The objective of the audit was to examine the effectiveness of the Department of Agriculture, Fisheries and Forestry’s administration of the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program. The audit assessed whether the department had:
- effectively designed the program;
- appropriate processes for assessing and approving grant applications received for program funding;
- effectively negotiated and managed compliance with the program funding deeds; and
- monitored and reported performance against the program’s objectives.
The audit focused on the design and delivery of the IGACEP. Other programs, activities or arrangements delivered as part of the IGA were not within the scope of this audit.
The Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program (the IGACEP) was established to provide up to $45 million in grant funding to assist harvest, haulage and silviculture contractors to adjust to the industry downturn and the reduced scale of harvesting. The program commenced on 26 October 2011 with funding to be determined through a competitive, merit-based assessment process. On 17 February 2012, the Minister for Agriculture, Fisheries and Forestry announced funding of $44 019 623 for 62 successful applications (61 applicants) with individual grants ranging from $20 000 to $3 million.
Of the 61 successful applicants, 58 accepted the department’s offer of funding to exit the Tasmanian public native forest industry. The department has estimated that the exit of these businesses will reduce wood being harvested by 819 888 tonnes and wood being hauled by 972 831 tonnes. Despite committing the total program budget, the expectation (outlined in the program objectives) that the harvested and hauled wood exited from the industry would be in the order of 1.5 million tonnes each, was not achieved. This was primarily a result of the number of eligible applicants, the scale of their forestry activities and the amounts offered to exit the industry.
While the IGACEP is a relatively small grants program, the short timeframe for program design and implementation, coupled with the diverse nature, complex business structures and the financial difficulties of potential applicants under the program, presented a challenging delivery environment for the department. DAFF worked quickly to establish the IGACEP and to distribute the majority of program funding within the timeframes established for the program. Potential applicants were appropriately informed of the opportunity to apply and were provided with timely access to the program guidelines and additional guidance material. To support program delivery, the department established detailed administrative arrangements to process applications and grant payments.
There was, however, a large number of incomplete IGACEP applications lodged (77 per cent), primarily due to applicants being unable to provide the documentation to demonstrate that the eligibility criteria had been met. In response, the department provided applicants with additional opportunities to meet eligibility requirements. Although this approach assisted many applicants to receive funding under the program, which contributed positively to the program objective, it adversely impacted on the assessment process and the timeliness of payments to successful applicants.
While 58 forest contracting businesses have received funding to exit from the Tasmanian public native forest sector under the IGACEP, there were weaknesses in key aspects of DAFF’s administration that adversely impacted on the effectiveness of program delivery. In particular the basis for the assessment of eligibility where applicants had not provided the required documentation, but received funding, was not clearly recorded by the department. Further, the process used to assess applications was not in keeping with the approach outlined in the guidelines, such as the use of a funding cap as the basis for assessing whether the panel would recommend a funding offer that was lower than the amount nominated by the applicant to exit the industry. DAFF’s adoption of assessment practices that were outside the published program guidelines, in the absence of advice to applicants, ultimately reduced the transparency and accountability of the assessment process.
The ANAO has previously examined DAFF’s administration of grants programs, including those assisting the Tasmanian forest industry, and has made recommendations designed to strengthen the department’s administration practices. In response to the ANAO’s previous audits and better practice guidance and the 2009 release of the Commonwealth Grant Guidelines: Policies and Principles for Grants Administration (the CGGs), DAFF developed a Grants Management Manual to support departmental program managers. However, in the case of the IGACEP, the department did not follow some key requirements established in the Grants Management Manual (and the CGGs), particularly in relation to the:
- establishment of sound governance arrangements before releasing the program guidelines and draft funding deed;
- documentation of important aspects of the assessment process; and
- development of measures to assess and report on program performance.
The ANAO has made three recommendations that are directed towards improving DAFF’s grants administration practices by reinforcing the importance of: documenting all elements of the assessment process; informing applicants of significant changes to assessment processes and the methods used to determine grant funding offers outlined in the program guidelines; and preparing compliance strategies early in the design phase of grants programs.