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ANAO Report No.10 2014–15 Administration of the Biodiversity Fund Program
21
approach would not be effective or feasible in delivering the desired outcomes
of the program, the guidelines for the remaining rounds did not foreshadow
this funding option. In the interests of transparency, there would have been
merit in the department including a reference to the possibility of discretionary
grants in each round’s guidelines and the basis on which applications would
be assessed.
29. While
all four of the grants had been appropriately approved for funding
by the Minister and had funding agreements in place, one grant was awarded
at a time when a competitive funding round—that was seeking applications
for projects similar to that funded through the discretionary grant—was
open. The issues raised by stakeholders with the ANAO in relation to
the transparency and equity of this matter illustrate the advantages of implementing
merit‐based assessment and selection processes for grant programs.
30. In
the case of a second discretionary grant, the grant recipient the Director
of National Parks was involved in recommending the project to the Minister
for funding, and Environment has dual ongoing responsibilities involving
the delivery of the project
19
as well as being the provider of the funding.
Notwithstanding the potential environmental benefits of the project, this
situation is unusual and presented a number of risks for Environment—particularly
in relation to actual or perceived conflicts of interest—which
could have been better managed.
Establishment and management of funding agreements Chapter 6
31. The
established funding agreements for the Biodiversity Fund program appropriately
set out the Australian Government’s and grant recipient’s obligations.
The adoption of proportional compliance obligations based on risk assessments
would have, however, provided the means to balance requirements
for an appropriate level of assurance with the potential compliance
burden on grant recipients.
32. The
funding agreement negotiation and execution period for the Round
2, NATI and Investing in Tasmania’s Native Forests funding rounds coincided
with the 2013 Federal Election ‘caretaker’ period. While funding
19 The Director of National Parks, an Australian Government statutory officer holder, is the funding
recipient, with day-to-day project management undertaken by staff from Parks Australia, which is a division within the Department of the Environment.
ANAO Report No.10 2014–15 Administration of the Biodiversity Fund Program
22
agreements for the NATI and Round 2 approved applicants were provided to
applicants shortly after their approval by the Minister, which meant those
applicants were afforded the opportunity to execute agreements, approved
applicants in the Investing in Tasmania’s Native Forests round were not
afforded the same opportunity.
20
The records retained by Environment do not clearly
demonstrate the basis for this differential treatment.
33. For
a significant proportion of Round 1 grant recipients, the department’s
re‐profiling of their project budget in funding agreements
21
, and
the signing of agreements late in the 2011–12 financial year which effectively
shortened their project by one year created additional challenges in delivering
the project as had been originally planned and set out in their approved
application. Improved communication with grant recipients regarding these
issues—both in the application and funding execution phases—would have
assisted recipients in planning the delivery of their proposed projects.
34. The
funding agreements set out a schedule of milestone payments that are
based on Environment’s acceptance of six‐monthly progress reports by grant
recipients. In general, Environment has adequately documented its review
of these reports and only released payments following acceptance of the
reports. The submission of a large number of reports twice a year has, however,
created challenges for departmental staff in reviewing and accepting these
reports prior to approving milestone payments taking an average of six
to seven weeks for approval of milestone payments. The resulting delays have
reportedly impacted on the cash‐flow of some grant recipients.
35. In
December 2013, Environment replaced the existing reporting framework
with a new online reporting tool—MERIT. MERIT is a key element of
the Biodiversity Fund program’s performance monitoring and reporting framework
as it seeks to collate comparable data across all projects, to then be correlated
and analysed to provide information on the achievement of the Biodiversity
Fund program objectives. The transition to MERIT was problematic
for some users, and more thorough planning and stakeholder
20 Ultimately, the approved applicants in the Investing in Tasmania’s Native Forests round did not
proceed to funding. 21
To expend the Biodiversity Fund program funding as appropriated to Environment, the department was required to tailor Round 1 funding recipients’ individual funding profiles to broadly match the
overall allocated funding profile for the program. For example, many grant recipients received less funding in years one and two of their projects than they had planned and set out in their grant
application project budget. These recipients subsequently received substantially more funding in year three of their projects although the overall funding for projects was not changed.
