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Finance and Public Administration Legislation Committee
03/03/2017
Estimates
CROSS-PORTFOLIO INDIGENOUS MATTERS
Australian National Audit Office

Australian National Audit Office

[12:09]

CHAIR: I formally welcome the officers from the ANAO.

Senator McALLISTER: Can I clarify that officers from the department will also be available during this discussion?

CHAIR: Yes.

Senator McALLISTER: It is essentially an outcome 2 matter.

CHAIR: Yes.

Senator McALLISTER: I am sorry. I did not mean to speak over you, Chair.

CHAIR: That is all right. I welcome officers from the Australian National Audit Office and the Department of the Prime Minister and Cabinet. We will begin with questions to both agencies in regard to the recent ANAO audit of the Indigenous Advancement Strategy. I particularly draw attention of the witnesses to an order of the Senate of 13 May 2009 specifying the process by which a claim of public interest immunity should be raised. Witnesses are specifically reminded that a statement that information or a document is confidential or consists of advice to government is not a statement that meets the requirements of the 2009 order. Instead witnesses are required to provide some specific indication of the harm to the public interest that could result from the disclosure of the information or the document.

The committee has set 13 April 2017 as the date by which answers to questions on notice are to be returned. Officers called upon for the first time to answer a question should state their name and position for the Hansard record and witnesses should speak clearly into the microphone. Mr Hehir, do you have an opening statement?

Mr Hehir : No.

CHAIR: Mr Tongue, I gather that you do not have an opening statement.

Mr Tongue : No.

CHAIR: Ms Hefren-Webb, I gather you do not have an opening statement.

Ms Hefren-Webb : No.

Senator McALLISTER: Minister, you have made some remarks about the Auditor-General's report in the chamber. I think you indicated in the chamber that you disagree with some of the analysis and some of the findings. Can I confirm that that is a correct understanding of your position and, if it is, the key areas where you do not agree with the way the work was undertaken in the report or the findings of the report?

Senator Scullion: Perhaps through clarification, the report contains two parts. One is the recommendations, which we accept. Many of them had already been adopted but they are very sensible recommendations. Then the element of the findings—and I think if you have read it and no doubt you have—you will see that there is not an inconsistency but I think it would be reasonable to say that there is a sort of a difference between some of the findings and what the recommendations are.

There are some areas of the findings that I understand why people can come to conclusions by reading just the findings. So, for example, that the minister did not have the information, effectively, to be able to make correct decisions. Whilst not taking issue with it, the fact is that the report and the auditors did not ask me what other information I had to hand, so there is an obvious gap in the information they had because they did not speak to me or my office regarding the additional information that I had at hand to make those decisions. So, whilst it is in the margins there are important differences that we had, that we do not take issue with, but we think need to be taken into consideration.

Senator McALLISTER: What would you have answered had you been asked about that additional information and how did that additional information shape the way that you participated in the process of the design and implementation of the IAS?

Senator Scullion: Much of the report, you will see, is about perhaps two areas. The first area is a process. So there is a strategy and they looked carefully about whether or not the department actually stuck to that strategy. There are rules around grant provision and all of those sorts of things. The second was the relationship between the department and providers. That was where that was up to, but there was very little discussion in that about my fundamental area, which is about outcomes and the people receiving those services.

I was able to get information from my network, from the communities and from individuals about existing service providers and the provision of those services to guide me. That information obviously is not available to the ANAO because they were either unable—I am not sure why—but I was not able to provide them with that information. That is a significant amount of information about a decision on whether or not, for example—and we discussed this earlier—how many actual Indigenous employees locally they actually employed because it has an outcome about whether or not they were able to deliver the service they purported to deliver. It was those sort of matters that both the network had assisted me and individuals and communities could assist me with, but as I said, that is the sort of information.

Senator McALLISTER: So your proposition is, essentially, that you undertook a separate consultation where you gathered additional information and that was an input into your decision making?

Senator Scullion: That was the additional information that I was able to take into consideration in my decision; that is correct.

Senator McALLISTER: Did you keep any written records of those consultations?

Senator Scullion: No, I did not. Most of those consultations came from direct phone calls. Many of those consultations, of course, came from what we knew historically. Many of the IAS processes were existing organisations that were applying, effectively, to continue to provide the same service so the communities, my department and my network were well aware of the actual outcomes of that service provider. The ANAO provided some dry assessments around process but in terms of an assessment about whether these individuals or organisations were able to provide that outcome, whether Indigenous organisations and employees and those sort of things were taken into consideration in addition to that.

Senator McALLISTER: There is some criticism in the report that service providers were not adequately consulted. There is a sample. I think the auditors office undertook a survey with the service providers and found that the vast majority of them said they were not consulted, but your argument would be that you had, separate to those formal consultations, phone contact, discussions, conversations on the ground, particularly in remote Australia I gather, that gave you additional insights into those organisations? Is that correct?

Senator Scullion: There were two separate conversations. I was not having a conversation about consultation.

Senator McALLISTER: No. You were not consulting.

Senator Scullion: I do not want to mix them up to assert that the consultation around the purchasing of services from 90 per cent of those organisations is what it is and we have accepted that.

Senator McALLISTER: What do you mean that it is what it is?

Senator Scullion: So the allegation that we did not consult enough with those people that we were buying services off is what it is and I accept that, but I do not want to assert, in any way, that my additional conversations about the decisions about those processes had anything to do or were notionally about consultation. They only assisted me in the decision about the provision of a service. I did not mean to assert that they were in any way some additional consultation of any form.

Senator McALLISTER: They were inputs into your decision making process but you would not formally call them a consultation?

Senator Scullion: No. I would not have called them informal or formal. They were well past the time by the time I was making the decision. The entire process had effectively taken place, so they were not in any way consultations; they were just simply about information particularly about the service provision and the outcomes.

Senator McALLISTER: The ANAO report highlights inconsistencies between the scoring of projects and the funding of projects. There is a table on page 44 of the report as an example. There are examples where applicants under the Safety and Wellbeing program received a score of 41 and were not recommended for funding and then applicants under that same program who received a score of 11 were recommended. I just want to understand a little bit about how that came about, perhaps by starting with the point at which the funding recommendations came to you. The report says that you received a set of recommendations on 1 March. They were cumulatively worth $917 million and then they were revised within a couple of days and re-presented with a cumulative total of $844.8 million. That is quite a substantial change. It is a $72 million difference between those two funding pools. Could you just explain to me what the substance of those changes was? Were there new projects that were put in and other ones that were taken off or were they changes in the quantum of funding? What is the difference between the first round of projects that were recommended and the second round?

Senator Scullion: I do not want to rely on my recollection. Perhaps the department can assist.

Ms Black : Do you want me to cover off the scoring issue first or the briefing issue first?

Senator McALLISTER: The briefing issue and I will come back to the scoring.

Ms Black : You are quite right. We provided a brief on 1 March to the minister which was the first briefing the department formally did to the minister on the recommendations. We did note that we were still doing some reconciliations internally in relation to the projects that were recommended and we did the supplementary brief on 3 March.

Senator McALLISTER: You are going to have to explain for me what a reconciliation refers to.

Ms Black : Yes, I was just about to say that. The key changes were 90 per cent of the projects that went from 1 March to 3 March the recommendations and the values remained unchanged. We had 412 projects, which is about eight per cent, that had a recommended value change of the department's recommendation.

Senator McALLISTER: So eight per cent and what was the actual number?

Ms Black : It is 412.

Senator McALLISTER: So, 412 had a value change?

Ms Black : Yes.

Senator McALLISTER: But the project remained on the spreadsheet?

Ms Black : That is correct. Then 39 projects or about 0.8 per cent had a change in recommendation.

Senator McALLISTER: Was that to come on, to come off or both?

Ms Black : I would have to go through the 39 projects and have a look for you. It was both.

Senator McALLISTER: It is both?

Ms Black : Yes.

Senator McALLISTER: So 39 projects were taken on or taken off. Why was the list of projects recommended for funding changed, of those 39?

Ms Black : I would have to go back and have a look at the 39 for you. My recollection was we were still settling internally. We had a grant selection committee which is made up of first assistant secretaries who were the governance body making recommendations to the minister. There were still some conversations happening in that body around recommendations to the minister. As I said, it was a very small number where the recommendation actually changed. The bulk were around the value.

Senator McALLISTER: The quantum?

Ms Black : Yes.

Senator McALLISTER: Why did you brief the minister on 1 March if discussions were still taking place within that committee? Is that the correct—

Ms Black : The grant selection committee.

Senator McALLISTER: The grant selection committee.

Ms Black : As we told the committee in previous estimates, we had asked for an extension of the assessment time and we had set ourselves a time internally around when we would brief the minister. We had already made applicants wait a little bit of extra time so we were very keen to get that process finalised. As the audit report notes in its footnote, the minister had a meeting with the Prime Minister and so we were keen to give the minister as much information as he needed to be able to have that discussion, noting that we had about a 24- to 48-hour period of which we were still doing some reconciliations and some fine tuning of the briefing.

Senator McALLISTER: Mr Auditor-General, are you able to give us any insights from your investigations about this aspect of your report?

Mr Hehir : I do not think we can give much more than what we have reported on. The only way we can determine the reason for a change is to ask the preparers of the information, the department, and that is set out in footnote 50 as the explanation that was provided to us. It is no different from the evidence just given.

Senator McALLISTER: Did you receive any feedback, Ms Black, from the minister after that first briefing to the minister?

Ms Black : Not to my recollection. I think the minister noted the brief. I would just like to take that on notice. I cannot remember but definitely there was no discussion around—and that brief—it was the 3 March brief the minister signed off on the recommendation, so that first brief, no.

Senator McALLISTER: Did you brief him in person or simply provide a written brief?

Ms Black : Both.

Senator McALLISTER: So you provided a written brief and you had a conversation. Were you present for that?

Ms Black : Yes, I was.

Senator McALLISTER: Mr Tongue, you also?

Mr Tongue : No, I was not working for the Commonwealth at that stage.

Senator McALLISTER: Anyone else with you, Ms Black? Any other personnel?

Ms Black : Ms Hefren-Webb was.

Senator McALLISTER: So you are the two principal officials essentially who were briefing the minister on this question?

Ms Hefren-Webb : We had a process whereby all the division heads who had responsibility for aspects of the IAS met with the minister just to talk through the broad outlines of the recommendations as to how they were shaping up.

Senator McALLISTER: Is this on 1 March?

Ms Hefren-Webb : Around then.

Ms Black : This is just prior. So we had 5,000 projects. As you understand, it is quite a big exercise and each of the first assistant secretaries had a conversation or discussion with the minister's office to brief on their set of projects that would be coming up. It was not to give any recommendations at that stage but just to brief.

Senator McALLISTER: So this is before 1 March?

Ms Black : Before 1 March. There was a series of briefings that happened. So when the brief arrived on 1 March it was a big ask for the minister to have 5,000 projects arrive on one day to look at so we made sure we briefed on the way through and then the 1 March briefing was primarily to say, 'This is where the department is up to. We are still doing some fine tuning to that', but the minister had a meeting with the Prime Minister and we wanted to make sure he was briefed to be able to have that conversation.

Senator McALLISTER: Was that a brief? Was that in person or simply a written brief provided to the minister?

Ms Black : It was both.

Senator McALLISTER: It was both?

Ms Black : Yes.

Senator McALLISTER: And you were present for that?

Ms Black : Yes.

Senator McALLISTER: Ms Hefren-Webb, were you present for that?

Ms Hefren-Webb : I was present and I think it was—

Senator Scullion: It was essentially two and a half years ago. I know there was certainly Ms Carroll and Ms Edwards.

Ms Hefren-Webb : Yes. Ms Carroll was there.

Senator Scullion: There are quite a few now who no longer work for the department that have gone elsewhere sadly. It was quite a long time ago. Perhaps we can take that other part on notice so we can give you a list of those people who may have been present.

Ms Black : We can give you the discussions leading up to that brief. Absolutely we can do that.

Senator McALLISTER: That would be good. So at that verbal end briefing where the minister received the written brief, did he provide any feedback to you about the projects that you had recommended?

Ms Black : No. As I said, the minister did not sign off on that brief.

Senator McALLISTER: No. I understand he did not sign off but did he provide you with any verbal feedback on the submissions?

Ms Black : As in his view on those recommendations?

Senator McALLISTER: Yes.

Ms Black : To the best of my recollection, no.

Senator McALLISTER: Is that correct, Minister?

Senator Scullion: It is 2½ years ago. I have difficulty recalling that without providing some advice from people who no longer work for me. That is difficult. I genuinely cannot recall that level of detail for 2½ years ago.

Ms Black : The briefing primarily was around providing the minister with advice on the quantum that we had, the quantum of funding, the quantum of projects, organisations, the Indigenous/non-Indigenous split of the organisations, so that the minister was prepared to be able to have that discussion with the Prime Minister.

Senator McALLISTER: The auditor's report notes that the department has been unable to provide evidence that the assessment scores and the need scores were communicated in that initial brief. Were they provided in the brief on 3 March?

Ms Black : Yes.

Senator McALLISTER: There are two briefs and it is just unclear from the report.

Ms Black : So the audit report I think says that we did not provide the individual scores by criterion for every project. That is correct. We provided the minister with an aggregate score. A couple of things on that: our assessment plan was quite clear—and we wrote this well before our assessment process started—that we would provide the minister with an aggregate score.

Senator McALLISTER: I understand the issues around the aggregate. I do not want to discuss those in detail. Can I go back to how that list was prepared? At what stage in the decision making process did the department decide to diverge from funding the high scoring projects only, from exclusively using the scoring framework, to using some other criteria to assemble the list?

Ms Black : There were two processes that we ran in the department. One was an assessment. We had assessment teams across the department. We also had regional assessment teams. We did those two things. There were two separate processes that ran and they came together for the grant selection committee to look at. We ended up with a score against the selection criteria and then a score by our regional assessment teams which was primarily around need. So those two things had to come together in any decisions. So, in relation to the scores, it was not necessarily the highest scoring projects that were recommended for funding because some of the lower scoring projects may have had a very strong needs score, so you cannot look at either of them in isolation.

Senator McALLISTER: Yes, although the audit report identifies areas where projects that had both a low needs score and a low assessment were funded. How did that come about?

Ms Black : It may be that it was a critical service we had to deliver somewhere and it was the only applicant we got for that service. So then, at the back end of that, the contract negotiations would be around working with the organisation to make sure there were appropriate risk clauses in contracts and that there was tighter monitoring of those contracts.

Mr Tongue : Bear in mind that we were trying to reconcile services previously funded under 150 separate programs, so we were constantly going through a process, as we still do, to check that we were not missing anything that might be important to communities.

Senator McALLISTER: Yes, although I do not understand why that would not have shown up in the needs score, if that was the case.

Senator SIEWERT: There is the issue of providing services in Central Australia. You recall that, don't you?

Ms Black : Absolutely, and we talked at length about the gap exercise we had.

Senator SIEWERT: It is directly relevant to the point that Senator McAllister just made.

Ms Black : Yes. We acknowledged through the gap exercise back in early 2015 that some of the applications were not entirely clear on what people were applying for, so the Barkly Youth Services that I think you are referring to was not entirely clear. People either did not understand they had to apply for that or it was not entirely clear from their applications. There was a variety of things that happened in that gap-filling exercise that we just had to redress some service delivery.

Senator McALLISTER: Back to that basic question, you said you were attempting to provide critical services and you may have only had one provider. Surely a critical service would generate a higher needs score. I do not understand how organisations which received both a low needs score and a low assessment could have been chosen.

Ms Black : It is hard to answer in the abstract, to be honest with you.

Senator McALLISTER: The information that I have is in the abstract. That is the nature of the report. Do you have any examples of these situations or did you see any examples?

Mr Hehir : We provided specific examples of such a circumstance to explain it.

Senator McALLISTER: Yes. There is a fairly comprehensive table on page 43 of the report. It demonstrates, for example, a series of projects that had quite low need scores and fairly low assessment scores that were recommended for funding. I am trying to understand how that could happen.

Ms Hefren-Webb : The needs score we have developed through the regional staff undertaking their best efforts. We have 600 regional staff. They cannot know every single community, every single level of need to the local level, so we always envisaged there would be a process where perhaps our regional office had not identified through our formal process when we presented it when we put it all together. Someone might, such as the regional manager, at the last moment say, 'Actually my team have missed something around this community having a really strong need for this.' That is why we have a number of checks and balances in the process. That was part of the role of the grant selection committee—to ensure that we picked up where there were outcomes like that. So the needs score was an attempt to do that as rigorously as possible but we always knew there would be occasions where additional information would come to bear on the decision making.

Senator McALLISTER: Did any of that additional information come from the kinds of grassroots contacts and knowledge that the minister spoke about in his earlier comments?

Ms Hefren-Webb : I am more thinking about where our regional network manager might have brought that knowledge to bear.

Ms Black : Are we talking about the departmental assessment process?

Senator McALLISTER: That is correct.

Ms Black : I just looked at the numbers. It was about 18 per cent that had a low needs score and a low score as well, so it is about 18 per cent of the activities that were recommended for funding. We would probably have to look at each of those individually as to the rationale for the funding, which we are more than happy to do.

Senator McCARTHY: Mr Hehir, did you conduct any analysis of whether the recommendations that were submitted on 1 March were more in line with those baseline scores than the ones that were subsequently submitted on 3 March?

Mr Hehir : No, we did not.

Senator McALLISTER: The report notes on page 50 that eight projects that were not recommended by the department were nonetheless funded. Which projects were they?

Ms Black : I have them on a question on notice from last year. I can pull them out for you.

Senator McALLISTER: My apologies.

Ms Black : The minister is required to report those to the Minister for Finance and we did that. I think it was in budget estimates 2015 that we provided those, but I will pull them out for you and give them to you today.

Senator McALLISTER: That is very good of you. Can I ask how that process worked. Minister, can you tell us how you went about selecting those eight projects that were not recommended by the department?

Senator Scullion: Again, it is 2½ years ago. I cannot recall what the process was but I know that the outcome was that I did have a disagreement with a very small number of those programs. I think the question on notice in 2015 would probably give you more information than I am able to provide at the moment.

Mr Tongue : The minister is required to publish his reasons for departing from a departmental recommendation, and that will be on the question on notice.

Senator Scullion: That is part of the question on notice.

Senator McALLISTER: The other thing I wanted to ask about was the decisions, over the subsequent months, to move funding between projects, often within the same organisation. Who made those decisions?

Ms Black : This is the 92 mentioned in the audit report?

Senator McALLISTER: Correct.

Ms Black : Ms Turnbull may want to add to this. I think the footnote to the audit report notes that the department does not agree with that analysis, so the 92 projects that we funded were as the minister agreed.

Mr Turnbull : The ANAO provided us with the 92 projects where they said that we moved it to another project that was not funded. We went to those 92 where the argument is the minister did not approve and in all cases we found that there was a ministerial approval for the project, so that is why we disagreed with that analysis. It came up fairly late in the audit, so there probably was not enough time to be able to resolve the issue pre-publication but we are more than happy, even now, to work through those with the ANAO because we simply do not agree with that particular finding.

Mr Hehir : We set out the position of the department and our view with respect to their position in that footnote.

Mr Tongue : It is not unusual for departments and the audit office to agree or disagree sometimes on elements of detail.

Mr Hehir : This is basically a factual issue and we were relying on the evidence in front of us. We were looking at the specific decision that the minister took, the specific implementation that occurred and the evidence around the reasons for change.

Senator McALLISTER: I am conscious of the time. We are going to need to make a decision as a group about whether we are coming back to this after the break.

CHAIR: Yes.

Senator McALLISTER: Senator Siewert or other senators may have questions.

Senator SIEWERT: I am listening intently to where you are going, so I am happy at the moment for you to keep going and then perhaps we can work out whether we need to come back after lunch.

CHAIR: The break is at 12.45 and, in an ideal world, it would be a neat break if we could make it then.

Senator McALLISTER: Minister, I think your view about the audit report is that it goes to questions of process but not to questions of substance that the outcomes on the ground—

Senator Scullion: I know you are not trying to verbal me but I would not say that the process is not substance. What I am saying is that one of the things that we are focusing very much on is outcomes on the ground. The intention of the IAS was to move from 150 programs. Prior to your attendance in this place, many people here will remember that questions were asked in Senate estimates on those 150 programs and whether or not the government was able to actually even provide a line item and a vignette of what that proposal was and the actual amount of money was not able to be provided by the previous government. So that irrational approach, with a lack of those processes, was our motivation for this. Our motivation was not about the change of process; it was about the outcomes. So, yes, I am very focused on the outcomes of an improvement of the delivery of services.

Senator McALLISTER: One of the things that did not happen was the development or the approval of a strategy to evaluate outcomes. The auditor's report indicates that that was supposed to have been in place by June 2014. A draft was developed and not approved and, in fact, no funding was provided for evaluation until last year. I do not understand how that is consistent with a commitment to outcomes. How can you know whether or not the program is performing if you did not fund any evaluation of the program's performance?

Senator Scullion: Can I just give you an example. We want to know that the Remote School Attendance Strategy is performing every week. We see whether every child attends school. I would have thought that is a fairly comprehensive set of data that is self-evident about whether or not you are succeeding or otherwise. The child is either at school or they are not. Do we need an evaluation process of the outcomes? We certainly have some data to demonstrate whether we are going well or not and we always acted if we did not think the improvements were sufficient in the community development program. We have already spoken about the significant increases in those people who are actually attending. So with the development of an evaluation program, whilst we have announced significant investment in formalising those processes, it should not be said that we do not know what is happening in the programs. We are collecting data points that give us day-to-day changes about whether or not these outcomes are successful.

Mr Tongue : I think it is fair to say we had an optimism bias in assuming that the 150 separate programs had a deal of clarity around performance indicators, evaluation frameworks and a whole range of things. What we found was, to be blunt, blancmange, and we were too optimistic about our ability to make sense of all of that. We have been working hard subsequently. We have asked the Auditor-General to come back and he is coming back to look at, amongst other things, that very issue. We are absolutely conscious of the need to bring more rigour to this area and we are working hard to do that.

I would note that we continue to spend in the order, recently, of $3 million to $4 million a year on evaluation and evidence collection. The government has announced that is now going to go to $10 million a year, so I think we are responding to the criticism but I think it is important to understand the place we are coming from.

Senator McALLISTER: I am trying to understand the way the minister thinks about this. I am reasonably confident that the Australian Public Service is committed to evaluation. What I do not understand is how we had a draft evaluation framework in place in 2014 but nothing formalised or funded for another two years. Can you explain that, Minister?

Senator Scullion: I am not sure if the department can actually go to those particular dates.

Ms Hefren-Webb : I might comment.

Senator McALLISTER: I am actually interested in the minister's view. Minister, are you not willing to answer? Can you explain that?

Senator Scullion: No. I have directed the question to an officer.

Senator McALLISTER: But I am clarifying that you are not willing to answer the question.

Senator Scullion: You have asked me about the details of a draft that was not somehow approved two years ago and, for accuracy and completeness, I have asked the department to be able to provide some specific advice around that because my recollection of two years ago—

Senator McALLISTER: I will come back to you because I am interested to know whether you thought that was acceptable and whether the lack of an evaluation framework was of concern to you.

CHAIR: Order! I think there were two questions there. Let us try and separate them out. We will get one answer from the minister and one from the department, perhaps.

Senator McALLISTER: Indeed.

Ms Hefren-Webb : The funding that was the subject of the IAS commenced on 1 July 2015 and then also a number of projects commenced on 1 January 2016. We had a working draft of an evaluation strategy that had been circulated and agreed upon within the department. I think what the ANAO was referring to was the minister's formal sign-off on it. We were actively collecting data, putting steps in place to ensure that we were in a good position to evaluate activities under the IAS before we were needing to make further decisions about funding.

In the meantime every activity had KPIs that were negotiated and agreed and we have been receiving six-monthly reports on all of those KPIs, so they will feed into our evaluation framework. We have also selected certain topics within the IAS for particular focus and we have been talking to a range of researchers about the best way to collect that information. So it is not accurate to say there was no activity underway on evaluation in that period; it was activity internal within the department.

Senator McALLISTER: Mr Hehir, was that consistent with what you found when you looked?

Mr Hehir : In paragraph 526 we set out what we found had happened with respect to the development of the evaluation strategy, that there was one drafted and that there was consideration of it over a period of time. I think implicitly there was an agreed one by mid-2015.

Ms Hefren-Webb : Yes.

Ms Black : If I could just add that the department accepted a recommendation and also accepts a number of the findings in relation to the report and we have noted before it was an area we needed to mature. I think there are performance reviews and evaluation, both of which are complementary. As Ms Hefren-Webb said, from the start of the IAS we have had biannual performance cycles for every activity under the IAS and now have a very rigorous compliance framework for IAS projects as well, all of which is collecting a wealth of data that will feed into our broader evaluation plan.

CHAIR: Would it assist if we put back the lunch break by five minutes to resolve any remaining questions with the ANAO?

Senator McALLISTER: From my perspective it could certainly be done within 10 minutes. I am not sure about other senators.

Senator SIEWERT: As long as I can ask a few questions at the end.

CHAIR: Let us set a hard limit of 10 minutes and we will try to cover it by then.

Senator McALLISTER: Just to be clear, Minister, have you now signed off on an evaluation framework?

Senator Scullion: I do not recall but I will check with my department. As you have indicated earlier, you said, 'The evaluation has not started, Minister.'

Senator McALLISTER: This is unbelievable.

Senator Scullion: You were incorrect in your statement that you wanted me to respond to. The department has now explained that, in fact, the evaluation process has started and it is ongoing.

Senator McALLISTER: I am sorry. It is unbelievable to me, Minister. It is unbelievable. Is there no-one on your staff who can put this brief in front of you and get you to sign it off? What is going on?

Senator Scullion: You are talking about events of two and a half years ago.

Senator McALLISTER: No, I am talking about an evaluation framework that it appears you are yet to sign off on years after the program started.

Senator Scullion: The notion of yet to sign off—

CHAIR: Senator McAllister—

Senator Scullion: I think it is really important that you make the difference between an evaluation framework—and let us just put that over here as it is just a word—because people will be thinking about whether an evaluation is actually happening on the ground. We have had evidence from the department that shows quite clearly that evaluation was happening pretty much from the get-go and has continued to this point, so whether or not I have signed off an evaluation framework or not I think is in the margins.

Senator McALLISTER: I do not think others would agree.

Senator Scullion: That is just a statement.

Senator McALLISTER: Is that right?

Mr Tongue : Can I clarify something here with the difference between a plan and a framework?

Senator McALLISTER: Yes—a plan and a framework. Tell me more.

Ms Black : The minister has definitely signed off on a 2015-16 evaluation plan which was broadly a framework for evaluation across the IAS. It was only a year, which is part of the criticism in the audit report that we have accepted. As I said, the department always knew we had to mature our approach but with the additional investment that the minister announced in late February, or whenever it was, that we needed to do some more work around that because we have our $40 million investment now to scope that out much more broadly. The minister has definitely signed off on a 2015-16 evaluation plan.

Senator Scullion: But not a framework.

Senator McALLISTER: I suppose the point I would make is do you accept that there is a difference between data and understanding what produces the data? You get an aggregate set of data and you have a series of programs. You need to understand what an evaluation does. It allows you to understand which programs are producing a result and which ones are not, because the data in aggregate cannot possibly tell you that. That is what the evaluation is for. Do you accept that as a proposition?

Senator Scullion: I accept the proposition that the more granular the data the better the data is, of course.

Senator McALLISTER: I am wondering if at least part of what seems to me to be a lack of interest in the evaluation process on your part or a lack of respect for it is—

Senator Scullion: No-one agrees that I said that or feel that.

Senator McALLISTER: I am glad that is the case. I am just wondering how you would rate a formal evaluation process compared to your own contacts and instincts. Is it your own networks that you are really using to evaluate whether or not these programs are working?

Senator Scullion: No, not at all. We are talking about the evaluation 2½ ago and not the ongoing evaluation program, I am assuming—so you are talking about the evaluation during the IAS process?

Senator McALLISTER: I am talking about the evaluation of the programs that have been funded under the IAS process. What do you understand by 'evaluation', Minister? Can you tell us? What do you think is necessary for an administrator?

Senator Scullion: In this particular context, that is what I was trying to make clear. There was an evaluation of applications in the IAS process. So that is one evaluation that we were undertaking which we have discussed. I understand from your response that we are now undertaking an ongoing evaluation process. As we have indicated, we have an evaluation process which enables us to ensure that the service provision is kept at a very high level by ensuring that as we evaluate sometimes weekly, monthly or six-monthly all of the IAS programs, some of the IAS programs are simply to buy something. So is it a tick or not? Yes, they have purchased it. Did they go through the proper things; those things are done? At the other end of the spectrum there are programs that are far more comprehensive and difficult to measure the outcomes. I know my answer is fairly vague to a fairly vague question, but the evaluation process is underway at the moment and that evaluation allows us to make decisions about those service providers and ensuring that they keep those services at a high level.

Ms Black : If I could just add, I accept the performance information is different from a broader evaluation approach. I completely accept that. Those two things are running in the department but as we acknowledged we needed to do more to bring them together. The announcement the minister made talked about contract, program and outcome level evaluation, so those three things coming together in a broader evaluation framework for the IAS is something that we will put more energy into over the next two to three months.

Senator McALLISTER: I am going to accede to Senator Siewert but I just want to ask a final question. Minister, I think in your last answer you said that there are some things that are evaluated weekly. Is that correct?

Senator Scullion: As I said, we actually get the data from schools. We get the data from our CDP, so I get the data from schools at the end of every week. That is an example of how I receive data. The overall position perhaps that you are trying to make is that somehow we do not value evaluation. Well, we have just provided significant funds for evaluation. We are in discussions with both the ANAO and the Productivity Commission to ensure that the data that they require is actually data that we collect, to try to ensure that with any further audits we should be audit friendly so we can actually provide those data points that they think are important rather than we think are important.

Senator McALLISTER: It is better late than never.

Senator Scullion: So in terms of evaluation, we have an evaluation across the programs that certainly we have not seen with previous administrations.

Senator SIEWERT: I wanted to go to the evaluation process as well but I have a couple of other questions after that. I want to go to the issue around the evaluation and take you back to the ANAO report. I will just take you to this: 'The department has established arrangements to monitor the performance of service providers but has not specified targets for all providers and arrangements are not always risk based.' I must say that coincides with the feedback I was getting from a lot of providers. How can we be confident that, in fact, the relevant targets have been developed, that they are there for that evaluation process, because I can tell you the feedback I was getting from providers was that this was extremely fraught, very messy and confusing?

Mr Tongue : Just before Mr Turnbull starts I would make the point that one of the dangers for all of us in Indigenous Affairs is an exclusive focus on providers. Providers are important and necessary but ultimately we are funding providers to deliver services. Providers are often self-interested in their complaints. The easiest way to run a program is to give the providers what they want, and one of our challenges in Indigenous Affairs is to find a pathway between the advocacy roles of providers, which we acknowledge, and the provision roles of providers.

Senator SIEWERT: The information I was getting was that there was not information and guidance provided by the department. It was not about what the providers wanted. I understand what you are saying but it was not about that. They were trying to get more specific information and guidance and it was not being provided.

Ms Hefren-Webb : Is that guidance about the selection of KPIs?

Senator SIEWERT: Yes.

Ms Hefren-Webb : That was done as part of the negotiation of the agreement with every provider.

Senator SIEWERT: I know that is what you are saying and yet the audit finds, 'There is limited assurance that these negotiations were fair or transparent', and it also talks about agreements being placed without those—'Specified targets for provider were not always there'—and that agreements were being signed before that was finalised. How can we be confident, in fact, that there are now specified targets for providers for the evaluation, that the adequate data or the appropriate data is being collected, given that we are still developing the evaluation framework?

Mr Turnbull : Just in relation to the original set of KPIs, there were two mandatory KPIs that all providers report against. One was around the percentage, the number and proportion of Indigenous employees in the project and another was about each provider's compliance with the terms and conditions. Beyond that, for each provider, there was a selection of KPIs depending on the nature of the particular project. Often those KPIs went to factors like the number of service beneficiaries. Now, having said that, we recognise that we need to improve those KPIs.

Senator SIEWERT: That is not an appropriate evaluation to measure the outcomes of it.

Ms Hefren-Webb : That is about performance. The evaluation will go much further than a set of KPIs. So, for example, we completely understand that in order to measure whether a program is running effectively we need to bring a range of data sources, quantitative and qualitative, to bear. So an evaluation of, for example, the community development program that I think Ms Williams mentioned earlier, we will have the data and we will have the reports on the KPIs. We also contracted a number of researchers to undertake interviews with people affected, to talk to communities, et cetera. We are not relying wholly on our KPIs for our evaluation strategy.

Senator SIEWERT: I realise that.

CHAIR: We do have to break at 1 pm.

Senator SIEWERT: I have hardly asked any questions.

CHAIR: I know but Senator McAllister invited you to jump in earlier and you said no.

Senator SIEWERT: Senator McAllister was on a roll and I did not want to interrupt that.

CHAIR: That was very kind of you, but we do have to break at 1 pm.

Senator SIEWERT: I have one question there for a question on notice.

CHAIR: Of course.

Senator SIEWERT: And one other question, if I could.

CHAIR: Yes.

Senator SIEWERT: What I was going to ask on notice is following up the point you just made about contracting people. Could you give us the details of who has been contracted to do that?

Ms Hefren-Webb : What research?

Senator SIEWERT: Yes, and how much that contract is for.

Mr Tongue : We shall do so.

Senator SIEWERT: I want to go back to this issue of the discussion that Senator McAllister had, which I acknowledge was quite extensive, about the provision of the additional information, Minister, that you sought that has not been recorded. Now, the audit finds that, in fact, 'The recommended projects provided to the minister did not provide sufficient information to comply with the mandatory requirements of the Commonwealth grant rules and guidelines.' This clearly did not meet those guidelines. How is it auditable and how is it verifiable and on what basis was the information used to make those decisions, because it has not been recorded? I understand that you have extensive knowledge and you talk to people, et cetera, but without that being recorded where is the level of confidence, in fact, that it was all appropriate, that the decisions were in line with that information?

Senator Scullion: Can I just try to correct that. You talk about the additional information I had access to but this was only a fraction of the information that I had at hand. There was an enormous amount of information. I know the officer will be able to assist with that but my recollection was there was an inordinate amount of information, and if I required more there was more available again. There was an enormous amount of information behind every application.

Senator SIEWERT: But it did not meet the requirements of the Commonwealth grants rules and guidelines.

Senator Scullion: Perhaps it would be better if somebody else could answer that.

Ms Black : It did not meet the requirements of the Commonwealth's grants rules and guidelines. That is a should and not a must, that the minister should have the score for every single selection criterion. We gave an aggregate score rather than individual scores against each criterion, so that finding is in relation to that.

Mr Tongue : In our assessment plan we said at the outset we would not provide the individual scores of the selection criteria, that we would provide an aggregate score because the Commonwealth grant guidelines do not make that a mandatory requirement. One of the reasons for that is had we done that we would have had to provide the minister with 25,000 separate cells of information and scores for all the decisions that he would make.

Ms Black : That is why we buffered it with individual briefings from each first assistant secretary on their individual projects. They had all of that information for those briefings.

Senator SIEWERT: Which at least is documented; however, the minister's input is not.

Mr Tongue : Where the minister departed from a departmental recommendation is because we have to provide that information. The minister is required to document—

Senator Scullion: The reasons that I departed from them are part of the answer to the question on notice in 2015, I understand.

Senator SIEWERT: I will put some more questions on notice.

CHAIR: Thank you. Minister, I know you have an appointment to get to so you are free to go. In the meantime Senator Smith just wanted to make a quick comment before we close for lunch.

Senator SMITH: It is just to correct the record. In my commentary around the Indigenous recognition campaign I used the figure of $50 million being the cumulative amount that government has spent to date. That figure should be closer to $40 million plus.

CHAIR: Thank you. Senator Dodson, do you have a quick point?

Senator DODSON: A question to Mr Hehir about the comment on page 7 of the summary in paragraph 2. Could you give me a view on the meaning of the statement that was said that the 2014-15 budget reported that the Australian government would save $534.4 million over five years by rationalising Indigenous programs, grants and activities?

Mr Hehir : I am not certain I understand the question.

Senator DODSON: I want to know what your view is. That is the statement you make.

Mr Hehir : That is a statement.

Senator DODSON: Is it a correct statement?

Mr Hehir : It is a statement of fact from the budget documentation.

Senator DODSON: Is the fact based on cuts to operations or cuts to programs? I read that as cuts to programs.

Mr Hehir : That is a question that you would need to give to the department. We are quoting on the budget documents with what they state would occur. How it is implemented would be a departmental issue.

Mr Tongue : We have provided previously on notice a reconciliation of the changes that were made in the budget and then the subsequent reinvestment in other priorities under the IAS. I am happy for us to dig that out again and provide it to you.

Senator DODSON: Thank you.

CHAIR: We will now break.

Ms Black : Could I just make one correction?

CHAIR: You may.

Ms Black : A colleague just pointed out that I have made an error. The evaluation plan was for 2016-17 and not for 2015-16. That was my error.

CHAIR: Thank you. We will now break and return at 1.50 pm after lunch.

Proceedings suspended from 13:03 to 13:52

CHAIR: We will now resume. We are continuing questions in outcome 2 with PM&C. I hope we will finish on that relatively soon and then we will move to the health issues. Senator Dodson.

Senator DODSON: This question is in relation to the Aboriginal and Torres Strait Islander children and family centres and the Budget Based Funded matters. Can the government comment on the current funding arrangements surrounding what I will call the childcare centres under the budget based funding arrangements after June 2018?

Ms Hefren-Webb : The majority of the Budget Based Funded childcare centres are funded out of the education portfolio, the Department of Education.

Senator Scullion: Before you get steam coming out from under the hat, we will make sure that we pass on those questions to them today.

Senator DODSON: I understand that, because there is a letter from Minister Birmingham to the services which stated, 'The Prime Minister, the Hon. Malcolm Turnbull'—as if you did not know who he was—'has given a firm commitment that we will identify alternative funding sources for these services and support them to transition to these new arrangements.' Can the department provide the committee with a tangible explanation on how the department intends to assist the service providers in this transition? If that is a question you could take on board I would be most appreciative.

Ms Hefren-Webb : Do you want me to answer that now?

Senator DODSON: You can answer that if you are in a position to?

Ms Hefren-Webb : The centres that are funded by the Department of Education, as you know, are subject to some reforms in the context of the government's childcare legislation. We are in very active discussions with the Department of Education about how those services will be supported through that transition, should the legislation pass, and where it is most appropriate for them to receive ongoing support. We have 11 Budget Based Funded childcare centres. How many others would there be that are funded out of the Department of Education?

Ms Beck : There are about 300 in total.

Senator DODSON: It is obviously critical to the Closing the Gap strategy, as the minister would be aware, and certainly in turning around some of those matters that we saw in the recent reports. It is critical that these centres be continually funded in order to deal with those matters.

Ms Hefren-Webb : Yes.

Senator SIEWERT: I have some questions that I would like to put on notice. I wanted to ask in relation to the evaluation of the Stronger Communities for Children answer that you gave me on question number 207 where you said that there is an evaluation of the program—this is specifically about the Northern Territory ones--that has commenced and it is due to report back to PM&C in June 2017. Is that on track to report back then?

Ms Beck : Yes. It is on track to report back in July this year.

Senator SIEWERT: July?

Ms Beck : Yes.

Senator SIEWERT: This says June.

Ms Beck : It is on track. It is underway. My understanding is it is due to report back in July.

Senator SIEWERT: Thank you. Is it the case that that report will be public?

Ms Hefren-Webb : That will be a decision for the minister at the time.

Senator SIEWERT: In dot point 4 there is the question where I asked, 'The original designated programs are intended to be extended to an additional five communities starting in July 2017. Have these centres been identified?' Do I presume that that is subject to the evaluation?

Ms Beck : Correct, yes.

Senator SIEWERT: So they may not go ahead now because of the evaluation. I am not saying that you are thinking of that. I am just saying if the evaluation is not strongly positive, do I take it from that that they may not go ahead?

Ms Hefren-Webb : As you know the Stronger Communities for Children model is just one of many models that we have running through early childhood. The Budget Based Funded centres is another one. It is a question of whether the objectives of that model, which were particularly around community ownership, have been met to the extent we sought and then that will inform our decisions about the structure of that funding going forward but also about how we might structure funding for other early childhood initiatives.

Senator SIEWERT: Can I take it from your answer just then that the funding that would have been available for the five more would still be there but you may use a different approach?

Ms Beck : Correct.

Senator SIEWERT: I have a series of questions around the answers that you gave me on Empowered Communities. I am seeking a bit more information. I think I will need to put some questions on notice because I have quite a lot, but I will just ask a couple of them if I may. In answer to one of my questions you say, 'The Department of the Prime Minister and Cabinet has a small team within the Indigenous Affairs group to support the implementation.' It says here, 'It is to drive and coordinate the implementation of the policy.' Can you expand a bit more on what that team does?

Mr Tongue : I think, as we have outlined in the question on notice, Empowered Communities requires us to work in a different way and that team supports our engagement with our regional staff and our policy staff back in Canberra. The idea is that we need to change our approach to those communities so that instead of a kind of funding transactional relationship we are moving to a more in principle engagement around priorities and that team supports our efforts. It is only small. Mr Ryan might help me out on how many people.

Senator SIEWERT: It says that it is going from seven to 10.

Mr Ryan : It is a fairly small team and it works closely with our regional network who play the lead role in each of those regions. It also works with the leaders at a national level and the very small support that they have as well, looking at how we need to change our arrangements within government.

Senator SIEWERT: Where are you up to in terms of how you need to change your arrangements in government?

Mr Ryan : It is fairly early. As this is an Indigenous-led initiative it has been important that we actually work with the Indigenous leaders, so at this stage they are still working through how they have to establish their arrangements within their own regions and communities and work through that. We are looking at, for instance, how we make decisions across government in an Empowered Communities framework, what sort of decisions they are going to be involved in and how we will manage that across not only our department but across the Commonwealth government. It is also working with state governments as well.

Senator SIEWERT: When you talk about 'their arrangements', can you just elaborate a little bit further on that?

Mr Ryan : They have a very small support team that helps them operate across the board at a national level. It is only a single position but it also has secondees from Jawun that provide that support as well. That provides support for them to look at how they develop a framework that can support each of the regions and to then put in place arrangements at a regional level. Most of the work is done at the regional level. We fund backbone organisations in seven of eight regions but there is a need to also work with them in that sort of overarching way to say how we need to understand what this means because it is a significant change in the way government delivers services. So it is: how do we need to get to a joint understanding about what this means and how we work with you?

Senator SIEWERT: What is the time frame for doing that?

Mr Ryan : The funding for the backbone organisations is three years. The time frame, in terms of coming to that understanding, each year we sit down and work through what each of the deliverables are for those backbone organisations and we do a review each 12 months on how we are progressing towards that implementation.

Senator SIEWERT: So what are the deliverables?

Mr Ryan : The major one at this stage for the backbone organisations is to work towards a development agenda which will set the priorities in each of those regions that then guides how we target our investment. That is the major deliverable, but in addition to that they will continue to work with their regions to build their authority to speak on behalf of community. They are assessing the data that we have provided. We have provided each of those seven regions with backbone organisations fairly comprehensive data from the Commonwealth's perspective and hopefully we will get that also from state governments as well, which sets out not only the funding data but also data around needs; that is, what sort of NAPLAN scores we have, employment figures, how we are going on domestic violence in that region and incarceration rates. It provides that demographic data as well as saying this is the level of investment that is coming from the Commonwealth government into that region.

Ultimately what we would be looking at is an agreed development agenda for the region which we then go to that quantified investment of how we best direct that investment to get the greatest effect and the greatest achievement against those identified priorities that are set out in the development agenda. It is not a quick process and the communities are reasonably well advanced, but they are beginning to understand just how significant the work is that is required in order to do that work properly.

Senator SIEWERT: When you talk about developing the group's authority, what does that mean?

Mr Ryan : That is something that sits with the Indigenous leaders. While the department would support that, that is something that sits with those leaders and the backbone organisations. It is explaining to their community what Empowered Communities means and how they can be involved in it. While there are regions that notionally are quite large, in some cases at this stage not all communities have opted in to Empowered Communities. In East Kimberley, for instance, it is largely, at the moment, centred around Kununurra, so over time they would hope to increase the number of communities within a region and have all of that region opt in, but they are doing that on an opt-in basis, so it is up to each community to determine that this is something that they do want to be involved in. They are also—

Senator SIEWERT: How do they determine that? How do you ensure that the community itself has actually determined it?

Mr Ryan : That is something that the leaders have to determine. Government is not part of that process. While we are partners in this that is something that the actual leaders themselves have to do and work on.

Senator SIEWERT: I understand that and perhaps I should word it differently. How will you be confident that, in fact, they do have a community mandate?

Mr Ryan : There would be some things that we would look for and in each area it would be different. At the moment we are doing work around the North East Arnhem Land where cultural authority is absolutely imperative and in order to have an effective Empowered Community's model in that region they have to have the support and involvement of cultural leadership within that group. That is something that would be absolutely fundamental in that region.

In Cape York they are working quite differently. They are working at a family level, working with those family and clan groups and getting them to opt in at that point. In other regions a lot of it is around organisations and key organisations being involved. So in each region we would have to look at it differently in terms of what would be relevant to that region. So it is led by Indigenous organisations and Indigenous leaders on the ground but we would certainly be looking for what, from our understanding, would reflect a reasonable authority. However, it is important to say we do not expect 100 per cent authority in this case, that this will be something where the leaders have sufficient mandate but not a complete mandate and over time they would hope to build that.

Senator SIEWERT: I will put the rest of my questions on notice because I know we are running out of time.

CHAIR: Thank you. I appreciate that. Are there any further questions in outcome 2 for the department?

Ms Hefren-Webb : I might just say we have got some clarification of the data on penalties that Senator Siewert sought and we would like to table that.

CHAIR: Thank you very much. If there are no further questions for the department I will thank the officials and we will now move to the Department of Health.