Finance and Public Administration Legislation Committee
Estimates hearings, 18 October 2011
Department of Finance and Deregulation
- Mr David Tune, Secretary
- Mr Lembit Suur, First Assistant Secretary, Financial Framework Division
Senator RHIANNON: I want to ask some questions about small grants. How does your department evaluate or review the overall effectiveness of the grants being administered by each agency? I am particularly interested in how you ensure the stated aims and goals of the agency that grants the money. From what I can gather, the process is enormously decentralised. We are actually talking about large amount of public money when you look at it overall, but it is handled on an agency-by-agency basis.
Mr Tune: That is correct. It is largely decentralised. We occasionally do reviews of particular grant programs, which would contain a number of discretionary grants and those reviews are often done in conjunction with the agency that is providing the grants. We feed those into government decision making. Mr Suur might be able to add a bit more to that. We do not systematically go through every grant that is provided by an agency. It just would not be possible to do that.
Senator RHIANNON: I appreciate that. I just want to understand the process.
Mr Tune: We are looking at it from a broad perspective. For example, if it is a $100 million grant program comprising 100 grants of $1 million, we would not go through the 100 grants; we would look at the overall $100 million and ask, 'Is it achieving the objectives that are set down for it?' Clearly, the departments are required to report on the effectiveness of those grants in their annual reports and also in their portfolio budget statements. Some do that better than others, I would readily admit.
Senator RHIANNON: I appreciate that you cannot report on all of them, but we are still talking about a lot of public money. Can you explain why there is no centrally published register or source of information on grants? One just cannot get a handle on how much money is involved, how it is being handled and whether it is doing the job it is supposed to be doing.
Mr Suur: Reporting of grants is done on a decentralised basis. Agencies are to report on their website the details of the grant within seven days of finalising that grant. If you go to each agency's website, you will be able to get details of their granting activity. In addition, there is a reporting requirement to the Senate three times a year, I think, whereby grants that have been approved are reported to the Senate. The timing is somewhat different and the definitions are somewhat different, but there is plenty of transparency about granting activity in the sorts of grants that are made. On the question of effectiveness and how grants are judged, the Australian National Audit Office periodically looks at granting programs, as does the government in the budget context. Agencies themselves have review processes around grant programs. There is information circulating about the effectiveness of various grant programs.
Senator RHIANNON: I appreciate that that is what is set down. I note that you said within seven days the information should be on the website. From my own preparation for today, I found it very hard and often could not find the information. I note that a combined total of 17,017 instances of non-compliances have been reported for 2009-10. My guess is that, in the scheme of things, this may not be a large amount of money and is not a problem. But a member of the public or, indeed, a member of parliament it is hard to find out how this is all working. Can you detail the main problems with this level of non-compliance? How have we got to this level and how has it been handled?
Mr Suur: The 17,017 number that you refer to, Senator, is the total number of instances of non-compliance of requirements of the Financial Management and Accountability Act across all FMA agencies. Of that 17,017 number, there are 3,523 instances related to agencies not publishing details of grants within the seven-day period. In fact, we have done some research on that and found that, in over 50 per cent of those instances of non-compliance, agencies did post that information within 14 days. So it was simply a matter of them missing a deadline. We have had a talk to the ANAO about that and we believe that shifting the date by seven days would help agencies comply and would not impact on the issue of transparency. So we are looking at whether or not that date ought to be shifted.
Fundamentally, the agencies do the right thing in terms of publishing the information. If the information is not readily to be found on their websites and that is an issue of website design, I am more than happy to take back from these proceedings your observation that this information is sometimes difficult to find. In the general guidance that we issue agencies about the management of grants, we can encourage them to look at website design and make sure that information is more readily available. So, if you want to give me details about the sorts of frustrations that you have had in finding information, we can take that into account.
Senator RHIANNON: Thank you for explaining that. I apologise, because I meant to go to the 3,524 instances, I think it is, for non-compliance with small grants. Do I understand correctly that the majority of those are a matter of timing? If the agency had more time everything would be okay?
Mr Suur: Yes, that is right. I think all of us who are involved in dealing with websites and getting information published on websites are sometimes a bit more optimistic about timing than we should be. I think it is simply an administrative issue that has led agencies not to meet that seven-day requirement. They all meet the requirement eventually; it is just that it takes longer than the seven days.
Senator RHIANNON: Transparency is about getting the information out there. How do you rate the accountability systems in place to monitor the effectiveness of the grants? To what degree are the grants doing what was promised in the media release?
Mr Suur: I think that question is better directed to the Australian National Audit Office, which undertakes evaluations of program effectiveness. We have some reporting back to the government about effectiveness as well, which takes place in the budget process, but the meaning of the role of my division is not to assess the effectiveness of grant programs in terms of whether or not they are meeting their stated objectives. Our role is more at the policy level and ensuring compliance in terms of transparency and accountability.
Senator RHIANNON: If you are talking about compliance maybe I will ask it slightly differently. Do you ever look at making a comparison between agencies in how they are managing these small grants? You have just talked about compliance there, so I thought compliance would have covered issues of accountability and working to improve how the system works.
Mr Suur: I will attempt to answer that question indirectly, and then if my answer is unsatisfactory you can tell me. In the area of red tape and grants administration, for example, the government is doing work to simplify arrangements between agencies and grant recipients. In other words, we are looking at grant agreement templates and the guidance around that and so on. The Victorian government has done some interesting work in this space, and so at the moment we are working with the Victorian government, grant recipients and agencies to see whether we can simplify the grants systems, the documentation and the red tape around grants to get a better process. In that sense we are engaged with different agencies involved in granting activity and we are comparing practice in this area with a view to strike the best possible solution. From time to time we draw together a community of practice in particular areas with a view to having agencies share how they go about things with a view to improving how things are done.
Senator RHIANNON: Right. I might ask you to explain how some of the guidelines that are there play out in practice. I understand that the obligations that must be complied with in all circumstances are denoted by the use of the terms 'must' or 'mandatory' and that they have to be followed, but then the use of the term 'should' denotes matters of sound practice. It sounds like when you use the term 'should' you are giving people some wriggle room. Could you just expand on those meanings. Yes, I acknowledge they have been defined, but how they work in practice I still find unclear.
Mr Suur: The guidance that we issue falls into two parts. Part 1 of the Commonwealth Grant Guidelines contains mandatory decision-making and reporting requirements that apply to ministers and officials involved in grants administration, and I think in that section of the grant guidelines you will find used the 'mandatory' wording that you referred to.
The second part of the grant guidelines is the best practice section, and that draws the attention of granting entities to better practice. We work on that quite closely with the ANAO to make sure that better practice lessons are shared within the granting community. I think you will find that the use of those words is fairly carefully split between part 1, which is the mandatory bit, and part 2, which is the best practice bit.
Mr Tune: I will add one last bit to that. On grant guidelines for the application of those two specific discretionary grants: departments bring those to the attention of ourselves and to Minister Wong as well and there is a process for agreeing those grant guidelines. So they do go through a process of checks before they are actually put into place and the grants are actually made.
Senator RHIANNON: Right. Thank you.