Administration of the Strengthening Basin Communities Program

Rural conditions Water Australia
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This audit assessed the effectiveness of the Department of the Environment’s administration of the Strengthening Basin Communities Program in the Murray–Darling Basin.

Overall conclusion

The Australian Government initially allocated $200 million in funding under the Strengthening Basin Communities Program (SBCP) to assist communities in the Murray–Darling Basin to assess the risks and implications associated with climate change and to identify local water efficiency measures that would meet the needs of communities now and into the future. The program was delivered across two components and two funding rounds, with 99 projects valued at $81.7 million approved for funding.As at October 2013, five applicants had not accepted the funding offer, 72 projects had been completed, four had been terminated and 18 were ongoing.

Program funding has been allocated to a broad range of projects across the Basin to assist communities to plan for a future with less water and to develop water savings initiatives. Despite the delivery of SBCP projects being adversely affected by extreme weather events, including drought conditions and severe flooding, all completed projects have reported positive results. Projects have resulted in the creation of planning documents, including socio‑economic modelling of how communities will be affected by a future with less water, and the construction of water saving infrastructure, such as grey water and stormwater re-use systems.

The department has worked in a collaborative and flexible manner to assist grant recipients to achieve the intended outcomes of their projects. However, there were significant shortcomings in some key aspects of program implementation that detracted from the effectiveness of the department’s administration. These included the design of the program guidelines, the subsequent assessment of grant applications, and the management of funding agreements.

The program guidelines published by the department provided applicants with a broad range of information. However, for each of the four sets of guidelines created (one for each component and round) information regarding program eligibility requirements was dispersed throughout the document. As a consequence, it was difficult for applicants and the department to easily determine whether eligibility requirements had been met. In total, 13 projects progressed to merit assessment despite not strictly meeting eligibility requirements, mostly in relation to applicant contributions. While the merit scores for six of these projects were not sufficient for them to be recommended for funding, the remaining seven were given in-principle funding approval, with six projects receiving funding. In addition, Environment departed from the assessment processes outlined in the program guidelines and did not fully document the basis of its decisions. As a result, the transparency, accountability and, ultimately, the equity of the assessment and selection process was adversely affected.

In relation to the management of funding agreements, Environment did not establish a sound and consistent process to manage the scope of funded projects. As a result, activities were funded that had not been merit assessed, and, on the other hand, activities that had been included in the assessment that determined the merit of the proposed projects were removed. Also, the opportunity to amend approved projects was not offered to all applicants, which again raises questions regarding the equity of the assessment and selection process. There were also shortcomings in the management of reporting obligations and the acquittal of grant funding. In particular, the department did not reconcile: recipient contributions to projects against the commitments included in funding agreements; and financial information included in the final report assessment against the audited financial statements to gain assurance over project expenditure. These shortcomings detracted from the department’s approach to monitoring program expenditure and applicant contributions to funded projects.

There would also be merit in Environment reviewing its approach to the reporting of SBCP performance. The department reported the achievements of the SBCP in a consolidated form with other departmental water programs. In some years it identified those projects that had contributed to this consolidated data and in others it did not. The individual contribution of each program to the consolidated figures was not, however, included. Further, the department did not disclose that the water savings data reported for the SBCP were based on estimates, including from projects that had yet to be completed, rather than actual program achievements. As such, stakeholders, including the Parliament, have limited visibility regarding program performance and the extent to which the Government’s objectives have been achieved.

While Environment has made a number of improvements to the administration of the SBCP over the life of the program, there remains scope to strengthen the department’s grants administration practices. The ANAO has made three recommendations designed to: improve the transparency and accountability of grant assessment and selection processes; strengthen the management of funding agreements; and more accurately report program performance.

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