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Finance and Public Administration References Committee
16/02/2016
Commonwealth Indigenous Advancement Strategy tendering processes

JAN, Mr David, Manager of Policy Development and Corporate Services, Local Government Association of the Northern Territory

[13:55]

CHAIR: I welcome Mr David Jan. Information on parliamentary privilege, the protection of witnesses and giving evidence to Senate committees has been provided to you. I invite you to make a short opening statement, and at the conclusion of your remarks I will invite members of the committee to ask questions.

Mr Jan : I will assume that senators all have a copy of the background information briefing paper that I sent. I want to highlight a few things on there, particularly about LGANT ourselves. We represent all of the 17 local government entities in the Northern Territory, of which there are nine regional councils, three shire councils and five municipals. We coordinate activities and advocacy on their behalf.

The Indigenous Advancement Strategy has the potential to affect all councils in the NT. However, it is the regional councils that are impacted the most. There are three points characterising those regional councils I would like to bring your attention to. Geographically, they constitute all of the remote areas of the Northern Territory and they service all of the Indigenous communities and outstations within that. Eighty per cent of elected members on those councils are Indigenous. In the East Arnhem Regional Council, for instance, they have one non-Indigenous member, but for all intents and purposes she may as well be Indigenous—she has been out there that long. MacDonnell Regional Council has one non-Indigenous member and Central Desert Regional Council has two. So, for all intents and purposes, they are all Indigenous. The employment levels of those councils all range between around 60 per cent to 80 per cent Indigenous employment. That tends to fluctuate over the course of the year and across councils. MacDonnell, Central Desert, East Arnhem and Roper Gulf—they are, predominantly, the ones that have the higher Indigenous employment. Barkly Regional Council is on the lower end of the spectrum, mostly because they have Tennant Creek and Elliot, which have a higher proportion of non-Indigenous people.

It is our belief that these characteristics and the robust administrative and governance structures, which are supported by the legislation that local government operates under in the NT, make them well placed to provide a long-term and accountable option for the delivery of Commonwealth programs, and they currently do that in many areas now. The regional councils, which I am going to focus on now, differ very much from all other local government in the NT and Australia wide, in that their income streams, or their delivery methods—the things that they deliver—are very different and they are based on where their funding comes from in terms of grant applications. You will find that the funding base for municipal councils is mostly rates, whereas with the regional councils, in many instances, the discretional funds which they get from things like rates and charges are under five per cent of their total operational revenue. This is significant if we look at the grants they receive. Yes, they get financial assistance grants, but out of all that 50 per cent of their funding is grants that are special purpose and are for specific things that they have to deliver on. They cannot take that money to subsidise any other program they have; they must deliver those programs. So they are really restricted in their flexibility in delivering programs.

Local governments in the Northern Territory are cost sensitive and while other spheres of government, and for instance the municipals, are able to absorb fluctuations in funding arrangements, the regional councils really struggle with that because of where the money comes from. I have provided a graph which highlights the difference between operational revenues of municipal councils versus the regional councils. You will notice two things. Firstly, municipal council revenue is steadily increasing and the trend for regional council revenue is on the decline. That is a function of the municipal councils' ability to increase their revenue streams through rate increases. You will also notice that the funding stream for regional councils seems to fluctuate a fair bit, which is problematic in a number of areas in that it really provides an uncertain environment to provide a stable work force, and then also on the service delivery side of things as well. We know that their funding is coming from program delivery for the state and the Commonwealth and with those funding cycles going up and down, based on different policies and programs, there is a fair amount of uncertainty there.

To top it all off, it is important to look at the overall scheme and not just the Indigenous Advancement Strategy. There are a lot of pressures on local government Australia wide—for instance, the freeze on the financial assistance grants to local government. For the NT alone, that is to the tune of about $3 million over three years. That does not sound like much, but to a regional council that relies on those programs to be able to deliver services, because under the legislation they are mandated to deliver services for the wellbeing of their communities, it is a big thing. I suppose there are positives in the firming up of the Roads to Recovery funding, and councils are very grateful for that, but what it really comes down to is the inability of regional councils to secure growth revenues in order to maintain programs and provide CPI increases for their staff in the long term. That is just an overview of local government in general, and I am happy to answer any more questions on that.

You will notice that none of our councils or the local government association put in a submission to this inquiry. There are a couple of reasons for that. Firstly, there was a huge amount of effort by our councils that went into the application process, and that created a lot of burnout within our councils. By the time it came around to getting the funding they all just want to get on and do the job, to be honest. Secondly, when the initial round of funding came out there were some significant gaps in what was asked for within local government. Preceding that there was a lot of lobbying on behalf of the councils, and local government overall across the board ended up coming out with pretty much the status quo of what they were delivering previously. The key things that local government deliver are night patrol, aged-care services, some child care services, some literacy and numeracy stuff and a lot of the youth sports diversionary programs—sport and rec stuff. They are the three or four key areas that they deliver. To all intents and purposes, they got funded again—there was a small cut but at the end of the day local government recognised that there are needs in the economic climate and the way things are there have to be funding cuts. They recognised that and will work within whatever constraints are put on them.

With regard to the application process, like I said all of our councils put in an enormous amount of effort and time in trying to come up with applications that satisfied the criteria but really got to the essence of what the Indigenous Advancement Strategy was about with the five pillars and coming up with holistic integrated programs. For example, the MacDonnell Regional Council spent $20,000 on a consultant alone to help them coordinate that. They have not been able to quantify the man-hours, but it would have been worth way more than $20,000 in terms of the consultation they did when they went out to all 13 of their remote communities to get a feel for what things those communities would like to change in program delivery. They did that over the course of six weeks, and I can tell from experience, when trying to contact people there, that they basically all went offline, and their focus was to put in a solid application to this. That is just one example. Central Desert went through the same thing, as did Barkly and East Arnhem Regional Council—all of the councils. They all went through the same process.

There is a general feeling that the premise of innovation was not really honoured once all the funding was decided, in that councils basically ended up delivering what they were delivering prior to that, with no recognition of their innovative programs that they pulled together. In some sense, that was pretty soul destroying for some of the people who did a lot of work and put their heart into trying to come up with some new way of program delivery within a constricted funding environment. There was disappointment in that there is really no allowance for CPI increases for the continual raising of wages which everyone gets, regardless of whether you are in remote or in urban areas. There was the odd job loss, but there was job creation as well.

There is a general perception amongst the councils that, throughout the assessment process, the people who were assessing programs probably either were inexperienced or did not have the knowledge behind them to fully assess what was put in front of them. Whether that is true or not I do not know. There is just that perception. That comes across—I will use MacDonnell for an example—in the fact that they had a program that covered their night patrol, their early childhood development and essentially their sport and rec type stuff, and it appeared that that was pulled apart and they were assessed separately. When the initial response came back, for instance, their youth development program was slashed very severely and they were looking at losing up to 28 positions. As I said, it all ended up getting turned around, but for all intents and purposes the contracts that they are on now are the same as what they were on before. So, as I said, they felt they went to a lot of effort just to go on with the status quo, whereas they really could have just kept on going.

That underlines, I suppose, why our councils have not really been passionate about putting in a submission to this. I was furiously ringing around over the last couple of weeks, trying to get them to get information for me to bring to them, which I got, and some of them were actually a little bit reluctant to send information through because they do not want to bite the hand that feeds them, to be honest with you. As I said, they are grateful for the opportunity to be able to deliver programs, and they want to continue to do so, and they see that they are in a good position to do so.

I just have three more things, and then we can get onto questions. The assessment delays and the delay in actually announcing the funding were problematic. They lost a lot of good people because people just could not wait around in the hope that they might have a job. This is not just non-Indigenous; Indigenous employees also went out and found other jobs. So there was a loss of corporate knowledge within organisations out in remote communities. There are clearly impacts on the service when you lose good people.

There is a perception that the assessment panels did not really appreciate the true cost of doing business out on remote communities when it comes to training and development of people. It is very expensive to get training organisations out. If you look at East Arnhem, a number of their communities are actually on islands, so you have to charter flights and, as you know, it gets very expensive. I mentioned before that there is no allowance for CPI increases. I would like to support the previous speaker's comments regarding feedback received. All our councils have questioned the value of any feedback they did get, and most of it had nothing to do with what they asked. One council was actually advised that they should stop pursuing this feedback further because it would be futile, and feedback I am getting from my councils is that the people they spoke to really did not have an appreciation of the intended holistic nature of the Indigenous Advancement Strategy.

I have comments here regarding the reporting requirements. One council has commented that they feel that the reporting requirements for night patrol in particular have increased. There was no indication of that prior to that, and it was not budgeted for, for an administrative purpose. They say it would have been nice to have a template but, as it was, that council had to make up their own template, and then they were heavily criticised about that template anyway. There were also a number of comments that they feel that the staff coordinating the program—the Indigenous Advancement Staff—seemed to be turning over a fair bit, so that corporate knowledge seems to be constantly being lost. Hence our members ringing up the Indigenous Advancement People were having to go over and re-explain the situation to people. That is really all I have to say, and I would welcome any comments or questions.

CHAIR: Thank you. We really appreciate your taking the time.

Senator BERNARDI: It would have been great to have a submission from you, but you made a point saying that your bureaucrats—that is my term—were fatigued from the application process. Am I correct in that?

Mr Jan : Yes. That is a general statement, yes.

Senator BERNARDI: What was different about the application process this time compared with when there have been applications for funding in the past?

Mr Jan : It was because it was such a cut-off of everything. Previously, from my understanding, you did not have to apply for everything all at once. With the Indigenous Advancement Strategy in this instance the councils were told, 'As of such and such a date all bets are off; you are all going to have to apply for everything again, and we want you to put together a holistic, innovative program that covers the five pillars.' And it was made quite clear to us that there was to be only one application, not several applications.

Senator BERNARDI: I appreciate that. So, it was the fact that it was a quantum change, if you will, that put pressure on your staff and your resources to comply with the new demands. Is that right?

Mr Jan : Yes, that is correct. And, as I said before, people in local government are aware that things need to change. There are always going to be funding cuts, and we are prepared to work with that. In this instance it just happened that everything came at once. When you have things coming all at once—councils still have businesses to run at the same time. They still have annual reports to prepare, they still have budgets to prepare. In particular, with the regional council, if they have to prepare a budget then they have to communicate that to their councillors, who often need a fair amount of training and coaching to actually understand what they are signing off on. So, there is still the day-to-day business to go on with, which is why places like MacDonnell employed a consultant at $20,000-odd to run through the process for them.

Senator BERNARDI: I can accept that, but, having gone through the process now once, do you think that your organisations will be better equipped to deal with in the future because there will not be such a radical change for them?

Mr Jan : I think they will be better equipped in that they will have all the information there. My understanding is that they would have the information anyway. The thing was that the Indigenous Advancement Strategy asked for innovative new ways of doing things, which is what our councils went out and tried to do—to do something different. If it was said, 'Just put your funding together based on the things that you do,' it would have been a hell of a lot easier.

Senator BERNARDI: I understand that. And this may be a political point that some of my colleagues will disagree with, but some things have been working in this space and some clearly have not delivered the outcomes they want, so I guess the government is entitled to say, 'Hey, let's come up with some new ideas', so that is what they have suggested. But have any shires been funded at a similar level to what they were previously?

Mr Jan : My understanding is that the bulk of the regional councils—and there is a difference here; there were a lot of changes that went through in local government since 2008 and then again in 2013-14—are now the ones that really cover the remote Indigenous communities. The shire councils are much smaller councils. I will just clarify that. That is the reason. Overall there is probably a slight drop in funding, but not enough to be saying, 'We didn't get funded; why didn't we get funded?' One of my councils has said: 'We appreciate that we got funded, and we actually got a little bit more, but did you actually look at what we're doing? You've just funded us for what we wanted beforehand. And are we actually the right people to do this? Is there anyone else who could have done this better?' They are complaining that there was actually no reference to these integrated programs that they pulled together.

Senator BERNARDI: When you say 'no reference' from the department when they were allocated funding—

Mr Jan : That is correct.

Senator BERNARDI: Yet the funding was based on the integrated programs that were put forward. Is that right?

Mr Jan : Well, it does not appear that way when you look at where the funding has come back to. It is basically funding the status quo.

Senator BERNARDI: So, you got the same quantum of funding, albeit it was designed to apply to the new submission and the new program, which is—what, designed to replace the previous programs? Do you know what I mean?

Mr Jan : I think I understand what you are saying. For instance, let's take MacDonnell council. They put a program together, and they actually asked for more money through the Indigenous Advancement Strategy. The initial grant was for far less. They went back into a negotiation phase and then the next phase that came out had nothing to do with their application. It was: 'What were you doing beforehand? Okay, you had this many night patrol people. There you go: that's how much you're getting funded. This is how much you were getting funded for youth services. Okay, we'll just fund you that again as well.' There was no reference to their application, from my understanding.

Senator BERNARDI: Was there any discussion then with the department about why that was the case, or an explanation as to why that was the case?

Mr Jan : My understanding from MacDonnell council in particular is that they tried a number of times to get feedback on that. And, as I said, they were told that in one instance pursuing feedback of this nature would be futile.

Senator SIEWERT: Senator Bernardi covered some of the areas I was going to cover, but I want to go back to this issue of how much time and effort by councils went into their applications, because it mirrors what we have heard from other organisations. I think you said that MacDonnell Shire spent $20,000—

Mr Jan : Yes, on a consultant.

Senator SIEWERT: So, the time they would have spent on top of that was their own staff time as well?

Mr Jan : Yes, they did.

Senator SIEWERT: How many other councils hired consultants, that you are aware of, to do their application?

Mr Jan : One other that I am aware of. That was the West Daly Regional Council at the time. But the others I am not aware of. That is not to say that they did not, though.

Senator SIEWERT: How much did West Daly spend?

Mr Jan : I could not tell you.

Senator SIEWERT: Do you know of any that have done any analysis of how much internally they spent in staff time?

Mr Jan : Let me just have a look here—the $20,000 constituted less than the labour cost to the organisation for the work staff had to undertake in assisting with the preparation of the application. They really have not put any other numbers into that.

Senator SIEWERT: At the time I remember that one of the big issues was the fact that there were a whole lot of youth diversionary programs and youth programs that did not get funded, particularly in Central Australia. I think it was Barkly where they had not got them and they went back and there was negotiation. Do you have any knowledge of how that process happened in terms of how it got flagged, what the negotiation process was to get that additional funding? And was any explanation given as to why those supports were not funded in the first place?

Mr Jan : My understanding from feedback from Barkly is that they went back to negotiate. My understanding is that they were told that the youth stuff was forgotten in the pillars.

Senator SIEWERT: Do you mean the five programs?

Mr Jan : Yes, the five programs. There was a perception that that money that went to fund the youth area was taken from somewhere else and that it was not extra money.

Senator SIEWERT: You mean they thought the money came from elsewhere?

Mr Jan : Yes, or from within the program. They were not sure where the money came from. But essentially all of our CEOs got on the phone to the department. I think they might have even contacted some senators as well.

Senator SIEWERT: Yes.

Mr Jan : They said, 'This is the issue. This is how many people we are going to lose.' It went from there. My understanding is that pretty much they went back to the status quo. They asked, 'What were you getting beforehand?' and then they said, 'Okay, that is what you will get now.'

Senator SIEWERT: Without CPI or with CPI?

Mr Jan : I am not aware of any CPI. One comment I would like to make is that local governments are not perfect but we do try our best. One of the things we could improve on is telling our story—like the gentleman said before about program logic—about the causal relationships between what we are doing and how those things are actually making a difference. I think that is something that we—and probably a lot of other people—could do a lot better.

Senator PERIS: I have a couple of questions. With regard to the night patrol, aged-care, childcare, youth sport diversionary programs, how are they currently funded?

Mr Jan : Through the Indigenous Advancement Strategy.

Senator PERIS: And they came out of—

Mr Jan : The night patrol came out of what was then FaHCSIA. The aged-care one came out of Health. My understanding is that they all came from different departments. To be honest with you, it actually made sense to try to coordinate it all into one, which is what they were trying to do.

Senator PERIS: Each of these shires or community councils had to apply for them individually?

Mr Jan : Yes.

Senator PERIS: I remember the Barkly Shire had some difficulty with their night patrol and youth sport diversionary programs. As far as you are aware, where does the IAS funding sit with this? Are those programs all due to expire on 30 June?

Mr Jan : My understanding is that if it is not then it would not be too far off. I do not think they would have got any longer contracts than that. So they will be in the same boat again and will have to reapply.

Senator PERIS: Is your understanding for each of the shires and councils when rolling out each of those specific programs—the night patrol, aged-care, child care and the youth sport diversionary programs—that they are all—

Mr Jan : They are all on fixed term contracts.

Senator PERIS: Fixed contracts until 30 June this year?

Mr Jan : I could not say categorically when those contract end.

Senator PERIS: Is that something that you are able to find out for each of them?

Mr Jan : Yes, I can find that out for you.

Senator PERIS: Finally, there was a decrease in the shires' funding through the financial assistance grants that were specifically for municipal service delivery. Did that leave a hole within those respective shires or councils such that you then had to apply for money through the IAS?

Mr Jan : Yes, you are right—the loss of that funding left a hole. That funding is generally discretionary money, so that allows them to employ more people to carry out municipal services, such as picking up rubbish, fixing some of the roads and things like that. Councils are not in the business of looking for funding programs to fund their core business. They recognise that they are in a strong position to be able to deliver these programs because of their local presence. All councils have a local office and they employ as many people as they can locally to do these things. From an Indigenous employment perspective, local government overall does pretty well. We have two local Indigenous CEOs on our regional council so that says something about what they are all trying to achieve.

Councils make sure when they apply for grants in programs that they put in what the true cost is, because they cannot afford to subsidise it. There have been occasions where, for instance, I know East Arnhem have subsidised programs like night patrol because they had a cut in funding—this is pre-Indigenous Advancement Strategy—but they recognised the community needed it and so they found money within their discretionary funds and they kept funding that. Whether that has been replaced by the Indigenous Advancement Strategy now, I could not say. At the end of the day, because of the structure now within local government—I do not know if you aware, but all of our communities now have what they call local authorities. They are essentially advisory bodies to the council that advise on what the local priorities are. Whether it is to fix up such and such a road or to build a new changing room for the sportsground or if they need more fencing for houses to deal with cheeky dogs or whatever, it is those bodies that provide the strategic advice to the regional council as a whole as to where they want that money spent. The councils, when they do their budgeting, generally try to divide the money up into different communities based on their needs. There is a fair amount of consultation that goes on with these local authorities to find out what the priorities are within the local communities.

Senator PERIS: Are these local authorities democratically elected from within their community, or they are just appointed by the government?

Mr Jan : They are appointed by council through a nomination process. The process for that is all available under guideline No. 8 on the Northern Territory government's local government site, which has just been updated. Essentially, people nominate. There is a set number of people who can be on the local authority. The local authorities get sitting fees in recognition of the expertise that they are bringing along to it. They generally meet anywhere from four to six times a year. Regional councils have obligations with regard to types of financial information and information they provide them with on what council is doing in the area. So these people nominate and then the council ratifies people's nominations. Just because you nominate does not necessarily mean you will get onto the local authority, particularly if they have too many people trying to get on. The councillors take it very seriously in making sure they put people on there who have got appropriate expertise and representation across other bodies within the community as well, to get that cross-pollination.

CHAIR: Mr Jan, we are really grateful for your evidence this afternoon.

Mr Jan : I will find out that stuff about when contracts end, but I am sure, through the department, they would have that information as well.