Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise today to comment on the Tasmanian Forests Intergovernmental Agreement Contractors Voluntary Exit Grants Program. I am very pleased that the Senate agreed yesterday that there should be an inquiry into the way that this grants program operated. That is because I have been very concerned for a very long time about what can only be described as incompetence, corruption or both in the administration of grants funding in relation to the Tasmanian forest industry. I have been pursuing this right through the Tasmanian Community Forest Agreement program and, in that case, a grant left the federal department and was not signed off by anyone. How is that possible? In his audit report at the time, the Auditor-General pointed out that was a breach of section 9 of the Financial Management and Accountability Act—which is a criminal charge—and asked the Department of Agriculture, Fisheries and Forestry to pursue it. Nothing ever happened.

When I pursued this at estimates, the departmental officer concerned said: 'We lost the paperwork, Senator.' That is not a competent way to administer a grants program. In response to the Auditor-General's recommendations that DAFF start implementing proper oversight of grants programs in accordance with the rules, they said: 'Oh, yes, we will certainly do that. Yes, we take that on board. Yes, we are going to improve our processes.' And here we are, years later, with exactly the same thing happening again. This time I intend to get to the bottom of it as I was unable to get to the bottom of it last time—because, 'We lost the paperwork, Senator.'

I want to talk about this program. The Department of Agriculture, Fisheries and Forestry was responsible for administering the exit assistance program. During the design of this program Minister Ludwig, the Minister for Agriculture, Fisheries and Forestry, his office and DAFF consulted with the Tasmanian government—Brian Green would have been the Tasmanian minister involved—the Tasmanian Forest Contractors Association and key industry stakeholders on the guidelines and parameters of the program. The objective of the program was to assist the Tasmanian public native forest industry to adjust to industry downturn and the reduced scale of native forest harvesting through voluntary exit assistance to eligible harvest, haulage and silviculture contracting businesses. It was expected that the reduced scale of harvesting would result in the order of 1.5 million fewer tonnes of wood being harvested and hauled and a decrease in public native forest silvicultural activities. So clearly it was set out at the beginning that this was meant to reduce the amount of forests being logged, and $44 million of public money was going into the program.

However, what has happened has been a disaster. We have ended up with a program which has failed to achieve its objectives. In fact, we have far from the one and a half million tonnes, each, reduced from harvesting and haulage. Only 819,888 tonnes of harvest and 972,831 tonnes of haulage are assumed to have been dealt with—58 per cent of what was supposed to be achieved.

Again I come to the point: who made these decisions? How on earth did it happen? I want to go back to the process involved because an advisory panel of three senior officers—one from DAFF, one from the Department of Sustainability, Environment, Water, Population and Communities and one from the Tasmanian state government—was established to assess the grant applications. These three people assessed the grant applications and provided advice to the minister's delegated decision maker, who was DAFF's secretary responsible for forest policy and programs. There were three people on the advisory panel. They then referred the matter to the decision maker who was the minister's delegated person. I ask: how is it possible that the people on the advisory panel recommended that people who got a merit score of zero, on a list of zero to 100, got exit grants? How is that possible?

How is it possible that 16 per cent of the applicants who were not eligible, because they did not provide the documents to prove their eligibility, were paid out?

I particularly come now to this case, because it goes to the whole matter I am raising in terms of DAFF. To meet the Milestone 2 obligations, grant recipients were required to provide a letter from their principal or contractor confirming that their contract or ongoing arrangement had now ceased. Milestone 2 documentation provided by one grant recipient—a contractor previously identified as ineligible, I might add—advised that there had not been an ongoing contract or arrangement in place at 24 July 2011. They established that they did not have a contract in place, therefore confirming that the applicant and the associated subcontractor were ineligible under the program's eligibility criteria.

As the department considered these applicants to be eligible, it did not obtain legal advice, it did not alert the decision maker, it did not recover the Milestone 1 payments that had already been released. Instead, both recipients—the contractor and subcontractor—were recommended for payment, Milestone 2 payments were released and grant funding totalling $697,000 was paid to these two grant recipients. It was proven that they were not eligible but the department said: 'As far as we're concerned, you are eligible. You haven't provided the documentation, but don't you worry about that. We are now recommending it be paid.'

The issue then comes to this: the person under the Financial Management Act who is responsible is the decision maker who signs that bit of paper saying that this grant is a proper use of Commonwealth money. That proper use is defined under the act: it has to be an efficient and appropriate use of Commonwealth money. So who advised the decision maker? It was the advisory panel. On what basis? Well, surprise, surprise, DAFF did not keep the paperwork. This was the whole point! Last time around they said they would do better, and they absolutely know better. When, in the Public Service these days, do they not know that they have got to keep the documentation that underpins whatever recommendations are being made?

What is more, we now have proof.

Forestry Tasmania—

and this is a footnote to the Auditor General's report—

was asked by contractors to provide a letter of support for the applicant’s exit from the public native forestry industry, as evidence of support from the principal contributed to the applicant’s merit score.

In January 2012, Forestry Tasmania notified DAFF that all letters of support provided to their contractors were not duly authorised and should be disregarded. Subsequently, the department wrote to these applicants as late as January 2012 requesting that a replacement letter of support from Forestry Tasmania be provided by 31 January 2012. In seven cases a replacement letter was not provided by Forestry Tasmania.

It is an offence under the law—it is a criminal offence under section 135(2) of the Criminal Code—to obtain a financial advantage by misleading or inducing a Commonwealth entity to do something that results in a person getting a financial advantage. How is it that the contractor could not verify that they had an ongoing contract? Forestry Tasmania gave them a letter saying that they had an ongoing contract which made them entitled to a grant. Then Forestry Tasmania writes to DAFF and says, 'Actually, disregard all those letters because they weren't authorised. You have to apply again.' When they applied again, seven did not get the letter the second time, which meant that the first time around they were not eligible. Forestry Tasmania gave them cover and, in my view, that means Forestry Tasmania worked with the contractors to make sure that they induced the Commonwealth to pay a grant for which people were not eligible. I want to get to the bottom of that, because I am tired of this happening. I will not accept Forestry Tasmania's excuse: 'It was just regional foresters. They didn't know what they were doing; they thought they were just helping out.' Well, you do not verify a contract if it does not exist. You do not verify a tonnage if it is not appropriate.

In fact, I have had a letter from one of the contractors involved, who pointed out very clearly that the most serious problem with the program is that applicants did not prove that they had genuine contracts were not able to verify their tonnages from public native forests. As a result, this whole thing really brings into question the fact that some contractors who did not apply because they knew they were not eligible now feel aggrieved that people who were not eligible were paid out. In the two cases I mentioned, $700,000 was paid out even though the contractors themselves said that they were not eligible. The department overruled that and said, 'Yes, you are, and here's the money.'

For other people, the other thing is compliance. When the program was advertised for application, DAFF had not even written the compliance guidelines for the program. People were meant to be out of native forest logging for ten years—and what has happened? They have simply taken the money from the Commonwealth and handed over the business to their son, their brother—their relation of some kind—and painted the name over on the side of the truck and they are out there continuing to log in native forests at this day. They have not exited.

What is more, at the same time that the Commonwealth is paying out contractors to get out of native forest logging, Forestry Tasmania is giving out new contracts to log native forests. That is outrageous and completely inconsistent with the intergovernmental agreement, which was to get people out of the industry, reduce the logging tonnages and be able to protect these areas. What was Forestry Tasmania doing giving out new contracts while the Commonwealth is paying people out? It is making a complete fool of the Commonwealth government, DAFF, the decision makers.

The issue here is that DAFF seemed to give advice at various times that was overruled by the advisory panel. In one classic case, DAFF provided eligibility rules, saying that you had to prove that you actually had a contract to log in two of the last three years—not unreasonable, I would have thought. But after consultation with the Tasmanian government and the contractors association, they came back and changed that to say that you only had to have a contract in one of the previous four years. So you could have retired from the industry in 2007, already sold your trucks and equipment, but you still would have been eligible for an exit package in 2010. How ridiculous is that? What has happened is that $44 million has gone out the door and a lot of eligible people are feeling frustrated that they were paid less than they were entitled to in order to accommodate a whole lot of people who were not entitled.

More particularly, I am not going to tolerate DAFF, every time there is an audit report, continuing to come back and say: 'Oh yes, we agree. We should've done that better. We should've stuck with the guidelines.' The Auditor-General said DAFF did not abide by the guidelines for grants, so who is going to take responsibility? The minister, the secretary of DAFF—who? Or are we going to have 'we could've done better; we will do better next time,' and it just rolls on to the next rort. I just do not think that the Australian community should put up with the fact that Commonwealth money is leaving this parliament, this government, going into grants programs and then, after the event, people are laughing all the way to the bank. They get the money, put it in their bank and business keeps rolling.

The contractors association have admitted that that is the case. They have said, 'We understood what businesses would do to stay in business while ever there was an ability to take some funds out of a program, and if we made the rules it would never have been done.' That is what they said, that it is basically part of doing business: take the money, change over the ownership and keep going. Well, it is not good enough. I am looking forward to the evidence that we get because already a huge amount is rolling in. People are saying that the problem here was the failure of DAFF, the failure of this advisory committee, the two ministers. Who is going to take responsibility, and at which point did ministers overrule their departments and make these hideous mistakes? They are the questions that need to be answered.