Auditor-General Ian McPhee has handed down a damning report of the government’s handling of the regional partnerships programme which has allocated over $300 million in funding that is highly biased towards government federal seats.
McPhee did a performance audit (attached in zip file) of the Department of Transport and Regional Services (DOTARS) focusing on the Regional Partnerships Programme. The report found the programme did not meet acceptable standards of public administration and found ministers regularly override recommendations to approve projects in their favoured areas. Labor leader Kevin Rudd called it “arrogant abuse” of public funds while Trade Minister Mark Vaile defended the program as delivering “fantastic outcomes for regional Australia”.
The Programme owes its existence to the 1999 Regional Australia Summit under the auspices of the then-deputy PM John Anderson. The Summit produced a number of recommendations to improve life in regional Australia. In response the Government released their “Stronger Regions, A Stronger Australia” statement in 2001. It outlined a framework for a decade-long regional development. The key direction was a partnership approach between government and the community. Its programme was designed to stimulate growth, improve services access and support planning.
Known as the Regional Partnership Programme, it was implemented in 2003 and it consolidated several disparate regional funding programs. The audit examined the first three years of operation and found DOTARS administered $330 million on the programme across 1,400 projects. In each case it was ultimately a government minister decision as to which projects got the money (In November 2005 individual approval was replaced by a committee of three ministers) according to published programme guidelines.
The main conclusions of the audit were that it was a very flexible discretionary grants programme, which assessed 1,800 requests, made 1,400 decisions and approved about a thousand of them. Individual grants ranged between $2,000 and $10.4 million and covered areas as diverse as tourism, community organisations, infrastructure works, new technologies, business grants and industry assistance. The audit noted that the programme was criticised in parliament and the media as being open for political misuse.
The audit noted that the flexible nature of the programme allied to ministerial approval presented “challenges” in demonstrating equitable treatment of applicants and said the administration of the programme had “fallen short of an acceptable standard”. However it also noted that response to audit issues had contributed to greater improvement since 2006. The audit quoted QC LJ King’s dictum in a 1999 paper The Attorney-General, Politics and the Judiciary by which ministers are expected to discharge their responsibilities in accordance with public interest and without regard to party political considerations. It also reminded ministers that they were approving the expenditure of public money.
The audit then pointed out examples that did not follow the guidelines including approvals without an initial application, “fasttracked” approvals, approvals despite not meeting approval criteria, or approvals through completely different processes. The audit concluded that these examples were less likely to be merit-based and more likely to fail to achieve the promised benefits. It also pointed out that Ministers do not have to give their rationale as to why projects are approved. Most damning was the finding that the ten largest recipients of largesse were all government held rural electorates accounting for 31 per cent of all funding. It also noted that Ministers were more likely to approve ‘not recommended’ projects in Coalition seats and more likely to turn down ‘recommended’ projects in Labor seats.
It also condemned the small timeframes allowed for due diligence, which it noted, was particularly prevalent “leading up to the calling of the 2004 Federal election”. The audit recommended competitive rounds to allow for comparison of relative merits, a more even communication process, and the scrapping of the fasttrack process (for amounts greater than $50,000). In September Mark Vaile made a National Press Club speech aimed at addressing some of these shortcomings. He limited the Programmes maximum amount to $1 million (divided into enterprise, community and small partnerships) but created a new Growing Regions Programme capped at $3 million. But because over 97 per cent of funding requests are for less than $1 million, the audit did not see Vaile’s announcement solving the problems. It recommended more accountability, ministerial justification, a more transparent bidding process and a recognition it was public money at stake.