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Joint Committee of Public Accounts and Audit - 06/02/2013 - Auditor-General's reports Nos 2 to 10 (2012-13) and related reports

CHALMERS, Major General Dave, Group Manager, Indigenous Coordination, Department of Families, Housing, Community Services and Indigenous Affairs

CROFT, Ms Lisa, Branch Manager, Remote Service Delivery, Department of Families, Housing, Community Services and Indigenous Affairs

DILLON, Mr Michael, Deputy Secretary, Department of Families, Housing, Community Services and Indigenous Affairs

GLEESON, Mr Brian, Coordinator General for Remote Indigenous Services

KINNANE, Ms Michelle, Branch Manager, Indigenous Commonwealth State Relations Support, Department of Families, Housing, Community Services and Indigenous Affairs

McPHEE, Mr Ian, Auditor-General, Australian National Audit Office

POPE, Dr Andrew, Group Executive Director, Australian National Audit Office

Committee met at 12:01

CHAIR ( Mr Oakeshott ): I declare open today's public hearing which examines two audit reports: report No. 8 2012-13 Australian Government Coordination Arrangements for Indigenous Programs, and report No. 43 2011-12 National Partnership Agreement on Remote Service Delivery. I welcome representatives from the ANAO and from the Department of Families, Housing, Community Services and Indigenous Affairs and the Coordinator-General for Remote Indigenous Services. Given the short time available, statements and comments by witnesses should be relevant and succinct.

Although the committee does not require you to give evidence under oath, I do advise that these hearings are formal proceedings of the parliament and warrant the same respect as proceedings of the respective houses. The giving of false or misleading evidence is a serious matter and may be regarded as a contempt of parliament. The evidence given today attracts parliamentary privilege.

It is certainly very timely that we have this public hearing with the Closing the Gap statements and responses and with Reconciliation Australia and others in the building. Before we proceed to questions, do any of the witnesses present wish to make a brief opening statement to the committee.

Mr McPhee : I have an opening statement, which I am happy to table. I would appreciate the opportunity to just say a few words.

As you are aware, achieving better social and economic outcomes for Australia's Aboriginal and Torres Strait Islander population is a complex and challenging policy area and it is an area of particular focus of my office for audit coverage. We see that the administration of Indigenous affairs is characterised by the parallel delivery of mainstream and Indigenous-specific services and a whole-of-government approach with multiple departments involved in delivering programs and services accessed by Indigenous people. The service delivery model relies on many different organisations to provide on-the-ground delivery of Indigenous programs and services. State and territory governments also have policy and program responsibilities of their own for Indigenous affairs. When delivery involves so many different organisations, having strong, central oversight is important, as is an end-to-end view on program implementation.

The two recent audit reports that you mentioned, Chair, that are the focus of this review present an overarching picture of core features and challenges relating to the administration of Indigenous affairs. Common across the reports is the central issue of coordination of the many entities involved in order to fully support the whole-of-government approach to Indigenous affairs, particularly ensuring the contribution of mainstream services at both reports federal and state levels. A further point highlighted in the report is that service arrangements can be complex, especially when viewed from the perspective of the beneficiary, and pursuing options to deliver integrated services is an important service delivery reform program. Lastly, the reports highlight the challenge of measuring the performance of government programs in a policy area where many different programs operate with different lines of accountability to respective governments and ministers.

There is a significant administrative effort and expenditure involved in addressing Indigenous disadvantage. Direct expenditure on Indigenous specific programs and services by the Australian government exceeded $4.2 billion in 2011-12. When Indigenous access to mainstream services—that is, services available to all Australians—is added, the estimate exceeds $11.5 billion. In addition, of course, the states and territories have significant expenditure on their own programs and services.

The administration of Indigenous affairs is necessarily evolving and, overall, the key departments are making improvements in implementation arrangements to support the achievement of outcomes for Indigenous people. However, to give full effect to the National Indigenous Reform Agreement, there is still progress to be made. The key challenges for departments remain around strategic coordination of policy and administration; making agencies' mainstream programs more accessible and effective for Indigenous people; and working to ensure service delivery on the ground is effective and working in a more integrated manner, including services delivered by state and territory government agencies.

Central to the various recommendations that the ANAO has made has been for the Department of Families, Housing, Community Service and Indigenous Affairs to review its current role in light of the priorities of the Closing the Gap agenda and advise the government of options for an updated lead agency role in Indigenous affairs. The department has agreed with this approach, indicating it is timely after five years of Closing the Gap policy under the federal financial relations framework.

With me today I have Dr Andrew Pope, the senior executive who oversights our Indigenous program audits, amongst other things. Thank you.

Mr Gleeson : I appreciate the opportunity to participate in the Joint Public Accounts and Audit Committee hearings today. Before providing the committee with my comments on the Auditor-General's report, I would like to briefly outline my role and specific responsibilities as coordinator general, as a statutory office holder established under specific legislation, which is the Coordinator General for Remote Indigenous Services Act 2009.

As the act sets out, my role as coordinator general is to monitor, assess and advise in relation to and drive the development of delivery of government service and facilities in each of the specific remote communities, including through improvements of coordination and development of the delivery of such services as well as the reforms that develop in the delivery of service and facilities. Also, as you mentioned, Chair, it is around the Closing the Gap, progressing achievements around Closing the Gap and targets in specified remote communities.

My act makes it clear that I have a mandate to comment on government policies, program and progress in the remote service delivery priority communities. I do not have a mandate on, and I will not be making comments about, broader government policies and activity in relation to Indigenous affairs or any other matter. While it is often a matter of judgement, I take considerable pains to act and speak within my mandate only. My overall objective and the focus of all my work and that of my office is to work with governments, communities and service providers to facilitate a positive change for Indigenous Australians in remote service delivery priority communities by changing the way governments work with them. I have been in the role since June 2009, and my officers and I have made over 100 visits to 29 remote communities. In this context, I make the following observations regarding the three Auditor-General's reports under consideration today.

First, I would like to acknowledge that the Auditor-General's reports are all important reports which highlight key issues in government implementation of the National Partnership Agreement on Remote Service Delivery, which is my area of responsibility, and the Closing the Gap agenda more broadly. While there are a number of specific issues I am happy to discuss in more detail, through the committee in limited time, in this opening statement I would just like to highlight four very high-level issues, which I think are critical.

The first is the report makes a very strong point about the issue of capacity development and, in that regard, how it enhances service delivery. It is a critical issue recognised in the remote service delivery model, an area of focus of my office in my reports. Through you, Chair and the committee, I have put out now six reports over the period of three years and 13 of my 38 recommendations refer to capacity development issues so that is how important, I believe, the issue of capacity development is.

There is a focus in the reports around non-government service delivery organisations, but I would like to highlight that I think it is also equally important that capacity of government not just NGOs working in communities delivering services.

The second is I would like to agree that insufficient attention has been given to ensuring we can assess whether services are improving as envisaged in the National Partnership Agreement on Remote Service Delivery. This is in my view a symptom of the focus on ticking the boxes rather than remembering we are trying to achieve all this through collective activity. I think there is of course a common failing across governments and all organisations, if we are to be honest, and that working together is a very important asset in achieving these results and is something I have addressed in my first report.

I am pleased to say that progress has been made—there is something in the audit report about delivering and developing service standards and measuring performance. It is pleasing to see that this is a body of work that we are working across government with, with our colleagues in FaHCSIA in particular. There has been significant progress on that and there is even a meeting taking place across government tomorrow to progress that work.

Thirdly, the reports highlight the need for strategic leadership and Indigenous reform and are somewhat critical of FaHCSIA's role in this regard. With respect to remote service delivery—again, that is my mandate—I am on record as saying that early on FaHCSIA did not provide the level of leadership needed in some areas, but it is my opinion that in recent times significant improvements on performance in this area have been achieved. In that regard, it is important that the committee is aware that there are a number of structural impediments to reforming service delivery, the most significant being around funding arrangements—and I am happy to elaborate on that if the committee wishes me to—and that limits some of the effectiveness of the issue of, again, how service delivery is achieved.

I agree with the conclusion of the report No. 8 that coordination arrangements need to be reviewed and strengthened, which is occurring; however, I would suggest that coordination alone is not sufficient without structure on the policy reform taking place. To this end, I recognise the need for an authoritative body to take the lead in addressing the issues that have been proved, which have so far proved to be difficult to tackle without an unambiguous mandate and strong leadership.

I recognise FaHCSIA's lead agency role at the Commonwealth level in coordinating Indigenous affairs; however, I also believe that more needs to be done in sustaining a real whole-of-government approach involving the Commonwealth, states and territories. There is a critical issue here, committee and through you, Chair, on the role of the states and the territories with regard to service delivery and issues of coordination. It is a very complex area as mentioned by the Auditor-General.

In conclusion, I would like to note that none of these issues are new; they have been highlighted in many reports over many, many years, so they are not new in that sense. What we need to do now is learn from those experiences and not keep making the same mistakes. That is crucial and I know that is coming through the Prime Minister's statement on Closing the Gap today. This requires a mindset open to the possibility of changing the way we work, changing arrangements which are not delivering the outcomes we need and recognising that, particularly in remote areas, top-down coordination will never beat bottom-up collaboration. I repeat: top-down coordination will never beat bottom-up collaboration with those people who will have to live with the consequences of the decisions made.

Mr Dillon : I thank the committee for the opportunity to appear today. I would like to formally place on record our thanks to the Audit Office for the audits they have done. We treat them very constructively and positively as a means of improving our performance.

I would make two broad points. Since 2008, when the committee last dealt with Indigenous issues, there has been major change in the framework through which Indigenous affairs is administered in this country. We have had the National Indigenous Reform Agreement put in place by COAG. Under that you have the Close the Gap targets, which the Prime Minister gave a progress report on today. We have building blocks that in a sense underpin our work right through those targets. And feeding into those building blocks, we have a wide range of national partnership agreements that put in place arrangements between the Commonwealth and the states to address each and every one of those building blocks and then drive performance towards the targets.

We also have a number of strategies for cost-cutting that underpin performance, things like an urban and regional service delivery strategy, a food security approach and a strategy on data improvement. As well as those we have bilateral implementation plans in each state and territory, so we have a very comprehensive framework. It is complex, it is all-encompassing, and it includes Indigenous-specific programs and mainstream programs with key involvement of Indigenous people in terms of their access through mainstream programs.

The Indigenous expenditure report released this year states that 78 per cent of money flowing to Indigenous citizens in Australia comes through mainstream programs. So the main game is actually maximising access to those mainstream programs.

Secondly, in our lead agency role, we absolutely take on board the conclusions of the Audit Office and we have been undertaking work through ECFIA, the Executive Coordination Forum for Indigenous Affairs, which is chaired by the secretary of FaHCSIA, Finn Pratt, and which involves deputy secretary involvement from about five or six key agencies such as DEEWR, PM&C, Health and so on. We have basically restructured that forum to make it tighter, to make sure the involvement of membership is kept at a senior level and that it is much more strategic. That is the main mechanism we use to drive a whole-of-government approach focused on the framework that I have outlined here. With those brief introductory comments, we are more than happy to take questions.

CHAIR: Could you give a response to the recommendations that have been made by the ANAO. What is the progress report? You said you have adopted them. What is happening in reality?

Mr Dillon : Would you like me to go through each and every recommendation?

CHAIR: Yes.

Mr Dillon : The first point I would make is that I am confident that we are addressing the recommendations in a constructive and positive way. There are huge challenges in front of us but we are on the case. In recommendation 1 of the first audit, which was to review our coordination role, I have already talked a little bit about ECFIA. We are working closely with agencies and ministers through ECFIA for the restructuring we are doing there. We are also focused on on-the-ground service delivery, stakeholder engagement as well as our research and evaluation efforts. We are not ignoring those things. So we have strategies in place in all those areas. We have strategies in place in all those areas and we absolutely accept that we have a responsibility to lead in this way.

In relation to recommendation 2—that is, promoting relevant change and delivery reforms across government agencies to better integrate service delivery, there is so much I could say. In terms of RSD, for example, we have been doing a lot of work with our network and with ICCs on the ground to get lines of responsibility much clearer. In remote Australia, we are in the process of rolling out the Remote Jobs and Communities Program which is a joint program with DEEWR and FaHCSIA and has the joint involvement of our ministers. It is going to be a transformational program because it will, for the first time, mandate participation by jobseekers and by people on income support in remote communities. In the Northern Territory, we are working across the board with DOHA, with DEEWR, with the Attorney-General's Department and with the Northern Territory government to negotiate implementation plans under the National Partnership Agreement on Stronger Futures. That is work in progress at the moment, with FaHCSIA leading those negotiations. We have weekly discussions with the NT government and of course with our colleague agencies. In remote housing, we are leading by doing—on the ground. We actually have, and have had for a number of years, a section embedded in the Northern Territory government to assist the Northern Territory housing department to deliver on their remote housing program. So on recommendation 2 we are doing an awful lot to actively promote relevant changes to the approaches.

In terms of a greater focus on outcomes in overall reporting, recommendation 3, clearly the government has set up the COAG Reform Council. That is relatively new, as is the Indigenous Expenditure Report—this is the second report. And we are obviously very focused on tangible improvements on the ground, in RSD and in all of these national partnerships that I have referred to—school attendance, housing—I can go to the detail but basically that is the broad approach.

In terms of the second audit, which is about the RSD, we had basically a single recommendation which was 'to assess whether the range, standard and accessibility of services has improved'. We have basically accepted the recommendation and we have a whole range of work in place. At the moment we have mid-term progress reports for each remote service delivery community and they are virtually completed. They will be published in early 2013. We have a mid-term implementation review. It has been drafted and we are negotiating with the states for its release this year, and there is a final evaluation due at the end of this year. So we have done a lot of work to respond to the recommendation in that report.

Finally, at a very high level—and I acknowledge I am running through this very quickly—the recommendation in the Capacity Development for Indigenous Service Delivery review, which was basically:

that the departments review their current funding approaches and supporting arrangements, and where appropriate, consider other options to achieve program deliverables such as longer‐term partnerships or core support.

We do this writ small as well as writ large. Yesterday the Prime Minister announced $14 million in funding for Reconciliation Australia over four years. It is essentially a partnership, and it is core funding. So that is the writ small, if you like. Writ large, we are locking in long-term funding through national partnerships. The National Partnership Agreement on Remote Indigenous Housing is 10 years. The Stronger Futures national partnership will be 10 years. We are looking to, in a sense, lock in a joint approach with the states and the Commonwealth. As the coordinator general has just mentioned, it is the bottom-up that is important and so what is imperative is that there is a single message hitting the ground, if you like. To the maximum extent possible, we are working to ensure that a single effort hits the ground. Having said that, these are sovereign governments and they have their own priorities; we cannot achieve the impossible but we are working very hard at it. I could give you other examples, but I think we can pick that up in questioning.

Senator PRATT: I want to ask all three of our speakers to respond to the following issues, noting, Mr Gleeson, you have spoken about the problems of top-down versus bottom-up and, Mr McPhee, your remarks were about the large number of programs and service delivery arrangements.

My experience in Indigenous communities is that you do have a large number of government programs all under separate departments coming in to deliver services all on public sector standards and the communities they are dealing with are those who that lack that capacity and they also lack the income to develop any capacity. So your incorporated Indigenous organisations that have the elders and the community leaders are, essentially, very, very constrained in their capacity to influence the kinds of services that come into their communities and to find ways of getting them to better match their needs because they do not have access to ongoing funding. They try to get buckets of money by applying for little contracts here and there, for which they try to sustain a manager of some sort. To my mind you can do all of that other great stuff you are talking about, but it is not going to mean anything unless that part of the community that is face-to-face with all those departments is addressed.

Mr Gleeson : Let me go first. I think that is a very good point and, as you noted, I highlight that. There are some success stories in the remote service delivery partnership. I would like to highlight three things which have been done as part of this new framework, this new place-based approach. The first part is that in each of the 29 communities we have a local reference group, or an equivalent, which is a community-owned structure. It is a representative group of different clan groups, different skin groups from each of the communities, which is their local governance mechanism. That is the mechanism with which government interacts, and they are established and mandated with a specific role to coordinate the community with regard to their priority needs and to engage with them about what they want. The first part is having that.

The second part is that each of the communities has got a local implementation plan. That plan has been something that they again have worked up themselves with the support of government. It is their priorities, their needs over a period of three to five years. So that is the second success. The third part is that in each of the communities, we have a local government person who is residing in the community with an Indigenous engagement officer from the community. That provides a locally based government resource to interact with, living in the community and working with the community. That is then part of their interaction and engagement process, but it is also a public accountability mechanism. They are just three quick examples of a useful model which is evolving.

Senator PRATT: Have you got a list of those 29 communities? Perhaps some of the gaps are in places that do not have that attention. Also, those kinds of arrangements are emerging but they do not have the same sustainability that is needed in making sure that there is always a nurse there, that there is always a teacher there. Those kinds of arrangements are the ones that tend to get dislocated and do not have the same kind of ongoing sustainability that other service arrangements do.

Mr Gleeson : I think it is important to acknowledge that through these plans, local implementation plans, we are able to identify gaps.

Senator PRATT: Good.

Mr Gleeson : What are the service gaps? We did a baseline mapping survey of every community, done through FaHCSIA, and that established the baseline. Then we have these gaps; the plans identify what priorities; it could be health workers; it could be education; it could be infrastructure issues. So that has been progressively improved. I would like to say there has been a before and after score card in all these communities now, as mentioned by Mr Dillon, and we have seen progress. Communities are saying that; whether you go to Fitzroy Crossing or Mossman Gorge, in jobs or in education.

Senator PRATT: Thank you.

Mr ADAMS: In relation to building capacity, the opportunity of houses being built in communities, how much participation, are we bringing people into that, the opportunity of maintaining a house once you live in it, learning the skills to do that—where is that capacity? Mr Gleeson raised this ability about the policy approach of having the capacity building within the programs. Can you elaborate on that for me?

Mr Dillon : Perhaps the example that comes best to mind is the Remote Jobs and Communities Program that I just mentioned and which we are in the process of rolling out, because it is going to operate in 59 remote regions. It is actually a mainstream program of personal income support. Ninety per cent of its clients will be Indigenous. We are in the process now of selecting the providers in each of those 59 regions. That process is going to give particular priority to local knowledge so that we can be assured that the provider does have local knowledge and, therefore, the capacity to represent people on the ground. We have built into the design of this that as we select these providers we have the capacity to broker changes. We are rolling in four major programs, CDEP, DES—disability employment services, Indigenous employment program and JSA providers. So those four strands are going to be delivered by one provider in each region so we simplify what is hitting the ground, but the provider is going to (1) have local knowledge but (2) we have built in and allocated significant resources around $10 million, to build capacity of the provider organisations as we lead up to the rollout. So we acknowledge there is an issue and we are addressing it.

Mr ADAMS: Thank you.

Ms SMYTH: My question is for Mr Dillon or any of your FaHCSIA colleagues. You have talked extensively about service delivery and involvement of Indigenous people at a local level in capacity building initiatives and so on. Looking further up the chain of decision making, indeed in relation to the very recommendations that were made in the Auditor-General's report, how do we involve or do we involve currently (inaudible) other decision making as well. Capacity building seems often to remain at a lower level of decision making. Is it starting to make its way up through the ranks of decision making?

Mr Dillon : For example, the government has funded and supported the establishment of the National Congress of Australia's First Peoples. So, in terms of the government decision making, I suppose if you went to the top inside the bureaucracy—obviously cabinet and ministers—but the secretaries meet regularly. There is actually a subcommittee of the secretaries committee that deals with social policy issues, and then under that we have ECFIA. The national congress has engaged with each of those levels of bureaucratic decision making, and in fact we have an MOU in place that has been negotiated. So we actually share a lot of information with the national congress. They are obviously at a relatively nascent stage of their development but they are a key stakeholder on a national basis. And of course we do not limit ourselves to them; in the health area we talk to NACCHO; in the land area we talk to various land councils and so on. So there is a lot of I suppose both formal and informal engagement with the Indigenous world. Having said that, there is a line between government and the external environment, and that is the reality in every part of government. So it is a question of how you mediate that boundary, if you like.

Ms SMYTH: Is there a particular way that it has been mediated in relation to these specific recommendations that have been made?

Mr Dillon : All I would say is that the government has put in substantial efforts over the last five years to make that communication much more effective, to ease it. What is going through my mind is, for example, the work we have done on constitutional recognition. The government has set up a panel, which the chair of this committee was actually a participant on. It was dominated by key Indigenous leaders including the congress and a whole range of others. It has fed into our policy work on constitutional recognition. There has been from the start a huge reliance on the views of key Indigenous organisations right across the board. I think the chair would acknowledge that. So that has been our broad approach.

Mr Gleeson : At the jurisdictional level, I will give you an example where I think there has been some further progress made with regard to involving Indigenous representation in both accountability and in decision-making. Each of the jurisdictions has a board of management which oversees how service delivery is occurring in their jurisdiction. It is composed of federal, state and local government. More recently there has been a move to include Indigenous representation on those boards. It is already happening in South Australia, it is happening in New South Wales and is starting to happen in other places. I think that is good progress when they sit with other government public servants talking about are things being delivered.

The other thing is that where initiatives are being rolled out, there are examples of where there is more Indigenous engagement. I conducted a forum recently in Melbourne talking about the role of NGOs working in RSD communities. We had the Indigenous voice at the table. We had the congress there, as Mr Dillon said. We had Indigenous NGO representation et cetera. I am just giving you two examples. I think it is a valid question but I also think things are changing in a positive direction.

CHAIR: I have two themes. The first one is a cultural one within government. I think the recommendations by the ANAO, the way I read them, were about that cultural place of FaHCSIA within the whole-of-government approach. Anecdotally through my eyes—and this is not reflecting on any one individual—I can see the concern that FaHCSIA can play a fantastic coordinating role but when it comes to the job of leading, which at times can mean bullying other departments into action, you will hit some problems because there are some bigger stronger department beasts out there. Again, that is not reflecting on any one individual but more about the structures of government.

I am buoyed by the words in response to the recommendations that you accept the need to culturally move from a coordinating role to lead role. I guess I am wanting more examples of how that happens or whether there is some level of comfort that you have got the highest levels of PM&C in your corner. What are the processes where you turn that comment into real action? Those that know the structures of government know how hard that job will be culturally for FaHCSIA to actually win those fights for all the right reasons. How will you make sure delivery of service and closing the gap remains urgent?

Mr Dillon : I am not sure how to respond. There is a range of implicit assumptions there, Mr Chairman.

CHAIR: Pull them apart if you want because that is through my eyes and through reading between the lines of those ANAO recommendations.

Mr Dillon : I acknowledge you are correct in your reading. We certainly try to work both the formal channels and the informal channels. I acknowledge that, like any area of endeavour, we could probably do better and we will try to do better. But I lay awake last night thinking what should I say in answer to this question. One of the things I thought was: in a sense it is around the notion of leadership and what that means. I wonder a little bit whether—to use a military analogy and my colleague here might correct me—leadership is to get us into some sort of Spartan phalanx. We have all the shields up and we are all together in one lot. The reality is that this is a complex landscape and it is not Thermopylae. It is actually something more akin to a complex battle, a Gettysburg. In that sort of environment, leadership is about taking the high ground, having the tactical advantage, forcing the direction of the battle. In a sense, it is not about getting a phalanx together. That is what the Confederates did—they massed on the other side of the battlefield and they came across in a phalanx, and they lost.

What we need to do is lead by taking the strategic high ground and we are doing that with Stronger Futures, with remote jobs, with RSD. We are working very hard to improve our capacity in RSD. In the health area, there is work underway on a national health plan. I would argue that we are leading but in a slightly different way than maybe is being suggested.

CHAIR: Okay. I fully accept it is an environment change and there are different levels of government involved and non-government factors involved.

Major Gen. Chalmers : Without wanting to critique Mr Dillon's strategic critique of Robert E Lee's strategy at Gettysburg, I would say that leadership is not about bullying. I know you were not meaning to imply that. Leadership is the art of shaping and convincing people to do what they otherwise might not want to do. Very much in this space, FaHCSIA's role is to engage closely with our peers in other departments—those big departments that have their own significant programs and lead in specific areas of government work—and to convince them to shape their programs in a way that best fits the whole strategy of Closing the Gap. We do that, and taking on board the first recommendation in the coordination audit, by using the governance arrangements that we have but making them work harder and work more effectively. In particular, ECFIA, chaired by our secretary Finn Pratt and with membership at the most senior level from the other departments, is taking a leadership role in actually implementing that recommendation.

Ms Kinnane and I have met with ECFIA members on a bilateral basis in a preliminary way to talk to them about how we might progress this project. At its next meeting which is coming up shortly, ECFIA will drive it forward. It is around collaboration and convincing, and going to the strongest weapon in our armoury, which is our ability to talk to each other rather than getting out a big stick. The fact of the matter is FaHCSIA does not have a big stick.

CHAIR: Sure, and I appreciate we are talking about the language and the culture as much as anything else. I do not want to turn this into a leadership forum. I want to know what the committee should be tracking to know that you have shifted from a coordination role to a leadership role. Both those answers, for all their passion and all their aspiration, could be interpreted as nothing more than a validation that leadership is coordination. I think what is being recommended is more than that. Bullying may be strong language but certainly doing business as usual is not going to close the gap. So some cracking of heads or whatever—and my language might be too strong—might be needed, but there has to be something different between coordination and leadership. I want to know whether you know what that is and what the committee should be tracking to know we know you know what it is.

Ms Kinnane : That is certainly in part the intention of the discussions we are having as part of ECFIA to make that definition. For us to acquit that recommendation, we will be determining what changes need to be made and how we measure our leadership role and how we are effecting or exercising that. They will be measures that will come out of it.

CHAIR: What is the time frame for that process?

Major Gen. Chalmers : It is happening over the next couple of months. It is a short time frame; it is not a process that we are going to conduct over the next year or so. Minister Macklin is very keen to make sure that we act quickly and vigorously in this area and she is cracking the whip.

Ms Kinnane : We also need to ensure that our leadership role keeps evolving. As the landscape changes and as the maturity of the collaborative leadership model that we want to put in place evolves, obviously the models and the processes need to evolve too. I am not sure if we can say that there is an end point, but there will be a point at which we can monitor, measure and manage the model that we are putting in place.

CHAIR: Even though a lot of them are not here, I think I can safely speak on behalf of every single committee member and say that we want to back you up in making that shift. Therefore, we want to know what we have got to do to back you up. So I just want to start to get some clear definition. Potentially we make talk about it as a committee but, as that process evolves, we may stay in touch as that recommendation from the ANAO gets turned into action.

The second theme I have is spatial mapping. I do not need it for the national partnership agreement, because it is pretty clear as far as the locations involved, but I have raised it previously as an example of some concerns I have about Closing the Gap. Therefore, potentially as a question on notice, I would be interested in best endeavours to get some spatial mapping on the first audit report. I will get whatever the number was. The reason I ask this is that my understanding—and correct me if I am wrong—is that more than 50 per cent of Australia's Aboriginal and Torres Strait Islander population lives on the coast between Sydney and Rockhampton. Therefore, without passing judgement, it fascinates me that the vast majority of spending is done outside that region, in more than likely very remote areas, for all the understandable reasons but with the danger of that being a cover story for some very light program delivery within that majority population.

I would not see in other areas of government service delivery where the vast majority of spending goes to the least number of people. This is more complex and there is more of a story here, which makes it a bit more understandable. But I guess I am looking for what is happening. If we really are serious about closing the gap and taking it to the next step, where is that program delivery for the majority of the population on the coast, between Sydney and Rockhampton? That is why I am looking for that spatial mapping story—to really try to get a handle on what we are doing in that next chapter, which hopefully is going to come sometime soon.

Mr Dillon : I would be happy to try to get the information you are seeking at some level of generality. I do not actually know how easy or hard it may be, but we will certainly use our best endeavours. I would make the point though, that, as I mentioned, 78 per cent of the funding going to Indigenous Australian citizens is through mainstream programs. If we talk, say, about Aboriginal housing, everyone thinks about remote housing. We are putting $5.5 billion in there over 10 years. However, the government put in some $20 billion, I think, into social housing, and 14 per cent of social housing tenants are Indigenous. Do the maths.

There a billions of dollars that have gone into urban and regional social housing for Indigenous Australians. We are not really tracking that in perhaps the way we should. I think that is the challenge in front of us, and I think that is what you are highlighting.

CHAIR: Yes.

Mr Dillon : My intuition is that we are actually doing quite a lot but we could do a lot better in tracking it.

CHAIR: There was a point that the Prime Minister made in some of the figures that just she released where—and it may be some jobs; I cannot remember if it was jobs or education outcomes—the best outcome, and it is quite a significant outcome, has been in the Northern Territory, which is fantastic for everyone involved but it is much less of an outcome than in other areas of Australia. This is, without passing judgement on good work being done in the Northern Territory, really trying to highlight some needs where the majority of the population is if we really are going to substantially deal with all of the issues involved.

Mr Dillon : Just to respond, that statistic she mentioned was in the Indigenous employment area where there has been a 10 per cent increase in employment over the last eight or so years. But that is off a very low base. If you looked at the employment data for urban and regional Australia you will find that the norm now—it was not the norm 15 years ago—is employment for Aboriginal citizens. It is not as if we are not working through our mainstream employment services to deliver effective outcomes for Aboriginal citizens, but, again, when you come off a really low base you see the improvements much more clearly than perhaps you would when they are just, in a sense, incremental.

CHAIR: Which is why that spatial mapping—

Mr Dillon : It would be very useful.

CHAIR: as much to prove my conspiracy theory wrong as to prove it right—would be fantastic.

Senator SMITH: You were pursuing the point on mainstream services in your question, were you, Chair?

CHAIR: Sort of.

Senator SMITH: I might go back to Mr McPhee's comments. In your opening statement, you talked about perhaps greater emphasis being put on the use of mainstream services to support Indigenous issues. Could you elaborate and explain that a bit further?

Mr McPhee : If you are comfortable I will ask Dr Pope to pick up on that.

Dr Pope : The issue that we are trying to address further in the report is the prominence given to accessing mainstream services. I think it has been well recognised through the departments for a long time now that 'harnessing the mainstream' is a phrase that has been around for a while. It is actually one of the key aspects of achieving the Closing the Gap targets and it goes somewhat to the Chair's observation of the relative balance of remote versus urban or regional spending and in that sense where the gains in the Closing the Gap targets will be made.

Mr Dillon has accurately pointed out that it is not something that is well tracked at the moment. Certainly we had no greater information than what has been enabled by the Indigenous expenditure report, which is a publication produced on a biennial basis, and that has made some estimates which are generally accepted and show roughly a 75-25 split in terms of overall expenditure. In some ways, it broadly maps the population demographics between remote, very remote and the others.

The other complicating factor around the mainstream is that many of those services are, in fact, delivered by state and territory governments. Some of the coordination questions which we were trying to address in this report are alluded to by the Coordinator-General in the context of structural impediments to improving some of that coordination in ensuring that access to mainstream services happens at all levels. Where we come down on it though is that we are recognising, as is recognised in the National Indigenous Reform Agreement, that this is the priority for making the big gains. Our view was that, over the 10 or so years that people have talked about it as a core priority, progress could have been a little quicker and a bit more solid in terms of what other agencies are doing. Part of that goes to the lead agency role. For example, as the department most involved in Indigenous affairs there is a lot of experience within the department which can be brought to bear on how other agencies engage with their sectoral knowledge and understand how best to improve that for Indigenous access. It remains a challenge; it has been recognised by the department as being the core challenge, and it is one we would continue to see as a major challenge.

Senator SMITH: Just so that I am clear, Dr Pope: to get significant gains in Closing the Gap statistics, we should be putting more emphasis on utilising mainstream services than on specific Indigenous services. Is that correct?

Dr Pope : I will have to defer to others with a policy mandate on that one. Population would tell you that gains to be made in urban areas are likely to lift them up.

Senator SMITH: Mr Dillon, do you have a comment on that—specifically around the point that perhaps that not enough is happening in that particular area in terms of utilising the mainstream services?

Mr Dillon : I absolutely acknowledge that to close the gap we need to make gains in both urban and regional, and remote. I have a bifocal approach to those two, because I think the policy responses are probably different in both. I think you are absolutely right, Senator, in thinking that if we do not close the gap in urban and regional Australia where the majority of Aboriginal people live—around 75 per cent—and make the gains there, then we will never close the gap, I suppose is the point. However, we cannot just focus on mainstream because of the disadvantage that exists in urban and regional. There is a clear differential but the disadvantage is so stark in remote that we need to do something there too, so we need to work on both fronts simultaneously. It is not a matter of either or.

Our perspective is that we acknowledge we have to be out there front and centre on these issues simultaneously. The problem is that it is much harder to measure, identify and record the take-up of services in urban and regional through mainstream programs because quite often they do not have the metrics available to do that. One of our challenges is to start to pressure mainstream programs to put those metrics in place.

CHAIR: Can I just cut in there: would you agree without being bifocal with the Coordinator-General that place-based thinking and place-based models are the unifier—both urban and regional whatever that the long-term sustainability will be achieved through that place-based model even in semi or urban Aboriginal and Torres Strait Islander populations?

Mr Dillon : I would probably frame it slightly differently but I acknowledge that there is a place—to coin a phrase—for place based-approaches in both urban and regional, and remote; I agree with that.

Senator SMITH: If I could be so bold, I think your challenge is to demonstrate your success and, both for Indigenous and non-Indigenous Australians, that is a real challenge because more and more money is being spent and we hear of lack of progress or slow progress and only isolated areas of success. Focusing on those areas where your success will be visible to many other Indigenous and non-Indigenous Australians should be a key area of your priority. In the public perception there is a very significant mismatch between the large sums of money and figures that get thrown around that just have no meaning anymore and real success on the ground. Even in your delivery, it sounded to me from Western Australia as a very Canberra-centric approach. What I did not hear much about was what was happening on the ground, which brings me to my second question.

I think, Mr Gleeson, you talked about the importance of capacity building and, in Mr McPhee's opening remarks, he talks about the fact that many of the programs are delivered by Indigenous organisations and that the capacity of those organisations to deliver services is an important factor. Are they the best organisations to be delivering these services? What sort of competition do we have on the ground between Indigenous and non-Indigenous organisations in delivering these sorts of services?

Mr Dillon : I might have covered this earlier when you were out of the room but I mentioned an example with the Remote Jobs and Communities Program we are rolling out at the moment in 59 locations right across remote Australia and we are in the process of selecting providers. This program will merge four existing programs: JSAs, Indigenous Employment Program, Disability Employment Services and CDEP.

One of the criteria we are using in selecting providers is local knowledge, which in a sense may lead you towards Aboriginal organisations. We are conscious that we may not have the capability there in all cases, and so we have deliberately built into the planning for this program a brokering role as we go forward in selecting so that existing job service providers or disability employment service providers might form a partnership with a local organisation so that we get the best combination of both local knowledge, Indigenous sensitivity, if you like, and capacity to deliver for what is a mainstream program.

We have built in that process into our program design and we have also backed it up with funding for capacity building for potential providers both pre the role out time and beyond. That is a long-winded way of agreeing with you that this is an issue but making the point that we are on the case.

Senator SMITH: So is that capacity building in Indigenous organisations so that their governance skills et cetera are more acceptable; and is it also about building capacity in non-Indigenous organisations to be attuned to some of the particular challenges around servicing Indigenous communities—or both?

Mr Dillon : I think the intention was probably the former but there is an unintended consequence of the latter—I think that is right. We are doing a range of other things to build Indigenous capacity. We have the Registrar of Indigenous Corporations, which is doing an awful lot to train committees in giving finance and whatever. We are increasingly recommending to organisations that they ought to use independent directors, because you can put board members through course after course, training and whatever but there is no substitute for sitting on a board having a competent and knowledgeable codirector who can say, 'This is how this should be done. This is how you keep your staff to account,' and so on.

Senator SMITH: I have two very quick ones, if I may. From Western Australia, I would have thought that state and territory governments have a strong incentive in seeing improvements in conditions in Indigenous communities in their own states and territories. I hear of these obstacles to better utilisation of state and territory governments. What is the problem there, Mr McPhee? Is it a structural thing or is it that perhaps we are not giving much attention to a better use of state government mechanisms?

Mr McPhee : It is a generic issue in public administration: how to get the best outcomes from the efforts of Commonwealth, the states and territories. One of the issues even in my area of auditing is the question of: my priorities might be different from some of my state colleagues from time to time, and so it is about having a common vision, a clear understanding of strategies, and how to work collectively together, particularly to manage the risks across the borders and make sure that someone has got oversight. This is the thing that I think is most important: someone is looking at the programs from end to end, has clear oversight of the program from the terms of the policy objectives right through to what is being delivered on the ground. Is it meeting the objectives? What needs to be done to improve the performance?

Traditionally, we have tended to have the Commonwealth focus on its area of responsibility and more and more to say, 'It is up to the states to deliver on particular programs,' and then for the states to say to the Commonwealth: 'You stay out of this delivery area. That is our space. Let us focus on delivery.' So you can get different models going on.

One of the concerns that I have in that space is that it takes longer for the system to work out the best way of delivering services on the ground if you get too much independence in the way service is delivered on the ground. Hence the importance of having committee arrangements to talk but, as we say in the report, we would like to see a bit more leadership here. It is just not a traditional interdepartmental committee, as we would call it in the public service, where people come together and share information; I think it is case of FaHCSIA providing the leadership.

In saying that, this is not a critisism—we indicate through the audit report the department has got the ability. It has got enormous skills. You heard Mr Dillon speak today with great authority and experience. It is having confidence in this department that it has got the ability to develop an approach which is even better than the one that we have today and not be inhibited unduly, particularly in the Commonwealth space, to suggest revised approaches to ministers at the Commonwealth level at least to get a better outcome and not be too concerned about their colleagues in other agencies at this stage. What we have suggested is: develop options for government consideration as to how the leadership model might work. Implicit in that is whether the department itself needs greater authority to be able to crack the whip to get particular outcomes at the Commonwealth level then there is the more generic issue of how the Commonwealth and the states work together to get better outcomes and that is clearly part of broader discussions. We are giving every encouragement to the department to bring all of its knowledge and skills to the fore for the best outcomes in this very challenging policy and program delivery area.

CHAIR: We are five minutes over and we have got to meet after.

Senator SMITH: I will leave it at that. Thanks very much.

CHAIR: Thank you for that. Please don't anyone walk away thinking we do not get how complex and difficult this topic is. We do and we want to track this because we share your aspiration for success in this area of program delivery. Thanks for coming in.

There are some questions on notice from Ms Brodtmann who had to leave, so we will forward them to the appropriate person. If we could get those back in a relatively quick time frame, that would be appreciated.

If the committee has any additional questions, if you could feed them into the secretariat and then we will get them in as quick as we can.

Is it the wish of committee that the committee authorises publication, including publication on the parliamentary database of the proof of the transcript of the evidence given before it at the public hearing today? There being no objection, it is so resolved.

Is it the wish of the committee that the opening statement provided by the Auditor-General is accepted and authorise it for publication? There being no objection, it is so ordered.

On behalf of the committee, I would like to thank all the witnesses who have given evidence at the public hearing today and I would also like to thank Hansard and broadcasting for their assistance. I declare the public hearing closed.

Committee adjourned at 13:07