This audit assessed the effectiveness of Indigenous Business Australia’s management and implementation of the Indigenous Home Ownership Program.

Audit objectives and criteria

The objective of the audit was to assess the effectiveness of IBA’s management and implementation of the IHOP. To form a conclusion against the audit objective, the ANAO adopted the following high-level audit criteria:

• IBA has management arrangements that support equitable access to IHOP and the achievement of the long-term outcomes of IHOP, including whether clear objectives have been established for the program, program activities are consistent with program objectives and directed towards target customers;
• service delivery is responsive to the needs of target customers and loan assessments are undertaken in line with IHOP policy and procedure, supporting the achievement of program outcomes; and
• performance measurement and reporting mechanisms support accurate assessments of progress towards program outcomes, and achieved performance is in line with the Australian Government’s expectations.

Overall conclusion

Under IBA’s management, from June 2005 to June 2015, IHOP has delivered 4937 loans to Indigenous Australians at an average annual program cost of $37.8 million. The home loans approved through the program have resulted in a maximum contribution of 11.6 per cent to the increase in the national home ownership participation rate for Aboriginal and Torres Strait Islander people from 2006 to 2011. However, it is not possible to assess how many of these participants would otherwise have been able to access mainstream finance.

The ANAO identified that IBA’s management of the program has been inefficient and lending does not fully align with the program objective for which IBA is funded. IBA has met its target for first home buyers, which is a particular focus of the program. However, IBA lending is not directed at low income earners who form an important segment of the program’s target customers. Also, there is not a strong focus on targeting areas where there is high need for home ownership assistance. Instead, IBA has increasingly approved loans to medium and higher income earners and lower risk customers. As market conditions have changed, the loan products offered by IBA have provided comparatively less benefit to Indigenous customers than products offered by mainstream lenders. IBA also needs to improve its business practices to be more efficient in delivering the program. This includes making the application process more accessible and streamlining how IBA assesses loan applications to avoid duplication and reduce unnecessary burden for applicants.

The home loan program was established and designed to meet the barriers to home ownership experienced by Indigenous Australians in 1975. Since this time, the loan product and delivery mechanisms of the program have remained largely unchanged. After 40 years of operation, it is timely for the Australian Government to assess whether a government-funded end‑to‑end loan program remains the most effective mechanism for supporting Indigenous Australians into home ownership.