Sharman Stone (Murray, Liberal Party) Share this | Link to this | Hansard source

asked the Minister for Sustainability, Environment, Water, Population and Communities, in writing, on 15 September 2011:

In respect of round two of the On-Farm Water Efficiency Program:

(1) On what grounds was Irrigation Efficiency Partners Pty Ltd deemed eligible for funding of $32 million.

(2) Is it a fact that in order to be an eligible delivery partner under the program, an applicant must: (a) be an entity with direct and demonstrable links to irrigators such as (i) an Irrigation Infrastructure Operator, (ii) a Catchment Management Authority, (iii) a commodity or agricultural industry group, or (iv) a regional irrigation body; and (b) be financially viable as demonstrated through the provision of audited financial statements and related documents (for at least the last three years).

(3) Is it a fact that an organisation is ineligible if it includes 'organisations which directly supply or install irrigation equipment'.

(4) Do any of the partners of the company (in part 1) supply or install irrigation equipment, and is it a fact that the company received its ABN number only days before tenders closed.

Mr Tony Burke (Watson, Australian Labor Party, Minister for Sustainability, Environment, Water, Population and Communities) Share this | Link to this | Hansard source

The answer to the honourable member's question is as follows:

(1) and (2) Irrigation Efficiency Partners Pty Ltd (IEP) was deemed eligible by the assessment Panel to be a delivery partner and receive funding because it met all seven of the eligibility criteria in the On-Farm Irrigation Efficiency Program Guidelines for round two. Under the heading, 'Who is eligible to be a delivery partner?' the requirements are that applicants:

1. be an entity with direct and demonstrable links to irrigators such as:

IEP met this criterion.

2. be able to demonstrate it has the authority under organisational governance arrangements to be the lead proponent who is responsible for the delivery partner project and is able to enter into contractual arrangements with others (e.g. project participants and irrigators) to implement the project.

IEP met this criterion.

3. be financially viable as demonstrated through the provision of audited financial statements and related documents.

The basis on which IEP was assessed as meeting this criterion is set out below.

4. be a legal entity capable of entering into a Funding Agreement with the Australian Government (note: unincorporated associations are not eligible).

IEP met this criterion.

5. be registered with the Australian Taxation Office for Goods and Services Tax purposes with a valid Australian Business Number (ABN).

IEP met this criterion.

6. agree to take all reasonable measures to ensure that permanent water entitlements offered to the Australian Government are unencumbered and are available to be transferred within the specified timeframe after a Funding Agreement is signed.

IEP met this criterion.

7. be seeking funding for irrigator sub-projects located only within the Lachlan River catchment and the southern connected system of the Murray Darling Basin.

IEP met this criterion.

It is not a requirement, as suggested in question 2, that documents related to financial viability must be provided for at least the last three years for entities to be eligible as a delivery partner. The formal eligibility requirement is as set out at point 3 above.

In their application IEP made it clear that they were a new entity formed for the purpose of becoming a delivery partner under the program. IEP demonstrated that they were financially viable through financial statements and an unqualified audit opinion in 2011. These were reviewed and accepted by the independent consultants conducting a financial viability risk assessment of all applicants. This financial viability assessment was considered by the Panel which was constituted to make recommendations on the merits of the applications. The Panel included program and economic officers of the Department, an external financial and auditing expert and an external technical (irrigation) expert. The external financial and auditing expert advised the Panel that the documents provided by IEP met the eligibility criteria as they demonstrated financial viability and constituted all the documents that the applicants could reasonably be required to submit under the circumstances. Applicants are asked to provide three years of audited accounts and financial records in the context of the guidelines. This is referable to where an entity had existed for three or more years, but is not formally material to a decision determining financial viability. The Panel decided that the key determinant of financial viability was the independent consultant's financial viability risk assessment report, and they followed the report's findings.

(3) and (4) The relevant statement in the Guidelines precluding 'organisations that directly supply or install irrigation equipment' specifically refers to an organisation in the lead proponent role as delivery partner in a proposal. The role of a delivery partner is to manage, on behalf of the Department, the delivery of groups of similar infrastructure projects and ensure that unencumbered water entitlements are transferred to the Commonwealth.

IEP does not itself supply or install irrigation equipment, but entities in the overall consortium are irrigation equipment suppliers. Many of the delivery partners in both rounds one and two lead broader consortia which included members that fall into the categories of an ineligible lead proponent. These consortium members include irrigation suppliers, state government departments and actual irrigators. In all circumstances where an application has been successful, such consortium members are not the lead proponent and do not sign the funding agreement with the Australian Government.

The approval of the IEP proposal was consistent with this requirement of the guidelines. IEP have supplied a written guarantee that they do not mandate the use of particular service providers to proponent farms participating in their projects. Like other delivery partners IEP has systems to benchmark quotes against industry standards. All delivery partners will have the records of how they disbursed their grant funds assessed by auditors working for the Department.

IEP was registered as a company on 21 March 2011 and applications for round two of the On Farm Irrigation Efficiency Program closed on 31 March 2011.