Auditor-General Report No. 47 2019–20
2.1
The audited entity was the Department of Agriculture, Water and the Environment (DAWE). The audit objective was to assess the effectiveness of DAWE’s administration of referrals, assessments and approvals of controlled actions under the Environment Protection and Biodiversity Conservation Act 1999 (the EPBC Act).
Provides background information on Australia’s environmental protection regime and outline the Australian National Audit Office’s (ANAO) findings;
Discusses DAWE’s information management, including its collection and management of regulatory information, and its documentation of regulatory actions;
Discusses DAWE’s assessment of risk, including both organisational risks and its compliance risk assessments; and
Discusses problems with internal governance and performance measurement as they relate to environmental referrals, assessments, and approvals.
Chapter overview
2.3
The report by the ANAO found that DAWE’s administration of referrals, assessments and approvals of controlled actions under the EPBC Act continues to be ineffective. This is despite the fact that the department has been subject to numerous previous reviews and audits.
2.4
The Committee is concerned that the department failed to demonstrate it had acted on the recommendations of previous audits and considers that it would benefit from stronger oversight and accountability to improve in a range of areas.
improvements to its ICT systems and capabilities;
record keeping practices;
assessment and treatment of compliance risk;
performance measurement frameworks; quality assurance frameworks; and
the efficiency of its environmental regulation.
2.6
Recommendations are made to this effect at the end of this chapter.
Background and audit findings
Background
2.7
Australia’s national environmental protection regime is laid out in the EPBC Act, the first objective of which is ‘to provide for the protection of the environment, especially those aspects of the environment that are matters of national environmental significance’.
2.8
There are nine matters of national environmental significance defined in the EPBC Act. They are:
world heritage properties;
national heritage places (added in 2003);
wetlands of international importance (listed under the Ramsar Convention on Wetlands of International Importance);
EPBC-listed threatened species and ecological communities;
migratory species listed in international agreements;
protection of the environment from nuclear actions (such as uranium mines);
Commonwealth marine areas;
the Great Barrier Reef Marine Park (added in 2009); and
protection of water resources from coal seam gas development and large coal mining development (added in 2013).
2.9
Where an activity (a project, development, or undertaking, or a series thereof) is likely to have an impact on a matter of national environmental significance, it becomes a ‘controlled action’, which must then be subject to an environmental assessment process. It is the responsibility of regulated entities to determine if their activity might have sufficient environmental impact to become a controlled action.
2.10
The assessment process that then begins is comprised of three stages:
referral - in which the Minister (or their delegate) decides whether the action is a ‘controlled action’, that is, one that may have a significant environmental impact;
assessment - which determines the method of assessing the potential impacts of controlled actions, and in which the assessment is carried out; and
approval - which decides whether to approve the controlled action and decides on any conditions to attach to the approval.
2.11
The Federal Government has reached agreements with the states and territories which allow them to conduct assessment processes under the EPBC Act. They may then report to the Minister, who determines whether to approve the action. DAWE remains responsible for enforcing compliance with any conditions attached to approvals.
Audit findings
2.12
The ANAO’s report found that:
Despite being subject to multiple reviews, audits and parliamentary inquiries since the commencement of the Act, the Department of Agriculture, Water and the Environment’s administration of referrals, assessments and approvals of controlled actions under the EPBC Act is not effective.
Governance arrangements to support the administration of referrals, assessments and approvals of controlled actions are not sound. The department has not established a risk-based approach to its regulation, implemented effective oversight arrangements, or established appropriate performance measures.
Referrals and assessments are not administered effectively or efficiently. Regulation is not supported by appropriate systems and processes, including an appropriate quality assurance framework. The department has not implemented arrangements to measure or improve its efficiency.
The department is unable to demonstrate that conditions of approval are appropriate. The implementation of conditions is not assessed with rigour. The absence of effective monitoring, reporting and evaluation arrangements limit the department’s ability to measure its contribution to the objectives of the EPBC Act.
2.13
On the basis of these findings, the audit report made eight recommendations:
Recommendation 1 related to the collection and management of compliance intelligence;
Recommendations 2 and 3 related to risk assessment and management, particularly compliance risk and probity risk;
Recommendations 4 to 8 related to the department’s internal governance of environmental approval processes, particularly performance measurement, quality assurance, the measurement of efficiency, and quality controls with respect to the department’s management of referrals, assessments, and approvals.
Past reviews
2.14
The issues identified in this audit are not novel. The audit report listed numerous previous reviews of DAWE’s administration of the EPBC Act, the majority of which contained adverse findings. These included ANAO performance audits in 2002-03, 2006-07, 2013-14, 2015-16 and 2016-17, a number of inquiries by parliamentary committees, as well as the two statutory reviews of the operation of the EPBC Act, the 2009 Hawke review and the 2020 Samuel review.
2.15
Previous performance audits have found several weaknesses in the department’s performance as a regulator, including:
a low likelihood of receiving referrals on all actions that may significantly impact matters of national environmental significance;
delays in meeting statutory timeframes under the EPBC Act; and
deficiencies in compliance monitoring and enforcement arrangements, relating to procedural guidance, risk-based compliance monitoring strategies, IT support systems and compliance intelligence capabilities.
Entity response
2.16
DAWE agreed to each of the audit report’s eight recommendations. The department’s submission outlined a range of initiatives it is undertaking which aim to assist in its implementation of the ANAO’s recommendations. Taken together the department argues these will constitute an ‘uplift’ of environmental compliance regulation. Among them are:
improved IT systems for better and more comprehensive assessment information and better measurement of conservation outcomes;
greater investment in intelligence to assist in oversight of illegal environmental activity;
a new Environmental Approvals Division Board to improve oversight of regulatory activity and the improved conflict of interest register; and
accurate records of public comments, a triage framework for assessments, and a better way to manage environmental offsets.
2.17
The department also pointed to improvements in the timeliness of environmental approvals as a result of increased funding.
Record keeping and information management
2.18
The audit report revealed a number of problems with the way DAWE handled information relevant to its administration of the EPBC Act. First, the ANAO found that DAWE did not have adequate systems in place to collect regulatory information – specifically compliance intelligence. Second, it found that DAWE did not manage information effectively even when it had been collected. And third, the department’s record keeping practices were poor enough that the ANAO could not reach an informed conclusion on some issues.
2.19
The collection of timely and relevant information is a central element of effective regulation, as it informs a regulator’s assessment of risk and its compliance and enforcement activities. This is especially true for Australia’s lead environmental regulator:
Collecting regulatory information from a range of reliable sources assists regulators to ensure their information is complete and accurate. As the department operates within a network of environmental regulators, it should have arrangements to collect information from those sources as well as its own activities.
2.20
DAWE’s information-sharing relationships with its co-regulators are underdeveloped. In 2016, a review commissioned by the department of its maturity, capability and capacity as a regulator recommended that it formalise information sharing arrangements with its co-regulators in the states and territories. However:
…the audit report found no evidence that the recommendation was implemented. DAWE has only one agreement which provides for regular compliance information sharing - with NSW.
2.21
As the audit report notes, failure to cooperate effectively with the states and territories has impaired the quality of the regulatory information the department receives and has thereby reduced its effectiveness as a regulator:
In the absence of agreed and structured information sharing arrangements, information received from co-regulators will be reactive, issue-based and dependent on personal relationships. As a consequence, compliance information may be incomplete and limited in value for strategic planning.
2.22
Second, the report noted that the department’s management of regulatory information is also imperfect:
Once regulatory information is obtained, it should be managed in a way that enables it to efficiently inform compliance intelligence. The department stores regulatory information in multiple systems maintained by different business areas … However, the department has not established a procedure to extract all relevant compliance information from each of these different systems. There is no system to store and risk assess open source information, develop custom risk profiles for regulated entities, or undertake projects to gather intelligence.
2.23
The ANAO noted that ‘the department’s ability to utilise information from internal business systems and develop a comprehensive view of the regulatory landscape is limited’. Further, ‘key internal systems do not provide for a consistent, accurate and holistic view of regulated entities. This has resulted in staff checking multiple systems and re-entering information already stored elsewhere’.
2.24
The audit report listed five IT projects commenced since 2015 to improve the management of regulatory information stored by the department. It also noted that none of these had been completed.
2.25
With this in mind the ANAO recommended that the department make improvements to its collection and use of compliance intelligence.
2.26
In response to this recommendation, DAWE told the Committee that it has begun another IT project to do so:
The department has commenced discovery activities which will inform an overarching Information Strategy to create a framework and strengthen processes for the collection and use of regulatory information, including compliance intelligence.
2.27
DAWE elaborated on what this strategy will entail:
We are, however, in the process of procuring an information technology system for compliance case management, which will enhance our ability to share our information in a more systematic way. That information technology system includes an online portal, which will include the ability for external stakeholders to report any concerns or allegations about non-compliance directly to the department. It will also comprise an end-to-end case management system. That IT system is on track to be delivered this year.
2.28
DAWE’s supplementary submission said that it expects the project to be completed by 2023 at the latest:
In response to the audit recommendation, the department is … in the process of procuring Information Technology for an assessments system and a compliance case management system. The integration of the two systems in the future will allow for a complete information workflow. The department is on track to have the systems implemented within the next two years.
2.29
Finally, and in addition to issues with the DAWE’s collection and use of regulatory information, the audit identified problems with the department’s record keeping practices. These were in some instances so poor as to prevent the ANAO from reaching conclusions due to a lack of evidence.
2.30
The audit office examined the records of a random sample of referral, assessment and approval decisions. While available documentation indicated that decisions taken ‘were largely in accordance with procedural guidance and aligned with the supporting evidence’, a number of records were not present:
Key documents relating to decisions were not available in the department’s record management system … This issue was noted in an internal audit in 2018 that found ‘inconsistent practices occurring for the storage of key decision-making evidence’ … Failure to create and maintain accurate records of regulation impacts the department’s accountability and transparency, and exposes it to further risks of legal overturn.
2.31
There were also gaps in the department’s records relating to pre-commencement conditions of approval. When a controlled action is approved, conditions may be attached to it to mitigate or offset any environmental impacts it is likely to have. Monitoring these conditions is an important way to avoid damage to the environment:
For pre-commencement conditions of approval to effectively prevent unacceptable impacts on matters of national environmental significance, the department must ensure they are fully implemented before project activities commence. This requires appropriate monitoring of both commencement of actions and implementation of pre-commencement conditions.
2.32
The department’s procedures require it to record when projects commence so that it can monitor the project effectively. However, it has not always met this requirement:
The department’s records of project commencement are subject to completeness and integrity issues. The department has recorded 151 projects as commencing between 1 July 2015 and 28 August 2019. There were a number of discrepancies with these records, including:
Ninety eight commencements were only found in either the spreadsheet or EIAS, and six of the 53 projects recorded in both sources had different commencement dates.
Thirty nine projects were recorded as ‘commenced’ or ‘completed’ but had no recorded date of commencement.
Fifty five projects that had reported on their post-commencement activities in annual compliance reports to the department since 1 June 2018 were not recorded as having commenced.
2.33
These issues with the completeness and accuracy of its records ‘limit the department’s ability to determine when projects have commenced and therefore its ability to monitor whether pre- commencement conditions of approval have been implemented’.
2.34
Documentation of the conditions attached to environmental approvals was so poor that in some cases that the ANAO could not even reach a view on how appropriate the department’s decision making was. According to the ANAO:
… it means that the department is poorly positioned to demonstrate the extent to which the setting of conditions is actually appropriate to the level of environmental risk ... there’s insufficient information there to talk about the appropriateness of the conditions that have been set with respect to the level of risk to the environment in particular referrals.
2.35
The Deputy Auditor-General, Ms Rona Mellor, said that Committee questions on whether the department was an effective regulator in relation to this issue were:
… hard for us to answer in the absence of documentation that needed to be there ... This is, as many areas of Commonwealth regulation are, a highly contestable space with very strong interests within it. It was very disappointing from an auditor’s perspective to see that rules that were set about good record keeping and documentation around decision-making actually hamstrung us in proceeding down some of the audit routes that we would have done.
2.36
Although the department did not address this issue directly, it is presumed that the improved IT systems described above will have a positive impact on its record keeping practices.
Risk management
2.37
The audit made two recommendations that primarily relate to the assessment of risk. First, that the department improve the way it assesses and treats probity or conflict of interest risks. Second, that the department conduct an up-to-date assessment of compliance risk.
Management of conflicts of interest
2.38
Given the importance of environmental regulation and the high value of the development proposals the department assesses, proper treatment of conflict of interest risks is important:
As regulators of environmentally sensitive, high-value and often contentious development proposals, appropriate arrangements to manage conflicts of interest are particularly important for building public confidence in the department as a trusted regulator.
2.39
The ANAO noted that the department had an appropriate conflict of interest policy for its employees:
The department has established a conflict of interest policy that complies with Commonwealth legislation. It requires employees to regularly assess and review their personal interests, take reasonable steps to avoid conflicts, complete a declaration where conflicts are identified, take measures to manage any identified conflicts and record declarations on the department’s record management system.
2.40
However, the report identified problems with the policy’s implementation. The department’s conflict of interest policy required internal oversight committees to have a standing agenda item on potential or actual conflicts of interest but this was frequently not observed. Further, where treatments for probity risks were required, the department did not implement them, or was unable to provide evidence for doing so.
2.41
Finally the report noted that an ongoing fraud risk plan had not been implemented:
The division has not established a fraud risk plan for 2019–20 onwards. Without an active fraud plan to identify and treat potential conflicts of interests, there is an elevated risk of the regulation of referrals, assessments and approvals being influenced by conflicts of interest.
2.42
The report therefore recommended that DAWE improve the oversight of referrals, assessments and approvals and properly identify and treat conflict of interest risks.
2.43
DAWE agreed with the recommendation and said that it has improved its management of conflict of interest risks:
A conflict of interest register for environmental approvals is now [in] place and a mandatory declaration process has been established for all staff in the Environment Approvals Division. This register is regularly reviewed by [a] senior executive. All declared conflicts of interest, where applicable, must have an agreed management plan in place to manage any risks posed by the conflict.
2.44
DAWE told the Committee that the department has made substantial changes to its internal conflict of interest processes to address this recommendation:
The former department had a conflict of interest process, and that required staff who identified a conflict of interest in relation to what they were doing to declare that conflict. But, following the ANAO audit, we revamped that completely, and we now have instituted a mandatory conflict of interest process with an ongoing register that is maintained within the division. That register and the process for rolling it out for - for requiring staff to update changing circumstances, et cetera - is made very clear to staff. For every new starter, the first thing they do, on day one, is complete their form.
2.45
The Deputy Auditor-General noted that ongoing and active management of identified probity risks is a key part of every regulator’s work:
... it’s a matter of active management. You’ve seen other audits of ours where conflict of interest policies have been in place and declarations have been made and management hasn’t occurred. What’s the outcome of a declaration being made? How’s it being managed? Are people turning their mind to it? It’s about positive steps by the department in moving forward on a more holistic conflict of interest regime for this part of its business.
Compliance risk
2.46
Compliance risk refers to the risk of regulated entities failing to comply with the EPBC Act or the department’s decisions as a regulator. Proper assessment of compliance risk is an important part of a regulator’s role:
Regulators that assess the risk of non-compliance are better positioned to target regulatory activities towards areas of greatest impact. Strategic risk assessments can inform the design of regulatory approaches, including the allocation of resources between regulatory activities (such as promoting voluntary compliance, individual assessments and approvals, and compliance monitoring functions). Operational and tactical risk assessments may be used to inform decision-making on individual actions.
2.47
The audit found that ‘no assessment of compliance risk across all of the department’s environmental regulatory responsibilities has been completed’. As such:
Without an overarching assessment of compliance risk across its regulatory responsibilities or a process to prioritise its assessments, the department is not well positioned to develop a complete view of compliance risk. This weakens the basis of its strategic risk assessments and limits its ability to align regulatory functions and resources to the risk of non-compliance.
2.48
On that basis the ANAO recommended that the department conduct an up‑to‑date risk assessment of non-compliance.
2.49
The audit also noted that the department’s conduct of individual referrals, assessments and approvals is not risk based. It argued that ‘the administration of referrals, assessments and approvals under the EPBC Act inherently involves a consideration of the environmental risk of each proposed action’. However, there is no framework to target the department’s actions according to risk:
While risk is discussed generally in the department’s procedural guidance, prompting officers to consider environmental, legal, reputational and compliance risks, it does not indicate how risk assessments should be conducted or establish how the assessment should inform the level of regulatory effort applied.
2.50
In response to these issues, the department informed the Committee that it has engaged an external expert to develop a compliance risk assessment regime:
The department has … engaged an external expert to carry out an independent Environmental Compliance Regulatory Risk Review which will provide systematic assessment and prioritisation of risk across the Department’s regulatory regimes.
Noting that the recently released Independent review of the EPBC Act makes a range of recommendations about compliance under the Act, the final report for this project could further inform government decisions and directions for compliance.
2.51
The regulatory risk review began in February 2021 and the department said it was expected to be completed before the end of June 2021:
The scope for the project is to identify the non-compliance risks with each environmental regulatory regime administered by the Department of Agriculture, Water and the Environment, to identify the compliance activities already undertaken by the department to manage those risks, to identify benchmarks and mechanisms used in other environmental regulatory jurisdictions for allocating resourcing levels across compliance regulatory functions, and to identify other regulatory tools that the department should consider using.
This work is expected to be completed this financial year.
Governance and performance measurement
2.52
The ANAO report made a number of recommendations that go to the department’s internal governance and performance measurement arrangements.
Performance measurement
2.53
Performance measures are particularly important because they permit the department itself, as well as its stakeholders, to assess its effectiveness as a regulator and determine whether it is achieving its intended results.
2.54
While the audit report found that the department’s performance measures were ‘largely relevant and partially reliable’, it also found that ‘results and analysis in the performance statements contained inaccuracies, were not supported by suitable records, or both’. Further, ‘for 2019–20, no performance measures specifically relating to the administration of referrals, assessments and approvals were included in the corporate plan’.
2.55
The audit highlighted that although DAWE had indicators to measure some outputs, these did not measure its performance:
The department has not established internal performance measures for the quality, impacts and long-term outcomes of its administration of referrals, assessments and approvals. It has established a number of output-level indicators, such as the number of statutory decisions made and the proportion of these decisions made within statutory timeframes. However, these do not provide any information on the effectiveness of the department’s regulation.
2.56
The ANAO therefore recommended that the department develop internal and external performance measures on the effectiveness and efficiency of its regulation of referrals, assessments and approvals.
2.57
DAWE agreed to this recommendation and said that it is developing a performance framework to assist it to meet its reporting obligations:
A performance measure for environmental approvals was reinstated in 2021 Corporate Plan: ‘Statutory timeframes are met 100% of the time for EPBC Act referral, assessment and approval decisions and the backlog of decisions is cleared’ …
The department is now engaging external expertise to assist with the preparation of a Performance Framework for the Environmental Approvals Division, in line with the Commonwealth Regulator Performance Framework and best practice approaches to performance reporting.
Quality assurance
2.58
The audit noted that procedural guidance available to departmental staff to assist them in making complex referral, assessment and approval decisions was incomplete and not well maintained.
2.59
As such, good quality assurance processes assume greater importance. However:
The department has not established a quality assurance framework despite agreeing to do so in an internal audit recommendation in 2018. The department informed its audit committee in March 2020 that the item was ‘not being progressed’ as it had been ‘overtaken by a shift in focus to improve [its] performance against statutory timeframes in line with the Australian Government’s congestion busting agenda’.
2.60
This left the department ‘without appropriate assurance over its regulation of referrals, assessments and approvals, including: compliance with the EPBC Act, quality and consistency of decision-making, and accuracy of externally-provided information’.
2.61
On that basis the ANAO recommended that the department implement a quality assurance framework to assure itself that its procedural guidance is implemented consistently and that the quality of decision-making is appropriate.
2.62
DAWE agreed to this recommendation and told the Committee that it has begun work to implement such a framework:
Work to prepare a Quality Assurance Framework for referrals, assessments and approvals under the EPBC Act is well progressed. The framework will provide ongoing assurance that procedural guidance is implemented consistently and that the quality of decision-making is appropriate.
The framework has been developed by external quality assurance experts to ensure it reflects best practice international quality assurance standards, is fit-for-purpose and provides a roadmap for implementation and uplift in quality assurance maturity over time. Implementation of the framework will consist of an ongoing program of continuous improvement of quality outcomes over time and is expected to commence mid-2021.
Efficiency
2.63
The audit report also considered whether DAWE’s environmental regulation was conducted efficiently. Efficient administration is an important part of effective regulation:
Efficient use of public resources enables regulators to maximise outcomes for government and the community, reduce demands on the Australian Government budget and promote financial sustainability. The efficiency of the regulation of referrals, assessments and approvals also impacts on the timeliness of decisions, which impacts regulated entities.
2.64
DAWE had not made arrangements to measure how efficiently it administers the EPBC Act. The department’s primary business IT system, the Environmental Impact Assessment System (EIAS) had the capability to measure departmental efficiency but it was not used to do so.
2.65
The ANAO noted that the department planned to make efficiency improvements using government funds which had been allocated with the primary purpose of reducing the backlog of environmental decisions:
It is particularly important for the department to establish efficiency indicators and implement efficiency initiatives if it is to deliver increased outputs in the future, including after the funding to reduce the backlog of assessments expires.
2.66
Accordingly, the report recommended that the department establish efficiency indicators to assist in meeting legislative timeframes for referrals, assessments and approvals.
2.67
In response, DAWE said that it has developed a triage system which will allow it to allocate its resources more efficiently:
A triage framework has been prepared and piloted and is expected to be finalised and implemented by the end of this financial year.
The framework will help guide the allocation of resources and processes undertaken in assessments to drive more efficient and effective delivery of assessments and approvals in a strategic risk-based manner.
Monitoring of conditions of approval
2.68
Conditions of approval are of central importance to good environmental outcomes under the EPBC Act. They are ‘the main mechanism to avoid, mitigate or offset any unacceptable impacts to matters of national environmental significance that may be caused by the action’.
2.69
However, for conditions to be an effective mechanism they must be monitored to ensure regulated entities are complying with them:
For conditions of approval to be effective at reducing impacts on matters of national environmental significance, they must be fully implemented in line with the original approval. It is therefore important that appropriate arrangements are in place to monitor the implementation of conditions of approval.
2.70
This audit is not the first time the ANAO has assessed the department’s performance in relation to conditions of approval:
The ANAO previously examined the department’s arrangements to monitor the implementation of EPBC Act conditions of approval in 2013-14 and 2016-17. The 2013-14 audit found that the department had limited assurance over compliance with conditions of approval, making five recommendations. The 2016-17 audit found that while the department had implemented three of these recommendations and partially implemented the remaining two, limited progress had been made in implementing broader initiatives to strengthen the department’s regulatory performance.
2.71
In turn, this audit found that the department’s performance in regulating the implementation of conditions of approval is poor:
The department has not established appropriate arrangements to monitor the implementation of pre-commencement conditions of approval. The department’s systems for monitoring commencement of actions are inaccurate. The absence of procedural guidance for reviewing documents submitted as part of pre-commencement conditions leaves the department poorly positioned to prevent adverse environmental outcomes.
2.72
The ANAO thus recommended that the department develop guidance and quality controls to assure itself that pre-commencement conditions of approval are implemented and assessed consistently to protect matters of national environmental significance.
2.73
DAWE agreed to this recommendation, stating:
The department has accepted responsibility for the findings of the audit report and has commenced work to strengthen quality controls for approval conditions. In the short term, we are strengthening the current quality control processes by updating guidance material for condition writing. In the medium term we are engaging external expertise to provide the department with options for a new process for quality control that is in line with best regulatory practice.
2.74
More broadly, DAWE noted significant internal reforms at the department which it argued will have a long-term positive impact on its performance as a regulator:
The department has put in place a range of measures - a tiering, if you like - of governance architecture to manage our response to the ANAO report … First of all, we have a steering committee that is chaired by a deputy secretary … [which] meets monthly and is charged with responsibility for overseeing the implementation of our work plan and keeping the department’s senior executive informed of our progress …
We also have established a board within the environment approvals division. That comprises all of the executive. That’s now committed to a formal structure where the board meets either fortnightly or monthly with a program of work again targeting very closely the implementation of the work coming out of the ANAO report …
We also have within the department an internal audit committee and an external audit committee. We have provided the full suite of our implementation plans to that audit committee and we will report to them quarterly on our progress against our work plan so we’re held accountable through that structure as well.
2.75
DAWE noted that the reforms have been undertaken with the support of substantially increased funding from the government:
We’ve committed to what we believe is a fairly ambitious program of business transformation that will see significant improvements in our administration of the act. The audit findings provide a useful road map for the department to improve that administration and build on our existing policies and practices, but present a number of key improvements to our administration, and that’s being supported by the government’s investment of $25 million through congestion-busting for environment approvals.
2.76
DAWE noted that while the implementation of some parts of the program will take 1-2 years, it is likely that other improvements to departmental operations will be ongoing:
We certainly won’t have an end date on the EAD [Environment Approvals Division] board, the internal board, because that will be the business of the senior executive to continue to monitor. Unless something radically changes, I imagine that would be an ongoing function. The steering committee does not have an end date at this time, but, if and when they’re satisfied that we’ve completed all eight recommendations, and we have reported back through the ANAO, then we may agree that it’s no longer required. That hasn’t yet been discussed. Our estimate within the division is that it would probably take 18 months to two years to complete this program of work.
2.77
However, as the Deputy Auditor-General noted at the Committee’s public hearing, positive outcomes in this space will require sustained effort:
… generally in regulation we find that, where there are problems, it’s because people aren’t putting the effort in, managing actively and keeping an eye on a very important part of their organisation … In the case of this part of the regulation of activities of the Commonwealth, there have been a large number of reviews. When people accept that they need to change things, they need to do it. We’re hearing some positive sounds from the deputy secretary about moving forward. We hope the momentum on that continues.
Committee comment
2.78
It is important that Australia’s environmental laws are administered by DAWE in a competent and consistent manner. Regulatory information should be collected, managed, used and published according to best practice, particularly when responsibility for regulation is shared between states, territories and the Commonwealth. An understanding of risk drawn from this information should inform compliance and enforcement settings.
2.79
Similarly, the department’s internal governance and performance measurement should be sound. This requires proper arrangements for identifying and treating conflict of interest risk, appropriate performance measurement practices, and good quality assurance to ensure decision making is sound and consistent.
2.80
It is unacceptable to the Committee that the audit found deficiencies in each and every one of these areas. There have been deficiencies in the department’s administration of the Act for many years, as evidenced by numerous previous reports.
2.81
It is also very concerning that the ANAO was unable to form a view on some issues because of a lack of records. As mentioned earlier in this report, accurate record keeping is vital to the effectiveness of regulatory agencies. Without this, the department is exposed to numerous threats including risks relating to probity and conflicts of interest, compliance risk and the inability to adequately substantiate decisions.
2.82
Although the Committee acknowledges that DAWE accepted all of the report’s recommendations, this inquiry’s evidence highlighted the scope and scale of the work the department must undertake to ensure it functions adequately in its role regulating the EPBC Act.
2.83
The Committee recommends that DAWE provide it with an update on the status of projects planned or commenced in response to the ANAO’s findings, including with respect to:
improvements to its ICT systems and capabilities;
record keeping practices;
assessment and treatment of compliance risk;
performance measurement frameworks;
quality assurance frameworks; and
the efficiency of its environmental regulation.
The Committee requests that DAWE provide this update within 6 months of this report.
2.84
The audit report lists a number of past projects which aimed to improve DAWE’s performance as a regulator but which remained incomplete or ineffective.
2.85
It is too soon to tell whether the actions taken in response to this audit will be effective, and as such the Committee recommends that the Auditor-General consider a follow-up audit to assess the success of the department’s implementation of the ANAO’s recommendations.
2.86
The Committee recommends that the Auditor-General consider conducting a follow-up audit of DAWE in 2023 to assess the department’s progress in implementing the audit report’s recommendations. The Committee intends to list this program in its future ‘audit priorities of the Parliament’ to advocate for a further audit and continued oversight of the department until substantial change is demonstrated.