The Auditor-General responded on 14 January 2020 to correspondence from the Hon Catherine King MP, requesting that the Auditor-General conduct an investigation to examine programs supporting regional development and jobs growth. The Auditor-General also responded on 2 April 2020 to follow-up correspondence from the Hon Catherine King MP dated 3 March 2020, alerting the Auditor-General to evidence given in Senate estimates that relates to the original correspondence. 

Auditor-General's response to follow-up correspondence

2 April 2020

Hon Catherine King MP
Shadow Minister for Infrastructure, Transport and Regional Development
By email: catherine.king.MP@aph.gov.au

Dear Ms King

Thank you for your correspondence of 3 March regarding evidence given in the Additional Estimates hearings of the Rural and Regional Affairs and Transport committee.

In your previous correspondence of 13 December 2019, you asked that I consider undertaking an audit of four grant programs, including the Drought Communities Program, the Building Better Regions Fund (rounds 1-4), the Regional Growth Fund and the Regional Jobs and Investment Packages program.

Following a risk assessment, a review of past audit topics undertaken, areas of broader Parliamentary interest and consideration of the value of different programs and investments, the ANAO has developed a draft Annual Audit Work Program for 2020-21, which is with the Joint Committee for Public Account and Audit (JCPAA) for consultation until 1 May 2020. The JCPAA has in the past sought input on the AAWP from other Parliamentary Committees in their development of a consolidated response to the draft AAWP and I would encourage you to also provide your feedback on audit priorities to the JCPAA.

In my development of the draft AAWP, I have considered the four topics you requested on 13 December and the additional information you provided in your correspondence of 3 March. At this time I have included a possible audit topic on both the effectiveness of the Drought Communities Program and the design and delivery of rounds 1-4 of the Building Better Regions Fund in my draft Work Program for 2020-21. The Work Program is usually finalised and published on the ANAO website in July each year, however with the current public sector prioritisation of COVID-19 response tasks, this timing may be varied this year.

Once I decide to commence an audit, it will be detailed on the ANAO website. If you would like to subscribe to the ANAO website to receive updates on audits commencing, this can be done through the following link: https://us9.list-manage.com/subscribe?u=81413a7f32ad4e90da9c0ce37&id=b7cf473752.

Yours sincerely

Grant Hehir

Follow-up correspondence from the Hon Catherine King MP

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Transcript of letter from the Hon Catherine King MP

3 March 2020

Mr Grant Hehir
Auditor-General
Australian National Audit Office
GPO Box 707
CANBERRA ACT 2601

Dear Mr Hehir

I write in relation to our exchange of correspondence on 13 December 2019 and 14 January 2020 regarding the inclusion of performance audits of a number of programs delivered by the Government to support regional development and jobs growth across Australia into the ANAO's forthcoming audit work program.

The purpose of my follow-up letter is to alert you to concerning evidence given in the Additional Estimates hearings of the Rural and Regional Affairs and Transport committee held on Monday 2 March 2020, which I believe highlights why these performance audits are so important.

At the hearings, Opposition Senators put a series of questions about the operation of the regional programs to officials from the Department of Infrastructure, Transport, Regional Development and Communications. The questions sought to shed light on the processes followed by the Department, Ministers and Ministerial panels in assessing, ranking and awarding grants under the suite of programs.

Unfortunately, the questions were met with repeated claims by officials and the Minister representing the Deputy Prime Minister, that all assessment processes and grant allocations were ultimately considered by Cabinet, therefore rendering the full application, assessment and grant administration processes beyond public scrutiny.

As I am sure you will agree, grant assessment processes and ministerial decision­ making on grant allocations is normally a matter for the responsible minister and is not subject to Cabinet consideration. I am concerned that, in response to recent ANAO reports that have identified electoral bias in a number of programs and the media reporting of a number of other programs, the Government is now hiding behind the Cabinet process. This removes the ability for the Parliament to scrutinise the activity of Government with respect to grant administration and in my view makes the case for full performance audits of these programs even more critical.

I look forward to your response on this matter in due course.

Yours sincerely,

Catherine King.

Auditor-General's response

14 January 2020

Ms Catherine King MP
Shadow Minister for Infrastructure, Transport and Regional Development

By email: Catherine.King.MP@aph.gov.au

Dear Ms King

Thank you for your letter of 13 December 2019 requesting that I include performance audits of a number of programs being delivered by the Government to support regional development and jobs growth across Australia in the Australian National Audit Office’s (ANAO’s) forthcoming audit work program.

I will consider including an audit on each of the programs you have referred in the context of developing the ANAO’s 2020–21 Annual Audit Work Program (work program).

The work program is designed to inform the Parliament, the public and government entities of planned audit coverage to commence in 2020–21 and will be published on the ANAO website in early July 2020.

Yours sincerely

Grant Hehir
Auditor-General

Correspondence from the Hon Catherine King MP

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Transcript of letter from the Hon Catherine King MP

13 December 2019

Mr Grant Hehir
Auditor-General
Australian National Audit Office
GPI Box 707
CANBERRA ACT  2601

Dear Mr Hehir

I write to request that the Australian National Audit Office (ANAO) conducts performance audits into a number of programs being delivered by the Government to support regional development and jobs growth across Australia.

In particular, I request that the ANAO include the following programs in its forthcoming audit program:

The Building Better Regions Fund (rounds 1-4)

Since 2017, the Australian Government has committed $841.6 million through the four rounds of the Building Better Regions Fund (BBRF) to create jobs, drive economic growth and build stronger regional communities into the future.  This is a substantial financial commitment, which I believe must be subject to appropriate scrutiny to ensure that the program’s objectives are being met, the program is being administered appropriately, and the program is free of political influence.  This audit should take into account the design and development of the program, program administration and decision making, and evaluation that has (or should have) been done after each funding round.

Regional Growth Fund

Under the Regional Growth Fund the Government provided grants of $10 million or more for major transformational projects to support long-term economic growth and create jobs in regions, including those undergoing structural adjustment.  Applications under this program closed in April 2018 and grants of between $10 million and $28.5 million were awarded to a number of organisations, many of which were private, for-profit corporations.  Under these circumstances I again believe it is appropriate for the ANAO to provide scrutiny to the administration of this program, the projects that were funded, the outcomes achieved, and whether the Australian community received value for money from this investment.  I request that his audit consider the design of the program, development of the program guidelines, program administration and decision making, and how the program is being evaluated against its objectives.

Drought Communities Program

The Drought Communities Program has been delivered in rounds since 2015 through the original program, the Drought Communities Program Extension, and the Drought Communities Support Initiative.  Since 2015 at least $336 million has been outlaid under this program. Noting recent concerns from councils from Victoria, NSW and Queensland of their exclusion from current rounds, I request that the ANAO review the various rounds of this program to ensure that the program has been administered prudently and without political bias by the Government. The development and amendment of program guidelines, advertising/promotion of the program rounds, and evaluation should be included in the audit scope. The audit should consider whether funds have been distributed fairly according to respective need and whether the Australian community received value for money from this investment.

Regional Jobs and Investment Packages

The ANOA recently completed a review of the Regional Jobs and Investment Packages as a result of representations from Mr Stephen Jones MP and the Hon Mike Kelly MP related to the administration of the program.  I am concerned that the scope of this audit was narrow and did not consider the design of the program, development of the program guidelines, how the 10 regions were selected, how the program was advertised/promoted, or the effectiveness of the program in achieving its goals of creating sustainable employment in the nominated regions.  Given the significant distribution bias that was evident in a number of regions I am concerned that the program may not have been adequately promoted in some electorates (for example NSW South Coast, Geelong Victoria, Tropical North Queensland, Goulburn Valley Victoria).  For this reason I request that the ANOA consider expanding the audit completed into this program to look at the design of the program, work undertaken to develop guidelines and promote the program to potential applicants, and how the program is being evaluated.

I would welcome the opportunity to discuss this request with you in more detail.  Any initial questions can be directed to my Chief of Staff, Katrina Wotton who can be contacted on mobile  0404 852 683 or by email at katrina.wotton@aph.gov.au.

Yours sincerely

Catherine King MP