26 September 2023

Projects audit finds official advice ignored

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A performance audit into whether the award of allocating projects under the Building Better Regions Fund (BBRF) was effective has found many funding decisions were not appropriately adopted despite advice from the Department of Infrastructure, Transport, Regional Development, Communications and the Arts (Infrastructure).

In his report Award of Funding under the Building Better Regions Fund, Auditor-General, Grant Hehir said the BBRF was an open and competitive grant program administered by Infrastructure which had seen 1,293 projects awarded funding across five rounds.

Mr Hehir said 65 per cent of applications approved for funding by the ministerial panel were not those assessed as being the most meritorious in the Department’s assessment process.

“The award of funding under the first five rounds of the BBRF was partly effective and partly consistent with the Commonwealth Grant Rules and Guidelines (CGRGs),” Mr Hehir said.

“As the program has progressed through the first five rounds, there has been an increasing disconnect between the assessment results against the published merit criteria and the applications approved for funding under the infrastructure projects stream (which comprised the majority of approved projects and funding),” he said.

“This reflects the extent to which the ministerial panel has increasingly relied upon the ‘other factors’ outlined in the published program guidelines when making funding decisions.”

Mr Hehir said that while the BBRF was well designed in a number of respects, there were also deficiencies in important areas, including an allowance for the decision-making panel to use a non-exhaustive list of ‘other factors’ to override the results of Infrastructure’s merit assessment process.

Highlighting the positive aspects of BBRF, the Auditor-General said its guidelines clearly set out that an open competitive application process was being employed, relevant and appropriate eligibility requirements, and the process through which applications against would be assessed.

“Infrastructure provided appropriate funding recommendations based on merit assessment results for three of the five rounds that have been completed,” he said.

“This was not the case for the third and fifth funding rounds.”

He said that in those two rounds, rather than clearly identifying which applications should be successful up to the limit of the available funding, Infrastructure recommended the panel select from a ‘pool’ of projects.

“The total value of those projects was significantly in excess of the funding available to be awarded (more than double the funding available in the third round, and more than triple the funding available in the fifth round),” Mr Hehir said.

“The decisions about the award of grant funding across each of the five funding rounds were not appropriately informed by Departmental advice, particularly with respect to the third and fifth rounds.”

He said the basis for the funding decisions had not been appropriately documented, particularly in the three most recently completed rounds.

Mr Hehir made five recommendations, four to the Department of Finance on amending the CGRGs to improve record keeping, strengthen written advice, apply the principles for grants administration to situations where parliamentarians played a role in the award of grant funding, and to reject all applications seeking funding in excess of what was available.

He also made one recommendation to Infrastructure regarding advice to grants decision-makers and record keeping.

The Auditor-General’s Report can be accessed at this PS News link and a 106-page pdf version at this link.

The audit team was Amy Willmott, Swatilekha Ahmed, Jessica Carroll,Tessa Osborne and Brian Boyd.

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