The Building Better Regions Fund (BBRF) is a $1.38 billion open and competitive grant program administered by the Department of Infrastructure, Transport, Regional Development, Communications and the Arts, under the Commonwealth Grants Rules and Guidelines (CGRGs).

The objectives of the BBRF are to drive economic growth and build stronger regional communities into the future. A total of $1.15 billion has been awarded to 1293 projects across the first five funding rounds. A sixth round was underway at the time of the audit, with successful applications expected to be announced between June and August 2022. The ANAO has not audited the assessment of applications and award of grant funding under the sixth round.

The BBRF is the largest open, competitive and merits-based grants program administered by Infrastructure. This audit was undertaken concurrent with completion of the fifth round and design of the sixth round, providing opportunities to examine any improvements that have been made over time. An audit of the BBRF also allowed the ANAO to provide assurance to the Parliament as to whether Infrastructure has implemented relevant agreed recommendations from the last audit of a regional grant funding program, tabled in November 2019 as well as embedding grants administration improvements previously observed by the ANAO and matters previously raised by the Joint Committee of Public Accounts and Audit (JCPAA) in reviews of earlier audits of regional grants programs. The JCPAA identified the potential audit topic as a priority of the Parliament for 2021–22.

The objective of the audit was to assess whether the award of funding under the BBRF was effective as well as being consistent with the CGRGs.

Key findings:

• The award of funding under the first five rounds of the Building Better Regions Fund was partly effective and partly consistent with the Commonwealth Grant Rules and Guidelines.
• While the BBRF was well designed in a number of respects, there were also deficiencies in a number of important areas. Positive aspects included the guidelines clearly setting out: that an open competitive application process was being employed; relevant and appropriate eligibility requirements; and the process through which the Business Grants Hub would assess the merits of applications against the four published criteria. 
• Infrastructure provided appropriate funding recommendations based on merit assessment results for three of the five rounds that have been completed. This was not the case for the third and fifth funding rounds.
• 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. The basis for the funding decisions has not been appropriately documented, particularly in the three most recently completed rounds.
• Overall, the award of funding was partly consistent with the grant opportunity guidelines. Consistent with the program design, the funding has been directed to projects in rural and regional areas. 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). 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.