Govt’s $1.3 billion manufacturing grants shortlisted for audit

Joseph Brookes
Senior Reporter

The administration of $1.3 billion in grants from the Coalition’s flagship manufacturing program could come under the audit office’s microscope after being listed as a potential investigation next year, alongside several government technology projects.

Other programs shortlisted on the ANAO’s work program include the $450 million Digital ID scheme, the Tax Office’s business register modernisation, and the panel arrangements that help consultants land lucrative government contracts, as have areas of privacy and data protections in government digital services, cybersecurity, and digital health.

Manufacturing grant program shortlisted by the Audit Office

Stakeholders have been asked to provide feedback on the Australian National Audit Office (ANAO) draft work program by 19 April.

The agency famously uncovered the “Sports Rorts” scandal and the massive overspend on land at Western Sydney airport but has warned it will need to reduce the amount of audits it conducts after successive budget cuts.

The “award of funding under the Modern Manufacturing Initiative” (MMI) has been listed as a potential audit topic for the ANAO next financial year.

“The audit would assess whether the award of funding under the Modern Manufacturing Initiative was effective and consistent with the Commonwealth Grants Rules and Guidelines,” ” the ANAO draft work program said.

Labor has raised concerns about the MMI program’s structure and the timing of grant announcements.

More than $600 million worth of MMI grants were announced in March from the program’s largest collaboration stream, which was set up in October 2020 to fund large, multi-partner manufacturing projects in key sectors.

Despite applications for the stream closing six-months earlier, and recommendations provided to the Industry minister and Prime Minister earlier this year, the announcements were not made until last month, with the first three going to projects in South Australia as then-liberal-premier Steven Marshall began an election campaign.

Several more of the large collaboration stream announcements are expected before the 21 May federal election, as are another $456 million worth of grants from the MMI’s two smaller streams.

Labor has warned changes to the timing of the program and its unusual structure, which allows the Prime Minister to have the final call on the largest grants, has “baked in” rorts to the scheme, which is now being used as an “election slush fund” with grants being held back for political reasons.

On Friday Shadow Industry Minister Ed Husic said MMI grants have been delayed to maximise the political impact of their announcements, at the cost of the local industry.

“You just can’t have the government turn every single government program…into a slush fund. That is basically one objective, one objective only, to get the government re-elected. [It is] not good enough,” Mr Husic told Sky News.

The ANAO has listed MMI grant administration along with several other areas under the Industry, Science, Energy and Resources portfolio.

These include the administration of funding for controversial carbon capture, use and storage hubs, contracting and compliance under the Emissions Reduction Fund, which pays polluters to reduce emissions, and procurement for the Southern Positioning Augmentation Network and the Northern Endeavour facility projects.

The $450 million Digital ID scheme, which has been under development for six years but still hasn’t seen legislation, has also been shortlisted for a potential performance audit. It was also shortlisted last year by the watchdog.

The program is led by the Digital Transformation Agency with Services Australia managing its Trusted Digital Identity Framework and identity exchange components, while the Australian Taxation Office (ATO) is responsible for digital identity providers through mygovID.

The ATO’s project management of the Modernising Business Registers program may also be scrutinised.

“This audit would assess the effectiveness of the ATO’s design, planning for and early implementation of the MBR program, including consultation with stakeholders and introduction of the related director identification number (director ID) initiative,” the ANAO said.

The project began in 2017 and became a 2018 budget promise to consolidate business registers. It has now received more $480 million in funding, including most of the government’s 2020 digital business package, which allocated $420 million to deliver the program over four years.

The tax office has outsourced huge parts of the project, mostly to Irish-domiciled technology firm Accenture, which is being paid $10 million a month for work on the MBR program. New Zealand registry software firm Foster Moore has also been paid $26 million over four years for its work on the project.

Use of the business advisory services panel has also been listed as a potential performance review under the Finance and cross-portfolio areas.

The panel was set up in 2015 and is due to expire in October. It is a cooperative procurement arrangement managed by the Department of Finance designed to make tendering more efficient while maintaining value for money.

By the end of last year there were around 50 suppliers listed on the Business Advisory Services Panel, including all the large consulting firms.  134 Australian Government agencies authorised to access it, and 625 contracts reported totalling $511 million, according to the ANAO.

The ANAO said a performance audit would focus on whether the panel’s use supported “value for money” objectives and whether the panel had promoted competition.

The Australian Digital Health Agency’s “delivery of a safe, secure and reliable digital health system” also faces an audit after a challenging roll out of its major patient record system My Health Record, which was controversially swapped to opt out.

The audit office has already investigated the roll out in 2019 and made several recommendations. A second audit would examine the progress of the agency’s response as part of a wider probe on a the Australian Digital Health Agency’s “management of controls contributing to the delivery of a safe, secure and reliable digital health system”.

Management of cybersecurity, privacy protection in digital service delivery, and the management of customer information and data have also been added to the draft work program.

This article has been updated to correct an earlier version that attributed concerns about the MMI program structure and timing to the ANAO. These issues have been raised by Federal Labor, not the ANAO.

Do you know more? Contact James Riley via Email.

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