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After a series of reports this year that have shocked the public and shamed the government, the auditor-general is turning his focus to Australia’s federal Covid-19 response, including the JobKeeper scheme. By Karen Middleton.

Auditor-general eyes pandemic response

The Commonwealth auditor-general, Grant Hehir.
Credit: AAP Image / Mick Tsikas

The auditor-general has launched a series of investigations into the federal government’s Covid-19 response, with five audits under way and plans for others scrutinising JobKeeper, travel bans and the COVIDSafe app.

After publishing several reports this year that were highly critical of how public money was being spent before Covid-19 – and despite his own request for more funding being rejected – auditor-general Grant Hehir has expanded his schedule to examine pandemic-related measures.

He has also proposed audits of the design of mental and preventive health programs, the establishment of the National Covid-19 Commission, airline industry subsidies and the management of debt.

The Australian National Audit Office is already investigating procurement for the national medical stockpile, the way the public service workforce has managed the crisis, how Services Australia has handled JobSeeker and other payments, and whether the Australian Tax Office properly managed risks associated with rolling out programs so quickly.

While Australia’s pandemic response is credited with keeping infection rates relatively low and preventing a more dramatic economic downturn, issues are emerging with some of these schemes.

ATO commissioner Chris Jordan revealed to a senate budget estimates committee hearing this week that when the early-access superannuation scheme was designed, nobody considered that people might be pressured to withdraw their super and surrender it to abusive partners or relatives – something financial counsellors say has occurred.

“I don’t want this to sound in any way harsh, but I think you’ve got to put into context here the stimulus measures of the government overall,” Jordan told the committee under questioning from Labor senator Jenny McAllister on Tuesday. “Largely, they were to get the money out to people in need as quickly as was appropriate with checks and balances.”

He said the “sheer volume” made checking impossible.

McAllister asked why protections were built in against other types of fraud but not financial abuse. Jordan said he was unsure how the system could have been designed to avoid it.

McAllister asked Finance Minister Mathias Cormann why the government had ignored warnings from the welfare sector in consultations a year ago that any early-release scheme risked financial abuse. Treasury, the Office for Women, and the Tax Office did not know whether anyone had sought or provided official advice on how the policy would affect vulnerable people.

McAllister relayed evidence from Financial Counselling Australia that women were at particular risk of having their superannuation accounts drained under duress. Jordan promised to review the scheme.

Cormann insisted speed had to be prioritised over caution.

“We were literally making hundreds of decisions a day to keep the show on the road and we were dealing with a rapidly evolving crisis situation,” the outgoing Finance minister responded. “And there are a lot of procedural good-practice elements that would be nice in a normal business-as-usual situation … Is every part of your response 100 per cent perfect when you make rapid decisions in the context of crisis, with the benefit of hindsight? No. But I think that everybody knows that you need to accept certain tradeoffs when there was a need for speed.”

“Well, that is some tradeoff, Minister,” McAllister replied.

Cormann’s argument was similar to that offered by the then Labor government as serious problems emerged with the rapid rollout of its stimulus programs during the 2008-09 global financial crisis, particularly the home insulation scheme. The Coalition has never accepted Labor’s argument.

In his “multi-year strategy”, the auditor-general has warned of the risks in rapid program rollout during a crisis. He says they include fraud due to poorly protected systems, reduced compliance, inaccurate payments, substandard implementation, draining other resources, inadequate legislative backing for new measures and “inefficient, ineffective, uneconomical or unethical decision-making”.

He also says governments should heed past lessons and that decisions are hard to defend without good records.

Over the past fortnight, senate estimates hearings have unearthed a series of issues with some of the programs rolled out during the pandemic. They revealed the COVIDSafe app has successfully traced only 17 close contacts of infected people not already identified by manual contact tracing. This is despite seven million people having downloaded the app.

The committee examining the health budget also heard that levels of mental distress had risen across Australia during the pandemic lockdown period – most sharply in Victoria, where demand for some services rose more than 60 per cent.

Questioning in the transport committee drew government confirmation that $715 million in subsidies to keep airlines flying included $73,000 in waived aviation fees for private jets. The jets’ owners included businessman and former politician Clive Palmer, Crown Casino and the Leppington Pastoral Company, the real estate developers from whom the government bought a parcel of land near the site of the planned Western Sydney airport for 10 times its real value.

The auditor-general is also continuing his program of audits not linked to Covid-19. This includes an examination of the $500 million Commuter Car Park Fund established in last year’s budget within the Infrastructure, Transport, Regional Development and Communications portfolio with no published eligibility criteria. The fund was used to pay for Coalition election promises in marginal seats.

He is also repeating a 2018 audit of the community development grants program in the same portfolio. Within the new investigation, he will examine the mid-September announcement of $23 million in federal funds to build a stadium in Rockhampton, in central Queensland.

Unusually, the announcement was made jointly by One Nation’s Pauline Hanson and federal Liberal National Party MP Michelle Landry less than three weeks before the start of the Queensland election campaign.

The stadium features in both One Nation and LNP campaign material for this weekend’s state election.

LNP election candidates have replicated the federal Coalition’s election strategy from last year, with billions of dollars in infrastructure projects promised across Queensland in the past three weeks.

Many promises focus on upgrading local sports grounds and community facilities, especially for women and girls.

Included are also large-scale road projects, some of which received partial funding in the recent federal budget, school-building renovations, upgrades to men’s sheds and other community facilities, and security-camera installations.

Many of the local infrastructure projects are very similar to the promises Coalition MPs in marginal seats made ahead of last year’s federal election, which have been funded out of federal grant programs in the Infrastructure and Home Affairs portfolios.

Increasingly, the federal grant programs – including the Stronger Communities and Safer Communities funds and the community development grants program – no longer have strictly merit-based eligibility criteria. Instead, money is allocated to projects recommended by the local federal MP or by “the federal government”.

The biggest Queensland LNP local sports promises are being made in state electorates that overlap with federal seats held by Coalition members.

In the highly contested seat of Burdekin, in the state’s north, LNP incumbent MP Dale Last has promised $2 million in upgrades to sports facilities if the LNP is elected. Burdekin overlaps with the federal seat of Dawson, held by Coalition backbencher George Christensen.

In the Brisbane-based seat of Everton, LNP shadow treasurer Tim Mander has promised another $1.5 million in grants to local sporting clubs. It overlaps Dickson, held by Home Affairs Minister Peter Dutton.

Dozens of other MPs have made similar promises, with the biggest commitments in the most marginal seats.

The Queensland LNP released its policy costings on Thursday afternoon, insisting its spending program would cost $5 billion to be partly funded by saving $3.2 billion in public service jobs.

Labor had released its costings on Monday, proposing to borrow an extra $4 billion. The LNP said it would also use this borrowing if elected.

The LNP costings allocate $30 million for local infrastructure projects this financial year and $42 million next year. Labor has allocated $50 million over three years, $28 million of that this year.

Based on the published criteria for federal grant funding, there is no immediate impediment to projects that state candidates have promised being nominated by federal MPs for federal funding.

Asked if it could be ruled out, the Infrastructure Department said of its grants programs: “The Department of Infrastructure, Transport, Regional Development and Communications is not responsible for nominating or identifying projects.”

This month’s federal budget boosted the federal grant programs with funds to be spent this financial year. They include $75.3 million for the community development grants program and $26.3 million for the Stronger Communities fund, both within the Infrastructure Department.

Another $35 million was earmarked for the Safer Communities fund within the Department of Home Affairs over the next four years. This is being funded out of the confiscated proceeds of crime and the budget did not specify how much is available this financial year.

The government had already allocated $6 million to the fund this financial year to pay for federal election promises made last year, plus $25 million in the Health portfolio for sports grants.

In Queensland, the state Labor government appeared reluctant to criticise the onslaught of LNP sports-related promises, a month after the Queensland auditor-general criticised the handling of its own sports funding program.

The auditor found that 2900 sports grants ended up evenly split between Labor and LNP electorates with the remainder to minor-party and independent seats, but the Sports minister, Mick de Brenni, had intervened to overturn departmental recommendations on 33, favouring Labor seats.

Separately, New South Wales Liberal Premier Gladys Berejiklian is facing questions about her government’s handling of a $141 million sports funding program, also named “Stronger Communities”.

And earlier this year, the federal Coalition government earned a rebuke from the federal auditor-general over what he found was political bias in the community sports development grants program allocating funding to local sporting groups.

That program featured merit-based selection criteria but the then minister, Senator Bridget McKenzie, had overridden officials’ recommendations to favour projects in target Coalition seats. McKenzie eventually resigned from the ministry over her handling of the program.

This article was first published in the print edition of The Saturday Paper on Oct 31, 2020 as "Held to account".

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Karen Middleton is The Saturday Paper’s chief political correspondent.