Ian Macfarlane (Groom, Liberal Party) Share this | Hansard source

On behalf of the Joint Committee of Public Accounts and Audit, I present the committee’s report entitled 'Report 454: Early Years Quality Fund: Review of Auditor-General report No. 23 (2014-15)' and I seek leave of the House to make a short statement in connection with the report

Leave granted.

In March 2013, $300 million was committed to establish the Early Years Quality Fund—the EYQF—to provide grants to long day care providers in order to supplement wage increases for childcare workers for a period of two years. As the father of an ex-childcare worker, I can tell you that the general emphasis on improving their wages and conditions is certainly something that those in the industry welcomed.

The grants were made available to providers on a first-in first-served basis, and an advisory board, comprising employer and employee representatives, was established to provide implementation advice. Small providers and large providers were each allocated a pool of $150 million. The program was implemented by the former Department of Education, Employment and Workplace Relations, with the Department of Education and Training then taking carriage of the program.

By close of business on 6 September 2013, the day before the federal election, funding agreements had been sent to one large provider, Goodstart Early Learning, for $132 million, and 15 small providers, for a total of $5 million.

Goodstart's CEO was on the EYQF advisory board, and Goodstart was the first large provider to lodge a completed application, and received the largest allocation of EYQF funding: 96 per cent of the $137 million allocated to all providers.

In its audit, the ANAO noted that the program's funding cap of $300 million, which was estimated to only cover around 30 per cent of all long day care workers, meant the program would most likely be oversubscribed—in fact, almost certainly oversubscribed. In the event, this funding cap was reached less than 13 hours after the application process commenced. The ANAO found that the department did not provide frank, comprehensive and timely advice to its minister on the program's implementation risks. However, it noted that this role was made more challenging because many of the key elements of the EYQF policy were developed by advisers in ministers' offices and then settled through ministerial correspondence rather than through more conventional cabinet processes.

The ANAO also found that key risks evident in the program's design—in particular, the first-in first-served approach—were compounded by inadequacies in the department's subsequent administration of the program. In short, the department did not demonstrate a disciplined approach to implementation that satisfied the requirements of the then Commonwealth grants guidelines.

At the public hearings, the committee also raised a number of probity and transparency matters regarding the EYQF. However, the committee notes that the Auditor-General did not make any adverse findings in this area. In its report, the committee made seven recommendations, including that: the Department of Education and Training report back to the committee on its progress implementing the ANAO recommendations, and that the ANAO consider including, in its schedule of performance audits, a priority follow-up audit of the effectiveness of grants program administration by the department; the Department of Finance amend the Commonwealth Grants Rules and Guidelines to refer to the implementation risks of a first-in first-served approach, and to specify that, where a method other than a competitive merit-based grants process is used, officials better document implementation risks and complete a risk management plan; the Department of the Prime Minister and Cabinet update its Guidance on caretaker conventions to clarify what constitutes 'appropriate consultation' with the opposition on grants administration matters during that caretaker period; the ANAO consider providing a clear statement on probity matters in its reports, outlining any probity findings and the Auditor-General's powers in such matters be covered; and the ANAO also consider expanding its Implementing better practice grants administration guideto further set out Commonwealth probity principles for grants administration, particularly regarding best practice information relevant to advisory boards.

On this last recommendation, I would like to take the opportunity to commend the ANAO for its better practice guides. They are important documents in bringing together collective experience on how to achieve outcomes beyond simple compliance with minimum requirements.

In conclusion, I thank committee members for their deliberation on these significant matters. I commend the report to the House.

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