- The grants hubs
Background and operation
3.1The Commonwealth Government established grants hubs in 2015-16 under the Streamlining Government Grants Administration Program (SGGA). The aim of these centralised platforms was to enable simpler, more consistent and more efficient grants administration across government in keeping with its digital transformation agenda.
3.2The Department of Finance (Finance) noted in its submission that:
Prior to 2016, Commonwealth entities administered their own grants through separate ICT platforms and advertised grant opportunities on individual agency websites. As a result, grant opportunities were difficult to find, there was little consideration of grant applicants and recipients, and data was inaccessible and unorganised (at a grant recipient and whole-of-government level).
3.3Two hubs were created under the SGGA to administer Commonwealth grants programs: the Business Grants Hub (BGH) run by the Department of Industry, Science and Resources (DISR); and the Community Grants Hub (CGH) operated by the Department of Social Services (DSS).
3.4Funding of $106.8 million was allocated over four years in the 2015-16 Budget to implement the SGGA program with the grants hubs to be operated as shared service arrangements, providing grants administration services to client entities. GrantConnect was also launched as the central system for publishing grant opportunities and awards.
3.5DISR stated in its submission to the inquiry that the BGH has launched 568 grant opportunities since its establishment and is currently managing 9,050 active grant agreements on behalf of 12 government agencies and administering 416 active grant opportunities.
3.6DSS stated in its submission that the CGH managed 25,102 grants totalling $8.3billion in value for the 2021-22 financial year.
3.7Finance indicated to the Committee at the public hearing on 10 February that the hubs were used to administer more than 80,000 grants worth $30.9 billion in the previous financial year.
3.8Finance also informed the Committee that the annual operating costs for administering grants through the hubs was in the order of $140 million. It was further noted at the February hearing by the respective agencies that approximately 300 staff were employed at the BGH and 900 at the CGH.
3.9Finance indicated to the Committee that the costs of administering a grant will be included in the proposal for that program and provided to the hubs if they are to be used:
… when an individual policy proposal comes forward for consideration by government and it's a grants program, it will include the costs of administering that grants program. In the case of a program that ultimately is administered by the hub, those costs are provided to the hub to allow that. For those grants where that is not the case, the entity that is administering those grants would take those costs.
Audit findings
3.10The ANAO conducted an audit of the BGH and CGH in 2021-22, one of the four audits examined in this inquiry, and presented its report to the Parliament on 31March 2022. The key findings were:
- Insufficient evidence to demonstrate that the SGGA Program improved the effective and efficient delivery of grants administration
- the interim Digital Transformation Office and DSS’s design, and Finance’s governance, of the SGGA Program was not effective
- Industry and DSS’s build and operation of the grants hubs was partly effective.
- The ANAO further summarised its findings in this audit in its supplementary submission to the inquiry, which included:
- governance arrangements were established, but did not support achievement of program outcomes, benefits and deliverables
- planning was not seen through to completion, impacting the achievement of deliverables
- the SGGA Program could not demonstrate the achievement of intended outcomes due to a lack of measurable indicators, baselines and targets
- while consistency and effectiveness in grants administration is somewhat improved, there are deficiencies in relation to usage of the hubs for the full grants lifecycle, collaboration between the hubs and client entities, and data management
- the hubs have not developed an appropriate performance framework to measure the benefits and
- core deliverables were not achieved, and shortcomings in the design and operation of the hubs impacted on the realisation of the intended SGGA Program benefits (that is, better outcomes for grant applicants and recipients, reduction in red tape, and efficiencies for government).
- Three recommendations were made by ANAO as a result of this audit, all of which were agreed to by the relevant agencies:
- that Finance and the hubs agree a methodology to capture and report performance information
- that Finance develop and agree a future plan for the operation of grants hubs
- that Finance and the hubs establish a whole-of government grants administration and payments dataset and implement arrangements to assure the quality of the data.
Efficiencies and benefits
3.13The evidence to this inquiry provided further commentary on the operational effectiveness and benefits of the grants hubs. Finance stated in its submission that:
The shared services hub model has generated many tangible benefits for grant recipients, grant applicants and government. Grants recipients have reported a reduction in the time and complexity of applying for and receiving grants, streamlined application and reporting processes, and improvements as a result of the application of the ‘tell-us-once’ approach. There has been a reduction in costs associated with the consolidation of grants management systems, greater standardisation across Commonwealth grants administration and improved compliance with the CGRGs.
3.14The Committee was interested in both the economic efficiencies and the benefits that the two grants hubs had brought since their establishment. An original estimate of $400 million in annual benefits was anticipated from the operation of the two centralised hubs for grants administration. ANAO reported in its audit of the hubs, however, that this saving could not be determined due to a lack of metrics:
The funding proposal indicated that benefits would be quantified as part of detailed transition planning with granting entities. However, the funding proposal did not establish baselines, a methodology for measuring benefits or performance measures to demonstrate achievement of outcomes.
3.15This anticipated benefit was discussed further at the public hearing on 10 February. Finance noted that it had not estimated this figure and provided the following response on notice:
The interim Digital Transformation Office led the policy design, including work on the evidence base [and] estimated savings through: reduced capital investment in multiple grants management systems; reduced red tape; and productivity efficiencies within government.
3.16On questioning regarding administrative costs for grant programs before and after the hubs were established, Finance noted at the 10 February public hearing that these costs had not been captured previously and that this would be difficult to do. Finance stated:
We are looking at trying to establish that baseline data. One of the difficulties is that sometimes in organisations beyond the hub they will have people who are working on multiple functions. So being able to directly attribute cost just to a grants program is somewhat more difficult than it is in the case of the grants hubs because they are dedicated functions where their full costs are going towards the administration of grants. But in individual entities they can have people and resources working across a number of things, which could include grants but also the other programs or policy issues. Attributing costs is difficult.
3.17Finance commented, in its further response on notice to this issue of cost comparisons before and after the hubs came into operation, that in implementing recommendation no.1 of the ANAO grants hubs audit it had agreed a methodology with the hubs to capture and report performance information, and was currently collecting baseline data against this agreed methodology. Finance further commented in the same response:
Finance is developing a costing survey for major granting entities to assist them to better understand grants administration costs incurred at the entity level. Also, grant administration costs are highly variable depending on the program design and delivery approach. This makes comparative analysis difficult across programs and entities.
3.18In response to questions regarding the efficiency of the $140 million annual spend to operate the hubs, DSS indicated in relation to the CGH that it had not done any analysis of that, further stating:
We provide our clients with a rates card for the elements of the grant we manage. That is a sense of proportionality and complexity. At the end of that, they are invoiced against the final costs. So they have access to data themselves. Our clients do and we do.
3.19As part of its audit of the Grants Hubs, ANAO surveyed views on their efficiencies and other impacts among Government entities that have been clients of these centralised services and evidenced mixed experiences across a range of parameters including costs, design, data availability, and management assistance. The Deputy Auditor-General noted at the 10 February hearing in relation to this survey that:
… the decision to do a survey in an audit is where there's no other evidence of feedback in a data structured way… As you will note in the audit report, data quality is an issue and benchmarking and baselining are absent or not progressing. Efficiency measures are not progressing. To get a dataset that gives you an enriched audit evidence base, sometimes we use a survey.
Committee comment
3.20The ANAO has found in its audit that the grants hubs have thus far only been partly effective in delivering on the intended efficiencies and cost-savings for Government. This is concerning given the high expectations for this centralised approach to grants administration, particularly in terms of cost savings, though unsurprising as it became apparent during the hearings that no one could point to a realistic basis to expect cost savings of the magnitude originally expected. Indeed it seemed fanciful and illusory that $400 million in annual benefits including savings would be found just due to centralisation of these administrative functions. That said, the Committee accepts that there have been other and important non-financial benefits from the creation of the Grants Hubs which may be legitimate reasons for the model even if only far more modest financial savings are ever realised.
3.21It is clear that it has not been possible to properly and fully assess the impact and benefits of the Grants Hubs to date – both financial and non-financial. The current metrics and data collection have not been adequate, necessitating the use of a survey by ANAO during its audit. This analysis revealed that client experiences with the two hubs have been a mixed bag.
3.22It is no surprise, therefore, that the audit recommendations of the ANAO in relation to grants hubs have focussed on implementing effective future planning and performance measures, and on improved data quality. The Committee agrees with ANAO in this regard and makes two recommendations that are intended to continue the external oversight of these platforms and evaluate in the future what is being delivered and whether they are meeting expectations. The Committee requests a progress report from Finance within the next year on implementation of the ANAO’s audit recommendations for Grants Hubs.
3.23The Committee requests that the Department of Finance reports back to it on its progress in implementing the recommendations of the audit into the grants hubs by the Australian National Audit Office within 12 months of the date of this report.
3.24The Committee recommends that the Australian National Audit Office conduct another information report on Australian Government Grants Reporting in 2024.
Mr Julian Hill MP
Chair
27 June 2023