were generally well received, with over 80 per cent of farmers satisfied with the services received from Centrelink staff.11
There was variation in the extent and nature of these activities. Many factors will impact on uptake, including the extent of drought and the industries affected, and the individual circumstances of farmers in the area. In some areas, uptake of drought assistance was less than anticipated. Identifying those activities and outreach services that were most successful and cost effective in delivery, information and advice to farmers could assist with delivering future customer service initiatives in the farming community.
Centrelink National Support Office established sound administrative guidance and procedures to support the delivery of drought assistance at Customer Service Centres. This included training, a rural help desk at its National Support Office to provide advice on complex or difficult claims, and reference material on its intranet.
The processing of drought assistance claims was systematic and structured. Files and Centrelink's systems contained evidence of the required information, including for the assessment of eligibility. Centrelink meets its target of making 80 per cent of EC Relief Payments within 42 days of the lodgement of the initial claim.
Centrelink systems provide a reasonable level of assurance that applications are processed accurately and in a timely manner. However, there were some issues regarding the accuracy of information contained in the EC certificates issued by the relevant State or Territory Rural Adjustment Authority.
A farmer claiming EC Relief Payment must hold an EC certificate. It is the responsibility of the State and Territory Rural Adjustment Authorities to check that the location of the farm enterprise, its industry type and other eligibility requirements comply with the conditions of the EC declaration. In response to the proposed audit report, State and Territory Rural Adjustment Authorities advised the ANAO that EC certificates are issued based on advice from the applicant, typically by telephone. It was also noted that the State and Territory Rural Adjustment Authorities are not required to implement procedures to prevent fraudulent claims.
However, the ANAO found, from a sample of files examined, that EC certificates submitted to Centrelink with applications for EC Relief Payment were often incorrect or had anomalies. These included: the farm on the certificate was not located within the EC declared area; and had incorrect industry or personal details on the EC certificate.
As a result of these anomalies, some Centrelink Customer Service Officers assessed the validity of EC certificates. Centrelink does not have formal responsibility or consistent arrangements to do so.
These work-arounds reflect a systematic weakness in the current procedures between the Australian Government and State and Territory agencies. The weaknesses affect a key aspect of the processing of claims for drought assistance, thereby undermining reliability and efficiency.
EC Interest Rate Subsidies are administered under the Rural Adjustment Act 1992 (RA Act).12 In order to pay money to the States or Territories under the Act, the Australian Government must have an Agreement with the State and Territory Governments. The ANAO found that the relevant Agreement had passed its formal termination date on 31 December 2000, and was not then renewed.
DAFF did not seek legal advice on the matter until February 2003. During this time, guidelines for the administration of EC Interest Rate Subsidies were being issued that referred to the Agreement (that had expired).
The legal advice obtained by DAFF was that it was arguable that the Australian Government and State and Territory Governments have impliedly extended the term of the Agreement.13 In this context, the ANAO notes that all parties behaved as if the Agreement was in place.
Notwithstanding this, DAFF was advised that it was desirable to clarify this situation by: entering into a new Agreement; or extending the term of the Agreement. In the event, DAFF took this advice and extended the term of the Agreement in July 2004, to December 2007.
The Agreement is a significant part of the formal framework for the delivery of EC Interest Rate Subsidies. Better monitoring of such a key element in the formal delivery framework is required to ensure the provisions which govern the program are met, not the least to address risks that may arise in delivery.
Rural Adjustment Authorities administer EC Interest Rate Subsidies. However, requirements for performance management, monitoring and reporting have not been formally agreed to with the Rural Adjustment Authorities, as required by the RA Act. In practice, DAFF receives weekly reports through informal arrangements.
This approach results in inconsistent reporting. A more structured approach to articulating performance requirements would improve the monitoring, accountability and transparency of the program, and meet the requirements of the RA Act in the future.
Small Business Interest Rate Relief (Chapter 6)
Consideration of assistance to small businesses was first undertaken by the Department of Industry, Tourism and Resources (DITR) in March 2002. Several options were considered. The department was asked by the Minister for Industry, Tourism and Resources to develop two options further, one being for an interest rate relief program.
While DITR indicated that it sought to gather some data, there was little development of these options. The recollection of those involved at the time was that there was no request from small business to provide such relief and no evidence of significant harm to small businesses from the drought. It was also considered that there were reasonable prospects that farm production would increase. The department advised that it was therefore not required to pursue the options further. There is no record of any request or decision not to continue this work.
The Small Business Interest Rate Relief program was introduced by the Australian Government as one of the additional drought assistance measures on 9 December 2002.14 Analysis of the key client groups or their needs had not been undertaken prior to the announcement. A risk management plan was not produced until early in 2004, limiting its usefulness for program planning and management.
Centrelink administered the program for DITR, which was the responsible policy department. An interim Agreement for these arrangements was signed by the agencies in December 2002, and a Memorandum of Understanding (MOU) was signed in March 2003. However, the related Program Protocol, which contained more detailed responsibilities, was not signed until January 2004.
As with other drought assistance measures, Centrelink used a range of activities to promote the program including: radio announcements; advertisements; and visits to regional areas. However, advertising did not commence until late February 2003, following concerns raised by DITR regarding the lack of advertising.
Processing of applications was centralised to Centrelink's Rural Call Centre in Maryborough (Queensland). Applications were accurately assessed in accordance with the required eligibility criteria. Over 90 per cent of applications were processed within five days.
DITR did not set targets for the program. It forecast that it would receive up to 17 500 applications, with up to 14 000 successful, as it advised that it considered it to be a safety net program. In contrast, only 452 applications were received, with just 182 successful. Program payments over the life of the program totalled just over $1.1 million, compared with an initial estimate of $70 million.
A Centrelink survey indicated that reasons for businesses not applying for the relief included complexity of the forms and processes, and not being able to meet the criteria for reduction in turnover and/or value of assets.
The program was closed in 2004. DITR advised that the program will be evaluated in 2005. In the light of these audit findings, the evaluation could usefully address program planning and design, including whether criteria targeted intended businesses; effectiveness of promotion; and reasons for low take-up.
Counselling (Chapter 7)
FaCS was responsible for the personal counselling measure, announced as part of the additional drought assistance measures on 27 November 2002.
The bulk of funding provided for counselling was through FaCS's existing Family Relationships Services Program (FRSP).15 Centrelink also provided telephone counselling and some face-to-face counselling, through a letter of agreement with FaCS.
Advertising targeting the personal counselling services did not commence until March 2003. FaCS advised that reasons for delay included a focus in early 2003 on its response to the Bali bombings. As with other measures, Centrelink produced fact sheets and publications. These were distributed through Customer Service Centres, social workers and outreach workers and the local community.
There were mixed views on the effectiveness of information and promotion. Most FRSP providers considered that there was insufficient publicity and information provided to potential clients about the availability of their services. For example, one FRSP provider commented that ‘many people didn't know or understand what was on offer … there needs to be more saturation of information about the benefits of seeking assistance … publicity aimed at de¬stigmatising counselling and assistance services would be helpful'.
These concerns were reflected in limited initial uptake of the counselling services. Accordingly, both FRSP organisations and Centrelink focussed, to a considerable degree, on activities to promote and establish relationships within the community, and outreach counselling activities. Examples included: information sessions for local groups and businesses; liaison and networking with other organisations; and doorknock campaigns. Broader counselling outreach activities included suicide prevention programs; workshops; and ‘time out' days for farming women.
Overall, there was limited information provided to FaCS on the extent of Centrelink counselling assistance. Centrelink advised that this was because the delivery of counselling services had evolved from that envisaged.
Centrelink advised the ANAO that over 500 people had made appointments for counselling with social workers, for issues related to the drought.
Reporting by FRSP providers to FaCS was more structured, including self-appraisal reports. This enabled FaCS to assess trends and commonalities faced by the organisations. The reporting contributed to a proposal to fund innovative models for service delivery in 2003–04.
FRSP organisations provided counselling to over 3 000 families or individuals.
Neither FRSP providers nor Centrelink assessed client satisfaction in a structured way. Such assessment would have been particularly valuable for FaCS, given the nature of the services.
Country Women's Association Emergency Drought Aid (Chapter 8)
The Government provided $1 million for the Country Women's Association (CWA)16 Emergency Drought Aid Fund. Through the Fund, the CWA across Australia provided grants to needy families in farming communities. DAFF administered the funds as a donation to the CWA. Administrative expenses were met by the CWA.
The Fund was advertised along with the Government's additional drought assistance measures and through the CWA network.
Decisions on whether to provide financial assistance, and the amount, were at the discretion of the local CWA. The decisions were based on an assessment of need against specific criteria. The criteria were developed jointly by the CWA and DAFF, reflecting their cooperation on administration of the Fund. In general, aid was provided in the form of voucher or a cheque payable to the claimants' creditor (for example, to pay utility bills).
Applicants were not required to fill in an application form. Instead, a Record of Assistance form was developed by the CWA, in consultation with DAFF. The forms were used to provide information to DAFF on the distribution of assistance provided.
The Fund was well received by rural communities, with funding being utilised very promptly. Some 90 per cent of the total allocation of funds was spent between January and March 2003.
The average payment was $500. Most payments were made for: phone bills; vehicle costs; utilities; school fees and costs; food; and health related expenses. This was in line with the agreed criteria.
Overall audit conclusion
Australian Government agencies made considerable efforts to deliver the drought assistance measures to affected communities. Delivery of assistance was, on the whole, accurate and timely.
However, the overall response to the drought would have been facilitated by clearer arrangements for a lead agency, allied with associated risk management, coordination and whole-of-government performance management arrangements, to assist with refining measures for better outcomes and to improve transparency to stakeholders, providing a more visible responsiveness to community concerns. Such an approach would also assist, in the future, in aligning policy, program design and service delivery.
Centrelink and other providers were flexible in their approaches to providing information and advice, especially through outreach services. Some of the innovative outreach approaches, and measures such as the CWA Fund, were effective in reaching those affected and needing assistance. Others, such as the Small Business Interest Rate Relief program, were far less effective in achieving outcomes.
There was good cooperation between Australian and State and Territory Government agencies. However, aspects of their administrative interactions could be improved, to improve the delivery of assistance. In particular, improved facilitation of EC applications and use of EC certificates warrants consideration. Better monitoring of the Agreement between the Australian Government and State and Territory Governments is also required to ensure that timely and appropriate action is taken.
There was a considerable amount of promotion of the measures and provision of related information. However, some of the targeted advertising did not occur until several months after the announcement of measures. Assessment of the effectiveness of various promotional and information approaches would provide valuable lessons for any future assistance measures targeting the farming community.
Overall, there was a degree of confusion amongst potential recipients of the range of drought assistance measures and of eligibility requirements, which underlines the importance of agencies taking into account the growing experience with whole-of-government approaches in delivering more effective outcomes.
Recommendations and agency responses
The ANAO made 10 recommendations for improving the administration and implementation of Exceptional Circumstances and other drought assistance measures. All recommendations were agreed.
Responses to the audit report from DAFF and Centrelink are provided in Appendix 9. DITR and FaCS agreed with the recommendations relevant to them and did not make any further comments of substance on the report.
The following was the summary response from DAFF:
The Department welcomes the ANAO's recognition of its significant efforts in delivering drought assistance in an efficient, effective and timely manner.
The Department notes the views formed by the ANAO and agrees with the recommendations. The Department has already made significant progress in addressing a number of the issues raised in the ANAO report.
Centrelink commented that it:
Welcome[s] this audit report and agree[s] with the specific recommendation related to Centrelink's responsibilities.
With respect to the whole-of-government element of the proposed audit report, the Department of the Prime Minister and Cabinet provided the following comment:
The Department of the Prime Minister and Cabinet strongly advocates agencies working collaboratively in the areas of policy development, programme management and service delivery. All Departmental Secretaries recently endorsed a guide entitled ‘Working Together' [see Appendix 10] that emphasises the importance of a whole-of¬government approach to inter-agency work. The covering message from Secretaries states that ‘Governance is enhanced by ensuring constructive, open communication across portfolios working to an agreed objective'. The … guide ... acknowledg[es] that a lead agency will not always be necessary, [it] establishes an expectation that there will be a lead agency who, as well as working from the perspective of their agency, will also extol the benefits of a whole-of-government perspective. Where, in the minority of cases, there is not a lead agency, that needs to be the result of a conscious and agreed decision.
1 Australian Bureau of Agricultural and Resource Economics, Australian Commodities, Vol 10 No 4, December Quarter, Australia, 2003, p. 570. DAFF advised that 2001–02 was one in which record crop production levels were achieved.
2 EC Relief Payment is paid at a rate equivalent to the Newstart Allowance.
3 A ‘farm enterprise' is defined in the Farm Household Support Act 1992 (FHS Act) as an enterprise carried on within any of the agricultural, horticultural, pastoral, apicultural or aquacultural industries.
4 Prima facie provides six months of Interim Income Support payments commencing from the date on which the Minister for Agriculture, Fisheries and Forestry announces that an EC has a prima facie case and its full EC status is being confirmed.
5 A ‘farmer' is defined in the FHS Act as a person who: has a right or interest in the land used for the purposes of a farm enterprise; and contributes a significant part of his or her labour and capital to the farm enterprise; and derives a significant part of his or her income from the farm enterprise.
7 For the purpose of this audit report, stakeholder refers to industry bodies, including farmers and farmer organisations.
8 ACNielsen, Centrelink's Delivery of Drought Relief, Australia, 2003.
10 Apart from the EC Interest Rate Subsidies, farmers must apply to Centrelink for drought assistance.
11 A research report, Centrelink's Delivery of Drought Relief, was prepared for Centrelink in June 2003. From a sample of 804 farmers, 251 farmers had applied to Centrelink for drought assistance. Of the 251 farmers, over 80 per cent were satisfied with the services received from Centrelink staff.
12 The RA Act specifies the payment structure for the subsidy. The Australian Government contributes 90 per cent of the cost and the State and Territory Governments contribute 10 per cent.
13 Legal advice obtained by DAFF advised that by continuing to (respectively): issue and accept guidelines; make and receive payments; and apply payments in accordance with the guidelines and the RA Act, State and Territory Governments had impliedly extended the term of the Agreement.
14 Announced in the Prime Minister of Australia's press release ‘New Drought Support' on 9 December 2002.
15 The FRSP funds about 100 organisations to provide a range of family relationship services. One of the services funded is Family Relationships Counselling.
16 The Country Women's Association of Australia (CWAA) is a voluntary organisation that provides community support in rural and remote areas of Australia through an extensive network of 1 800 branches, with membership of around 44 000. Member bodies include seven State and Territory Associations. For the purpose of this audit report the CWAA, State and Territory Associations and local branches are generically referred to as the CWA.