Introduction

1.1 As part of the Australian Government’s mutual obligation requirements² for receipt of certain income support payments³, jobseekers must fulfil a range of requirements, such as looking for work and participating in activities that will improve their employment prospects and reduce reliance on income support payments. In 2016–17, the Government committed in excess of $2 billion to fund employment services in Australia to support jobseekers into employment.

1.2 In May 2017, the unemployment rate in remote regions⁴ of Australia was 6.6 per cent compared to the national average of 5.5 per cent, with a corresponding youth unemployment rate (15–24 years old) of 18.6 per cent compared to the national average of 12.7 per cent. The unemployment rate was also higher for Aboriginal and Torres Strait Islander people in remote areas compared to those in non-remote areas.⁵

What is the Community Development Programme?

1.3 The Community Development Programme (CDP) is an Australian Government employment and community development service designed to reduce welfare dependency in remote Australia, by improving labour markets, increasing workforce participation, increasing skills and facilitating sustainable work transitions for jobseekers.

1.4 To participate in the CDP, a jobseeker must be on income support, live in a designated remote region and meet certain criteria, as shown in Table 1.1. Those eligible for the CDP who have mutual obligation requirements as part of their income support payment (for example, Newstart Allowance or Youth Allowance) are required to participate in the CDP.

Table 1.1: Eligibility for the Community Development Programme

Source: ANAO analysis based on the departments of Human Services and PM&C documentation.

1.5 Those jobseekers aged between 18 and 49 years, who are receiving the full rate of income support, are not exempt from mutual obligation requirements, and are not otherwise disqualified by illness, injury or disability, are required to participate in Work for the Dole activities.⁶

1.6 Participation in the CDP is not specific to Indigenous peoples; however, Aboriginal and Torres Strait Islander people comprise more than 80 per cent of the CDP caseload. The CDP is delivered across 60 designated remote regions⁷ to more than 1000 communities in Australia, as shown in Figure 1.1. Eligible jobseekers outside these regions are serviced by jobactive (administered by the Department of Employment) or Disability Employment Services (administered by the Department of Social Services).⁸

Figure 1.1: Overview map of the 60 Community Development Programme regions^a

Note a: See Appendix 2 for supporting information on the regions.

Source: PM&C information.

1.7 CDP employment services in these remote regions are delivered by third-party providers (providers). There is generally one provider per region⁹ with some organisations providing services for multiple CDP regions. As at April 2017, PM&C reported that, of the 40 CDP providers, 65 per cent were Indigenous organisations.

1.8 CDP providers deliver two types of services on behalf of the Government.

• Basic Services: including integrated case management and supporting jobseekers to find and keep a job.
• Remote Employment Services: including establishing and administering Work for the Dole—work-like activities, which jobseekers must participate in five days a week, depending on their assessed capacity. These work-like activities were to reflect local employment opportunities or be relevant to community aspirations and needs.

1.9 The total number of jobseekers on the remote employment services caseload fluctuates over the course of the year. As at 22 May 2017, there were 33 152 jobseekers in the total CDP caseload, consisting of 17 569 Work for the Dole jobseekers and 15 583 Basic Service jobseekers.

2015 changes to remote employment services

1.10 The CDP commenced on 1 July 2015, replacing the Remote Jobs and Communities Program (RJCP).¹⁰ The introduction of the CDP saw a range of changes aimed at increasing workforce participation, providing employment pathways to long term employment outcomes, and reducing administrative burden for providers.

1.11 Table 1.2 outlines the key differences between the RJCP and the CDP.

Table 1.2: Key differences between the Remote Jobs and Communities Program and the Community Development Programme

Note a: Under CDEP, participants received a payment (expressed as a fortnightly rate) for participating in Remote Employment and Participation Activities. The CDEP Wage Rate at 1 July 2013 was $217.71 (GST exclusive) per week for a CDEP Youth Participant and $287.57 (GST exclusive) for all other CDEP Scheme Participants.

Note b: See Appendix 3 for further detail on the CDP and the RJCP payment models.

Source: ANAO analysis of PM&C documentation.

Administrative arrangements

Roles and responsibilities

1.12 PM&C is responsible for the overall administration of the CDP, including policy advice, and program design and management. A number of other Australian Government entities administer relevant legislation and aspects of CDP delivery.

1.13 Table 1.3 outlines the relevant responsibilities of each of the entities in regards to the CDP.

Table 1.3: Australian Government entities’ responsibilities for the Community Development Programme

Note a: See Appendix 3 for further detail on the CDP payment model.

Note b: CDP providers report jobseeker non-compliance to the Department of Human Services (which triggers initial payment suspension and jobseeker contact), Human Services investigates non-compliance and decides whether the non-compliance applied, with any penalties applied as prescribed by legislation.

Note c: For example, the Skills Education and Employment Programme and the National Disability Insurance Scheme.

Source: ANAO.

Funding

1.14 In the 2015 changes to remote employment services, the Government redirected existing RJCP funding of $1.5 billion over four years from 2014–15 and provided an additional $94.9 million in funding for the CDP.¹¹ Table 1.4 sets out total funding allocations for all relevant entities for the CDP, 2014–15 to 2017–18.

Table 1.4: Community Development Programme funding allocations for the period 2014–15 to 2017–18

Note: Total may differ due to rounding.

Source: PM&C data.

1.15 No separate departmental funding was appropriated for the CDP for the departments of the Prime Minister and Cabinet and Human Services. The Department of Employment was allocated up to $3.2 million in departmental funding to deliver IT systems.

Audit approach

1.16 The objective of the audit was to assess the effectiveness of the transition of the Remote Jobs and Communities Program to the Community Development Programme including whether the Community Development Programme was well designed and administered effectively and efficiently.

1.17 To form a conclusion against the audit objective, the ANAO adopted the following high level audit criteria:

• Sound analysis and advice informed the design of the Community Development Programme and transition from the Remote Jobs and Communities Program.
• The Community Development Programme was effectively and efficiently administered.
• Performance was appropriately monitored and outcomes were measured, reviewed and reported to the Minister.

Audit methodology

1.18 The audit methodology included:

• the examination and analysis of documentation relating to the design and implementation and risk management arrangements for the Community Development Programme;
• interviews with key officials in the Department of the Prime Minister and Cabinet, the Department of Employment, and the Department of Human Services; and
• interviews with, and surveys of, key external stakeholders including: Community Development Programme providers; relevant regional and remote employers; state and territory Government entities responsible for delivering related Indigenous programs; community organisations; and peak bodies such as Jobs Australia.

1.19 The audit was conducted in accordance with the ANAO’s auditing standards at a cost to the ANAO of approximately $547 000.

1.20 The team members for this audit were Sandra Dandie, Megan Beven, Barbara Das, Shickam Saouna, Donna Burton and Andrew Rodrigues.

Was the design of the Community Development Programme informed by sound analysis, advice and consultation?

2.1 Implementation of the Remote Jobs and Communities Program (RJCP) commenced on 1 July 2013, with the then Department of Education, Employment and Workplace Relations as the responsible entity. Following the September 2013 Machinery-of-Government changes, the Department of the Prime Minister and Cabinet (PM&C) assumed policy and program responsibility for a range of the Australian Government’s Indigenous initiatives, including the RJCP and its successor, the Community Development Programme (CDP). A timeline of these key events is set out in Figure 2.1.

Figure 2.1: Timeline of key milestones and events in the establishment and implementation of the Remote Jobs and Communities Program and the Community Development Programme from 2013 to 2018

Source: ANAO analysis.

Decision to change the Remote Jobs and Communities Program

2.2 Between November 2013 and December 2014, the Government decided on changes to the RJCP. Broadly, these changes were aimed at:

• addressing a number of emerging design and implementation issues with the RJCP model¹²;
• aligning remote employment services with broader welfare reforms and changes to the mainstream employment services; and
• ensuring people in remote communities were ‘engaged in training that leads to real jobs or participating in activities that benefit their communities’.

2.3 The Government’s decision to change the RJCP occurred in the context of broader changes to the mainstream employment services model, jobseeker mutual obligations requirements, and the Review of Indigenous Training and Employment (the Forrest Review).¹³ The changes introduced through the CDP would ultimately form part of the Government’s response to the Forrest Review.¹⁴

2.4 PM&C’s advice to Government supported the decision to change the RJCP based on the program’s performance outcomes. In particular, PM&C’s advice noted that, under the RJCP model, only around a third of remote jobseekers were engaged in any form of Structured Activities.¹⁵

2.5 Under the RJCP, participants could meet their mutual obligation requirements by participating in one or more ‘employment and participation activities’¹⁶, consistent with their individual participation plan (which was required to be developed for each jobseeker). Structured Activities were only one type of activity jobseekers could be engaged in and, as such, PM&C’s analysis did not take into account those jobseekers engaged in other agreed employment and participation activities, such as accredited training or Remote Youth Leadership and Development Corps activities.¹⁷

2.6 As at December 2014, if all RJCP agreed activities were taken into consideration, around 65 per cent of RJCP jobseekers were participating in RJCP agreed activities.

2.7 Additionally, in October 2014, PM&C also advised Government that under the RJCP there had been a significant reduction (90 per cent) in jobseekers achieving employment that lasted more than 26 weeks since the commencement of the RJCP compared to the previous year’s employment outcomes under the Job Services Australia model in remote areas. PM&C was unable to provide evidence to the ANAO to support this advice.

Consultation on changes to the remote employment services model

2.8 The decision to change the RJCP and the subsequent design of the CDP was informed by consultation and submissions received from relevant stakeholders, including communities, employers, Indigenous leaders and community organisations; and Government departments and agencies, as part of the Review of Indigenous Training and Employment (the Forrest Review).

2.9 The Minister for Indigenous Affairs (Minister), supported by PM&C, convened several roundtable meetings with selected employers and community councils in September 2014 to discuss the findings of the Forrest Review, including aspects relevant to the design of the CDP. In October 2014, the Minister also consulted with the Indigenous Advisory Council members¹⁸ on the merits of the CDP, as well as Jobs Australia¹⁹ and a selection of trusted providers. In April 2015, PM&C consulted Jobs Australia on elements of the CDP design.

Design of the Community Development Programme

2.10 The changes to remote employment services took effect from 1 July 2015, and formed the basis of the CDP. Key changes included²⁰:

• all adults between 18 and 49 years of age, not in work or study, would undertake a routine of full-time Work for the Dole activity—up to 25 hours across a five day week, 52 weeks a year (‘Continuous’ Work for the Dole);
• a greater emphasis on ‘work-like activities’ that provided a service to community and full-time work experience for jobseekers;
• the establishment of new enterprises in remote communities through the provision of grants under the existing Indigenous Advancement Strategy;
• changes to incentives for providers and employers;
• simplified processes for providers aimed at reducing administrative burden; and
• a requirement for providers to immediately notify the Department of Human Services of jobseeker non-compliance to better support remedial action.

‘Continuous’ Work for the Dole

2.11 The inclusion of ‘continuous’ Work for the Dole in the design of the CDP was consistent with Government policy²¹ and the introduction of Work for the Dole in mainstream employment services. Under jobactive, the mainstream employment service, jobseekers were required to participate in Work for the Dole, or another approved activity, for six months each year.²²

2.12 In its advice to Government, PM&C proposed that Work for the Dole participation requirements should vary from the mainstream income support payment participation requirements. PM&C noted that implementing Work for the Dole for only six months of each year would not work in remote communities which often had virtually non-existent labour markets and where there was a need to establish social norms. Consequently, PM&C advised that ‘only a comprehensive full time Work for the Dole program applied to all jobseekers will work in remote regions’. ‘Continuous’ Work for the Dole activities was also considered a key factor in reducing the ‘high level of idleness in communities’.

2.13 The Government agreed that the ‘continuous’ Work for the Dole component of the CDP would be implemented as a trial until 30 June 2018, with the outcome of the evaluation of the CDP’s effectiveness to inform further advice to Government in late 2016.

Work-like activities

2.14 As part of the CDP’s ‘continuous’ Work for the Dole component, providers were expected to deliver a mix of ‘work-like’ activities that set a daily routine for jobseekers across a five day, Monday to Friday week. Providers could either deliver the activities themselves or through a hosted placement with an employer.²³

• The CDP guidelines provided greater flexibility in what constituted a Work for the Dole activity, to drive creativity and allow providers to design activities that best met community wants and needs.²⁴
• Around 16 per cent of Work for the Dole jobseekers were expected to be in hosted placements. Host organisations would receive a payment for the costs of hosting a jobseeker, with PM&C recommending providers split the Work for the Dole service payment²⁵ 50-50 with the host organisation. This arrangement was intended to maintain the incentives for providers to move jobseekers into hosted places.²⁶

2.15 PM&C advised the Government that an additional $96 million over the forward estimates was required to ensure the quality of the work-like activities to be delivered, based on PM&C’s estimates of the likely caseload.²⁷ The additional funding was sourced through the new National Partnership Agreement on Remote Indigenous Housing.²⁸ This was agreed to by Government on the basis that the CDP could be used to support remote housing delivery.²⁹

Indigenous Enterprise Development

2.16 In December 2014, the Government announced $25 million in funding to support the establishment of local enterprises, and in so doing help build remote labour markets.³⁰ The funding would be limited to one to two years, with enterprises required to have a plan in place to become commercially sustainable. In addition, jobseeker placements would be limited to 12–24 months to ensure the placement represented a path to ongoing employment and to reduce the displacement of existing jobs.

2.17 In early 2015, PM&C engaged a private consultancy firm to support the initial design of the operation of the remote intermediate labour markets. This design work ultimately formed the basis of the Indigenous Enterprise Development (IED). Funding decisions under the IED were covered by the Indigenous Advancement Strategy guidelines³¹ and assessed on the extent to which applicants would ‘… provide employment and hosted placement opportunities for the CDP jobseekers’.

CDP payment model

2.18 The transition to the CDP saw significant changes to provider payments, with greater emphasis placed on employment outcomes.³² Additionally, the provider Participation Account³³ that had existed under the RJCP, would cease to operate under the CDP.

2.19 From 1 July 2015, payments to providers to deliver the CDP included the:

• Basic Services payment—payable for delivering Basic Services to jobseekers not required to participate in Work for the Dole activities.
• Work for the Dole payment—payable for delivering both Basic Services and Work for the Dole activities.
• Employment Outcome payment—payable where a jobseeker was still employed after 13 and 26 consecutive weeks (with an allowable break³⁴) of employment and designed to encourage providers to support jobseekers into employment and ensure they stayed in employment.
• Employer Incentive Fund payment—a payment passed onto employers from providers if a jobseeker achieved a 26 week employment outcome.

2.20 CDP funding agreements also provided for two other payments:

• The ancillary payments—the purpose of these payments were not specified in the Funding Agreement or other guidance; and
• Funding to strengthen organisational governance—payable to providers who became incorporated (where required) under the Funding Agreement.

2.21 The CDP payment model was designed to strengthen incentives for providers to place jobseekers into work; however concerns were raised prior to its implementation that ‘there is little, if any incentive (at a financial risk for them) for a provider to place a Work for the Dole participant into a job’.

2.22 Pursuant to the changes introduced to the payment model in transitioning from the RJCP to the CDP, the Employment Outcome payment providers received for a full-time jobseeker increased from $6325 to $7500 (GST exclusive).³⁵ ANAO analysis showed that although the financial incentive had increased overall, there was a lower probability a provider would receive that payment as:

• under the CDP, Employment Outcome payments were weighted towards 26 weeks, compared to the RJCP where the providers received a proportion of the payment at more regular intervals (as shown in Table 2.1);
• under the CDP, there was an increased risk to the provider given that the jobseeker may not have achieved a 13 or 26 week outcome payment, with only 40 per cent of job placements achieving 26 week outcomes (as shown in Table 2.2).

2.23 Given the more stringent timing requirements, and inherent uncertainty in achieving the 13 and 26 week employment outcomes, the revised payment system may dilute the incentives for providers to place jobseekers in work, as opposed to continuing their engagement in ‘work-like activities’ pursuant to Work for the Dole arrangements.

Table 2.1: Comparison of the Remote Jobs and Communities Program and the Community Development Programme Employment Outcome Payments

Source: ANAO analysis of PM&C documentation.

Table 2.2: Community Development Programme job placements, and employment outcomes at 13 weeks and 26 weeks, 1 July 2015 to 30 April 2017

Source: ANAO analysis of PM&C data.

2.24 Additionally, the timeframe within which an employment outcome could be achieved was reduced. For example, under the RJCP model a 26 week outcome would be achieved when a jobseeker had been employed for 26 weeks over a maximum of 52 consecutive weeks, whereas under the CDP, a 26 week employment outcome had to be achieved within 26 consecutive weeks (with an allowable break).

2.25 There were further concerns raised by other Government entities on:

• the timing of 13 and 26 week outcome payments not accounting for the seasonal and casual work available in remote labour markets; and
• the financial viability of CDP providers, as the 26 week outcome payments for the CDP were lower than those for the most highly disadvantaged jobseekers under the mainstream Employment Services 2015 model with no additional fees for providers, including ‘… to pay for interventions that address non-vocational and vocational barriers or to help jobseekers into work’.³⁶

2.26 To reduce red-tape for providers, the CDP payment model was streamlined into three main payment categories from approximately seven different payment categories available under the RJCP.

Did the Department of the Prime Minister and Cabinet have a suitable strategy in place to underpin the transition of the Remote Jobs and Communities Program to the Community Development Programme?

Transition arrangements

2.29 The transition from the RJCP to the CDP was considered a significant task, with six months between the announcement of the changes and the commencement of the new funding agreement on 1 July 2015, including a new payment model. In December 2014, the Government agreed to a four-stage process to transition from the RJCP to the CDP to be implemented over 18 months, as shown in Table 2.3.

Table 2.3: Transition from the Remote Jobs and Communities Program to the Community Development Programme

Source: ANAO analysis of PM&C documentation.

2.30 The implementation risk management plan identified ten key risks to the transition process, six of which were rated as ‘high’.

Governance Arrangements

2.31 PM&C proposed that the transition process would be supported by an internal Implementation Taskforce; an interdepartmental RJCP Reform Sponsors Group; and subsequently a Reform Implementation Programme Board. A range of cross-agency working groups, supported by Project Boards, were also proposed.

2.32 The Reform Implementation Programme Board held its first meeting in late May 2015, some five months after the Minister’s announcement and only one month before the commencement of major program changes (such as continuous Work for the Dole in selected regions).

2.33 PM&C implemented the transition according to the overall implementation timeframe agreed by Government. The short timeframe between the announcement of the changes and the commencement of the new Funding Agreement on 1 July 2015 (including the new payment model) contained a number of inherent risks. PM&C established risk mitigation strategies to address these; however, several key risks, specifically those related to transitioning providers from the RJCP to the CDP, eventuated. Subsequently, a number of providers did not have the capacity to meet the requirements of the new Funding Agreements, impacting on the transition to the CDP and the extent to which providers were able to meet their CDP performance targets.

Provider transition

The development and expansion of structured activities

2.34 From December 2014, as agreed by Government, PM&C reviewed RJCP activities and jobseeker characteristics, and mapped Work for the Dole needs and potential activities for each region, informed by existing activities and provider Community Action Plans.

2.35 To facilitate the transition to the CDP, PM&C was to assist providers in each region phased for transition, to develop and establish Work for the Dole activities, and to monitor the Structured Activities being developed and offered to jobseekers. Providers in these regions were allocated placement targets for each month from April to July 2015, with the aim of 100 per cent of eligible jobseekers in these regions placed in Structured Activities (Work for the Dole activities) by 1 July 2015.

2.36 As at 1 July 2015, 45 per cent of Work for the Dole eligible jobseekers had been placed in Work for the Dole activities.³⁷

Use of the Participation Account and other funding to support the transition

2.37 In the lead up to the implementation of the new CDP arrangements, from late March 2015 PM&C encouraged providers to make use of the (RJCP) Participation Account, to support the development of structured activities and increase participation rates.³⁸

2.38 There was only a gradual increase in the rate of funding commitments from the Participation Account for most of the six months leading up to 1 July 2015. As at 13 May 2015, a large proportion (55 per cent) of projects were still in development or awaiting approval³⁹—some dating back to September 2014.

2.39 After the Participation Account closed, PM&C advised the Minister that between 22 and 23 June 2015, providers had entered into the Account’s IT System more than $13 million in funding commitments. In particular, PM&C noted that at this time there had been a significant increase in withdrawals under $20 000 (which did not require prior PM&C approval). PM&C subsequently reduced the available notional balance in the Participation Account to ‘ensure appropriate expenditure and avoid overspending’ of the account.⁴⁰

2.40 The total Participation Account funds paid to providers in 2014–15 was $152.6 million. As outlined in Table 2.4, in June 2015 alone, there were 415 advance payment expenditure transactions from the Participation Account across 38 CDP regions worth more than 20 per cent of the total funds expended in 2014–15 (>$30 million).

Table 2.4: Participation Account commitments of advance payment transactions in June 2015

Note a: Transactions >$20 000 required prior approval from PM&C.

Note b: Transactions ≤$20 000 did not require prior approval from PM&C.

Source: ANAO analysis of PM&C data.

2.41 PM&C’s review of expenditure from the Participation Accounts indicated that 30 per cent of commitments/claims in 2014–15 did not meet evidentiary requirements and were not payable.⁴¹

2.42 As part of its annual audit of financial statements, the ANAO identified weaknesses in PM&C’s management, reporting and pre-approval processes for Participation Account expenditure, resulting in the program area having to undertake a significant project to re-baseline and reconcile total expenditure of the Participation Account over the life of the former RJCP.⁴²

2.43 Based on a direct selection process, on 11 May 2015 the Minister approved the awarding of a $19.5 million grant under the Indigenous Advancement Strategy to Indigenous Business Australia (IBA), to be managed through the Indigenous Economic Development Trust. The funding was sourced from the Participation Account and aimed to assist providers prepare for the implementation of continuous Work for the Dole under the CDP. The provision of funds through the grant was to address the risk that providers would have limited time to cost and purchase the services and equipment required from 1 July 2015 or would make ‘hasty and poor quality decisions’. Additionally, as the assets would be owned by Government, the risk of providers holding onto assets when contracts were cancelled (as occurred with CDEP providers with the onset of the RJCP) would be avoided.

2.44 In advising Government, PM&C expected the majority of this grant to IBA would be expended before 1 July 2015 given RJCP providers ‘will be required to deliver structured activities by then’. However, there was very limited time available for providers to identify services and equipment they would need to implement Work for the Dole, with IBA signing the agreement on 3 June 2015.⁴³

Exiting and new providers

2.45 In the transition to the CDP, three providers across four regions (out of 41 providers across 60 regions) exited the program. Two of these providers requested that their funding agreements be terminated. The third provider’s funding agreement was not extended by PM&C due to serious performance and financial issues—including investigations for fraud. However, this same provider was then sub-contracted by the incoming provider to deliver activities within select communities in the region.⁴⁴

2.46 PM&C replaced exiting providers through a register of interest process. Organisations were selected based on factors including: past performance in other regions; capacity for timely commencement of service delivery; and ability to establish meaningful community connections.

2.47 PM&C identified and monitored a number of significant risks associated with three of the four incoming providers. These included: prior poor performance; financial viability concerns; capacity to scale-up to provide region-wide services; investigations into board members for allegations of inappropriate accounting; and inability to recruit appropriate staff. To mitigate these risks PM&C offered shorter funding agreements to two of the incoming providers and advised government they would provide intensive business capability support and performance monitoring (for further discussion on risk, see paragraphs 3.18 to 3.24).

2.48 As the existing providers had access to the Participation Account, PM&C also provided start-up funding, totalling $1.8 million, to three of the four incoming providers.

Funding agreement Deed of Variations

2.49 The transition to the CDP was reflected in a variation of the existing RJCP funding agreements between PM&C and each provider. The draft agreements were made available to providers on 30 April 2014, with formal offers made to providers from 28 May 2015. Providers were expected to return the signed agreements to PM&C by 12 June 2015.⁴⁵ PM&C executed the agreements between 16 and 29 June 2015.

2.50 The funding agreements incorporated the Programme Management Framework (PMF) for the CDP which established PM&C’s approach to the management of compliance, performance and assurance under the CDP. The PMF was discussed with providers in early June 2015 and came into effect from 1 July 2015.

2.51 Providers subsequently raised concerns that they did ‘… not believe they [had] enough information about the change to implement the changes by 1 July 2015’. Associated risks were also raised in PM&C’s advice to the Minister in June 2015.⁴⁶

Implementation of the new Funding Agreement

2.52 PM&C contracted PricewaterhouseCoopers Indigenous Consulting (PIC) to work with providers ahead of the implementation of the CDP to help them understand the new funding agreement; to consider their operations and financial viability; and the financial implications of the changes, using PM&C’s Financial Modelling Tool.⁴⁷

2.53 This provider support project was undertaken between 12 May and 30 June 2015, with PIC engaging with 32 of the (then) 41 providers. PIC noted that timing of their contract was difficult as it coincided with providers anxiously considering and signing the new funding agreements, communicating the changes to community and participants and trying to increase their delivery. PIC further noted that ‘… the project was too short to meaningfully evaluate the impact of using the financial modelling tool with providers’ and indicated that ‘… providers were struggling with being able to provide even basic financial information’.⁴⁸ In September 2015, following advice from PM&C, the Minister approved the provision of funding for PIC to deliver additional provider capability support given the findings from PIC’s pre-implementation work.

2.54 During the start-up period, for the first six months following implementation of the CDP, providers received a minimum Work for the Dole monthly payment for 75 per cent of their Work for the Dole jobseeker caseload. In November 2015, four months after the CDP had commenced, only 22 regions (37 per cent) were assessed by PM&C to be on track to be able to maintain their funding level of 75 per cent monthly Work for the Dole payments from 1 January 2016 when outcomes-based payments began. PM&C advised the Minister that regions with jobseeker activity attendance below 37.5 per cent, particularly the bottom 10 performing providers/regions, were the focus of enhanced compliance action, with PM&C preparing Breach Notices for providers in three of the regions.⁴⁹

Communication on the transition

2.55 The agreed implementation plan for the CDP included a communication and stakeholder engagement strategy. Dates for the release of key communication material were also included in PM&C’s implementation timeline and a stakeholder engagement calendar.

Communication with providers

2.56 To support providers during the transition to the CDP, PM&C made guidance material available through a number of channels.⁵⁰ The more detailed information on the transition was available from March 2015.⁵¹ In submissions to this audit, a number of stakeholders noted there was inadequate time allowed for the provision of key guidance material and the implementation of the CDP. This impacted on providers’ understanding of the new requirements, particularly among smaller or less experienced providers.

Communication with jobseekers, communities and other stakeholders

2.57 As part of the agreed implementation plan, PM&C also proposed conducting a number of community consultations, and visiting a number of communities in conjunction with providers to discuss the changes. PM&C also developed flipcharts for jobseekers on the changes and ran a number of advertisements on community radio in English and Indigenous languages in May 2015.

2.58 The Minister visited a number of communities, providers and met with key stakeholders, including the Indigenous Advisory Council, in the lead up to the changes. Bilateral discussions were also held with relevant state and territory governments between March and April 2015 on opportunities to improve Government services to remote communities and create useful activities for jobseekers.

Has an appropriate governance framework been established with well-defined administrative policies, procedures and guidance in place?

Community Development Programme frameworks and guidance

3.1 The administration and delivery of the Community Development Programme (CDP) was governed by a number of key program frameworks and guidance material, as outlined in Table 3.1.

Table 3.1: Community Development Programme frameworks and guidance

Note a: Two Remote Activity Conditions (RACs) existed under the Funding Agreement: RAC1 outlined the categories of remote services and associated payments; and RAC2 outlined the Remote Youth Leadership and Development Corps, phased out from 1 July 2015.

Source: ANAO analysis of PM&C documentation.

3.2 This guidance addressed important aspects of the delivery and administration of the CDP, and provided information relevant for PM&C staff and CDP providers. PM&C is currently updating the CDP Guidelines Handbook.

Governance arrangements

3.3 The CDP was managed within PM&C’s Indigenous Affairs Group (IAG). While CDP policy and other high-level program management functions were managed within the IAG national office, responsibility for day-to-day operations, management of providers, and identification of emerging issues affecting the CDP, was dispersed across the IAG regional network.⁵² The overall structure of governance for the CDP, as at May 2017, is outlined in Figure 3.1.

Figure 3.1: Department of the Prime Minister and Cabinet’s internal governance structure for the Community Development Programme

Source: ANAO analysis of PM&C documentation.

3.4 PM&C’s governing committee structure for the CDP changed over the two years following the implementation of the CDP. From July 2015 to July 2016, early implementation oversight was primarily the responsibility of the CDP Implementation Steering Group⁵³, Remote Jobs and Communities Program (RJCP) Implementation Taskforce⁵⁴, and to a lesser extent, the Programme Board.

3.5 From July 2016, it was intended that the CDP Implementation Steering Group would take on a more strategic role. In addition, two supporting fora were established—the CDP Account Managers forum and the CDP Contract Managers⁵⁵ forum.⁵⁶ While these governance fora offered a useful vehicle for raising issues and progressing strategies for managing individual providers, strategic direction and decision making was not a focus. The CDP Implementation Steering Group had only met twice since amending its terms of reference in July 2016 and the only substantive outcomes were the endorsement of PM&C’s Provider Performance Review (PPR) 2 outcomes in September 2016 and discussion of new budget announcements affecting the CDP in May 2017.

3.6 In addition, PM&C’s governance framework did not provide sufficient links between the CDP programme area and PM&C’s broader governance area, particularly in relation to management of fraud and serious non-compliance matters.

Cross-entity governance

3.7 Delivery of the CDP was supported by a Memoranda of Understanding (MOU) between each of PM&C, the Department of Employment (Employment) and the Department of Human Services (Human Services), as well as a cross-entity MoU management committee.

Is the Community Development Programme administered efficiently?

3.8 As noted in Chapter 2, a key objective for the CDP was to broaden the availability and quality of structured activities for jobseekers. To support this objective, the Government agreed to an additional $94.9 million in funding, in addition to funding previously allocated under the RJCP, to ensure providers were sufficiently resourced to deliver Work for the Dole activities in remote communities that were work-like.

3.9 The estimated unit cost (per jobseeker) of delivering employment services in CDP regions was around double the estimated cost for delivery under the RJCP, as shown in Table 3.2

Table 3.2: Comparison the Remote Jobs and Communities Program and the Community Development Programme estimated cost per jobseeker

Note a: As per the funding allocated, from 2012–13 to 2015–16, to the RJCP in the 2012–13 Budget Paper No.2.

Note b: ANAO estimated jobseeker caseload for the RJCP from 2012–13 to 2015–16.

Note c: As per the final agreed costings for the CDP with the Department of Finance (2014–15 to 2017–18).

Note d: ANAO estimated jobseeker caseload for the CDP from 2014–15 to 2017–18.

Source: ANAO analysis of PM&C data.

3.10 The ANAO calculated the estimated cost per jobseeker in the CDP (estimated 40 000 jobseeker caseload) in 2016–17 was around five times the estimated cost per jobseeker in jobactive (estimated 750 000 jobseeker caseload). These outcomes may partly reflect dis-economies of scale in sparsely populated areas as well as the inherent challenges associated with delivering services in remote locations.

3.11 The CDP formed part of the broader Indigenous Advancement Strategy (IAS) with CDP expenditure estimated to be around 29 per cent ($1.4 billion in administered funds) of the IAS funding allocation ($4.9 billion)⁵⁷ over four years to 2017–18.⁵⁸ CDP expenditure primarily funded Work for the Dole, employment outcome, ancillary and the Employer Incentive Fund payments to providers.

3.12 Provider payments varied based on the accuracy of their reporting, jobseeker attendance at Work for the Dole activities, employment outcomes and overall caseload. ANAO analysis showed that in 2016–17, provider payments ranged from $2 950 to $31 419 per jobseeker (see Appendix 3 for detail on the payments made to providers). Providers reported that the ratio of jobseekers to staff employed to deliver the CDP (including operational/compliance staff) varied from eight to 117 jobseekers, with an average of 28 jobseekers for each provider staff member.

3.13 For 2015–16, the ANAO analysis showed that PM&C had a budget underspend for the CDP of just over $50 million, primarily due to fluctuations in the total number of jobseekers in the CDP and lower jobseeker attendance in Work for the Dole activities. Given this, there would be merit in PM&C reviewing the factors underpinning the wide variation in provider payments, and the resulting underspend, including on whether provider resources have been put to optimal use and whether there is scope to improve on the efficiency with which providers deliver the CDP.

3.14 At the time of the audit, the CDP had been implemented for around 24 months and the ANAO considered this period of time to be too short to assess broader efficiency, taking into account policy outcomes.

Departmental

3.15 PM&C advised the ANAO that PM&C’s average staffing level (ASL) to administer the CDP was 106—comprising of 56 ASL in the regional network and 50 ASL in the national office. As noted at paragraph 1.15, the Department of Employment was allocated $3.2 million in departmental funding for delivery of IT services. The Department of Human Services delivered its CDP functions from existing resources.

Are fit-for-purpose risk management plans in place?

3.16 PM&C’s entity-wide approach for managing risk and compliance was supplemented by specific measures to support the operation of the CDP, namely:

• a program level risk management plan (formally owned by the CDP Steering Group);
• provider risk plans; and
• program fraud risk assessment (and corresponding specification of controls/treatments).

3.17 These mechanisms were supported by a centralised monitoring and compliance area which oversaw CDP provider compliance and performance.

Program level risk management plans

3.18 The CDP program level risk plan⁵⁹ was approved by the Programme Board in December 2015.⁶⁰ The risk plan included ten significant risks, including: fraud and other misappropriation of funds; gaps in support for providers; budget and ICT infrastructure constraints; data quality; and occupational health and safety risks to jobseekers.

3.19 Some of the specified controls and treatments did not fully address the identified risks. For example:

1. while individual risk profiles were prepared for each CDP provider, this did not always translate to increased monitoring or support for that provider;
2. the risk plan did not adequately account for functions being carried out by other entities—for example, the challenges for Human Services in re-engaging jobseekers located in remote areas; and
3. while PM&C prepared risk profiles for individual providers to inform monitoring and support requirements, the allocation of staff to oversee these risks was not aligned with the risk profiles but determined by Regional Managers in response to local community priorities; as well as the competing needs of other programs.

Provider risk

3.20 Provider Risk Plans were a core element of PM&C’s risk framework. PM&C’s Account Managers were responsible for preparing risk plans for each provider, and each region, which were typically updated every six months following the review of provider performance. The Provider Risk Plans were intended to reflect local monitoring results as well as performance and compliance information held by PM&C.

3.21 The 2016 Provider Risk Plans assessed providers against five risk categories. Table 3.3 outlines these risk categories and the overall results for 2016. While the typical assessed rating for providers across all categories was ‘moderate’, a significant proportion of providers were rated as presenting a ‘high’ or ‘very high’ risk against each category.

Table 3.3: Provider risk assessment and results, 2016a

Note a: As at May 2017, the results of the 2016 provider risk assessments were the most recent results available.

Note b: The available risk ratings were: low, minor, moderate, high and very high.

Source: PM&C guidance and ANAO analysis.

3.22 Assessments of provider financial viability, based on providers’ annual financial statements, were undertaken by Employment on behalf of PM&C. All incoming providers underwent a financial viability assessment, with ongoing annual assessments for existing providers.

3.23 In late 2016, PM&C began work to ensure CDP provider risk assessments were fed through the broader IAG Grant Applicant Risk Profile (GARP) assessments conducted.⁶¹ GARPs considered provider delivery against other PM&C programs and funding agreements. This integration was particularly important given many CDP providers were also delivering other PM&C service delivery agreements by grant (for example, the Remote Schools and Attendance Strategy).

Program fraud risk

3.24 PM&C’s Fraud Risk Plan for the CDP (in addition to the broader departmental Fraud Control Plan and Fraud Risk Register) specifically targeted the risk of providers claiming funding for services not delivered. Although the plan identified specific controls and treatment actions, PM&C’s IAG carried out its non-compliance functions independently from PM&C’s serious non-compliance and fraud teams. Integration between PM&C’s CDP operations area and its fraud and serious non-compliance area is discussed further at 3.42.

Has a suitable compliance framework been implemented?

Jobseeker compliance framework

3.25 The Social Security Act 1991⁶² requires jobseekers receiving activity-tested income support payments to satisfy mutual obligation requirements (MORs). The level and exact nature of a jobseeker’s MORs vary according to their: income support type; age; work capacity; level of education completed; and carer responsibilities. Under the CDP, providers set activities through which jobseekers met their MORs.^{63 64}

3.26 The Job Seeker Compliance Framework (JSCF), administered by the Department of Employment⁶⁵, was intended to assist providers to quickly re-engage non-compliant jobseekers. Under the JSCF, providers were required to take compliance action and lodge compliance reports where a jobseeker failed to meet the MORs under the CDP. ⁶⁶ The type of action taken depended on the nature of the jobseeker’s non-compliance.⁶⁷

3.27 While providers were responsible for initiating compliance action, Human Services was responsible for administering the Social Security Act 1991, including any prescribed penalties.⁶⁸ Human Services’ determination was in some cases informed by a Comprehensive Compliance Assessment which sought to identify any barriers to compliance for the jobseeker.⁶⁹

3.28 In 2015–16, around 146 700 financial penalties were applied to CDP jobseekers (with the majority of these penalties related to non-attendance at activities) compared to around 35 500 in the RJCP in 2014–15. This reflects that under the CDP, unlike the RJCP, providers were required to consistently enter jobseeker attendance data and, where required, initiate action under the JSCF. Provider payments were dependent on the accurate reporting of jobseeker attendance and re-engagement.

3.29 Moreover, based on a snapshot of Participation Reports in January 2017 for both jobactive and the CDP, 54 per cent of all non-compliance reports across the two programs that triggered Human Services’ investigation and decision making process were CDP generated, despite the CDP comprising around 5 per cent of the jobactive caseload.

3.30 Providers centralised compliance teams in regional centres, engaged external contractors or used third-party organisations to assist with the compliance process due to reported complexity of the JSCF and the difficulty in employing local staff with relevant skills and experience.

CDP jobseeker and provider contact with Human Services

3.31 Jobseekers who received payment suspensions due to non-compliance were required to contact Human Services to discuss the reasons and arrange reconnection. Human Services indicated that jobseekers (and providers) calling from remote locations were given priority through the use of the Participation Solution Team (PST) phone number (1300 306 325). However, Human Services general enquiries phone number (132 850), referenced in the JSCF, was not prioritised by Human Services according to remote post codes.

3.32 Table 3.4 showed that the metrics related to PST phone call wait times were more favourable for jobseekers in remote regions. (These estimates were for all queries/income support payment type calls originating from remote locations, not just the CDP). However there has been a significant increase in the maximum call wait times for both remote and overall wait times from 2014–15 to 2016–17.

Table 3.4: Comparison of performance metrics for overall and prioritised remote Centrelink Participation Solution Team telephone line, 2014–15 to 2016–17a

Note a: Centrelink Participation Solution Team telephone line (1300 306 325) services both jobseekers and providers. Financial year results calculated based on monthly results provided to the ANAO by Human Services.

Note b: Year to date data, as at end of February 2017.

Note c: Number of calls answered by all Centrelink service officer after passing through the Interactive Voice Recognition (IVR) system and entering the queue.

Note d: Average time a caller spends in queue (after proceeding through the IVR system) before being answered by a Centrelink service officer.

Note e: Average time a caller spends in the queue (after proceeding through the IVR system) that abandons after entering a queue and prior to reaching an agent.

Note f: Maximum time a caller spent in queue before being answered by a Centrelink service officer.

Note g: Average time a Centrelink service officer spends handling an individual call.

Source: ANAO analysis of Human Services’ data.

3.33 Wait times related to the CDP were being investigated by the Commonwealth Ombudsman. PM&C and Human Services noted that they ‘… are currently working on ensuring a better understanding of the range of issues that feed into call wait-times’.

3.34 Given the phone number for jobseeker enquiries (which includes CDP jobseekers) referenced in the JSCF (132 850) was not prioritised, there would be value in the Department of Employment updating the guidelines and providing further detail to differentiate the jobseeker enquiries number from the PST phone number (1300 306 325).

Jobseeker Compliance Framework policy change

3.35 In the 2017–18 Budget, the Government announced changes to the JSCF. The CDP was excluded from these changes due to: the potential impacts on CDP jobseekers; the need to redesign the provider payments and performance framework; and the requirement for additional funding. Following the 2017–18 Budget, PM&C advised the ANAO that they had commenced a consultation process with remote communities on a potential new employment and participation model for remote Australia, which it intends to bring forward in the second half of 2017.

Provider compliance framework

3.36 Under the CDP, provider payments and provider compliance were closely linked to the JSCF. The Funding Agreement requires providers to accurately record jobseeker attendance in the Activity Diary as well as manage jobseeker non-compliance in accordance with the JSCF.

3.37 Work for the Dole provider payments comprised, on average, more than 70 per cent of total provider income. PM&C’s Programme Management Framework (PMF) sets out the assurance mechanisms applicable to assure the integrity of provider payments, including: routine monitoring compliance activities (for example, spot checks, regular liaison, and desktop monitoring); Provider Performance Reviews; Targeted Assurance Reviews; and Provider Risk Plans. In addition, the framework requires cases of potential fraud to be referred to PM&C’s Governance, Audit and Reporting Branch in accordance with PM&C’s Fraud Control Plan.

PM&C compliance activity

3.38 PM&C site visits and spot checks identified a number of instances where providers had overstated jobseeker attendance at Work for the Dole Activities. In addition, PM&C found that some activities had, at times, been unsupervised.

3.39 These outcomes were consistent with the ANAO’s observations during fieldwork, which found: inconsistent reporting of voluntary jobseeker participation in Work for the Dole activities to meet mutual obligation requirements across regions⁷⁰; and inaccurate recording of attendance in Work for the Dole activities, including where timesheets were signed for an activity that was not delivered or where there was only partial jobseeker attendance in activities. In addition, some providers had no systematic approach to monitoring and reporting partial attendance.

3.40 From the commencement of the CDP to the end of 2016, PM&C compliance monitoring identified nine providers as having significantly misreported attendance, shown in Table 3.5. In 2016, nearly $700 000 of CDP funds had been recovered as a result of PM&C investigations. Of the nine instances of serious provider misreporting of attendance, only three were referred by PM&C’s CDP compliance area to PM&C’s fraud team for assessment of whether a fraud investigation or serious non-compliance review was required.⁷¹

Table 3.5: Provider instances of misreporting: 2015 and 2016

Note a: Referred by PM&C’s CDP compliance area to PM&C’s fraud team.

Source: ANAO analysis of PM&C data.

3.41 Given the serious nature of the non-compliance and the fact that it generated overpayments to providers, consistent with the Commonwealth Fraud Control Framework (CFCF), the matters should have been promptly referred to PM&C’s dedicated fraud team for initial assessment of whether, in their experience of applying the CFCF and investigating fraud, the matters required investigation as fraud, serious non-compliance or compliance.

3.42 In February 2017, the CDP compliance area within IAG began a more formalised approach to sharing information about identified instances of potential CDP non-compliance with PM&C’s entity-wide Fraud and Serious Non-Compliance teams. Subsequently, a further five providers were referred to PM&C’s fraud team.

3.43 During the course of this audit, PM&C also established a CDP Complaints, Compliance and Fraud Triage Committee (the Committee) and was developing an agreed protocol for the allocation and management of cases to the most relevant business area. In May 2017, the Committee agreed to commission an assurance review of CDP fraud and compliance.

3.44 A further mechanism to assure the integrity of the CDP was a Targeted Assurance Review (TAR). The TAR was intended to: deter providers from serious non-compliance; audit provider reporting of Work for the Dole attendance in detail; and identify potential ways to strengthen PM&C’s provider compliance framework.

3.45 The TAR was intended to review three out of the 40 current CDP providers in 2016–17, with the providers selected to reflect geographic diversity and a mix of reporting results.⁷² The TAR methodology included analysis of provider-reported attendance and outcome data as well as site visits, activity observation and interviews with provider staff, jobseekers, employers and other stakeholders. The first of the TARs commenced in September 2016. As at June 2017, the TAR report had not been finalised; however, preliminary findings had identified issues including jobseeker activity attendance and compliance.

Are suitable arrangements in place with providers to support the administration of funding?

Administration of payments

3.46 The jobseeker outcome-based provider payment model was implemented from January 2016⁷³, pursuant to the revised provider Funding Agreements. Outcome-based payments were linked to jobseekers’ reported attendance in activities, providers’ recorded actions following non-attendance (including, in some cases, compliance action) and jobseekers staying in jobs for 13 and then 26 weeks.

3.47 As outlined at Appendix 3, Basic Services, Work for the Dole service payments and employment outcomes payments were made monthly, in arrears, with:

• Basic Services Payments calculated according to the total number of the jobseeker caseload, excluding jobseekers in Work for the Dole activities, recorded in the CDP IT System;
• Work for the Dole service payments calculated on the basis of providers accurately reporting on all jobseeker attendance in Work for the Dole activities and re-engaging jobseekers who have an invalid reason not to attend their activities; and
• Employment Outcome payments calculated on the basis of providers placing and supporting a jobseeker in employment for 13 weeks and 26 weeks.⁷⁴

3.48 Basic Services, Work for the Dole and Employment Outcome payments were automated and calculated daily in the CDP IT system based on information entered by providers and/or information from the Human Services system regarding a jobseeker’s obligation requirements.⁷⁵

3.49 Some providers noted that, initially, there was a lack of clarity from PM&C on how the monthly service payments were calculated, and they were unable to reconcile the payments received with their own corresponding data extractions. PM&C has since improved its advice to providers on the calculations of providers’ monthly service payments.

3.50 The Employer Incentive Fund payment was an employment incentive payment manually claimed by providers from PM&C, with the requirement that providers pay the equivalent amount to the employer of a CDP jobseeker who had achieved a 26 week employment outcome.⁷⁶

3.51 CDP providers were required to have sufficient documentary evidence to prove that services had been delivered in accordance with the Funding Agreement when making a claim for payments and reimbursements.

Ancillary payments

3.52 The Funding Agreement for the CDP includes provision for ancillary payments to be made to providers.⁷⁷ As at May 2017, there was no published guidance for providers (or PM&C) to indicate the potential purpose(s) or potential amounts of ancillary payments. PM&C advised the ANAO that the Department is currently finalising internal guidance on ancillary payments.

3.53 Towards the end of 2015–16, PM&C facilitated a process for making $5.5 million in ancillary payments available to selected providers to enable them to run projects that would improve the delivery of the CDP.⁷⁸ The ancillary payments (known as ‘provider performance payments’) of $250 000 were made to 22 CDP providers who were allocated a ‘good’ rating in PM&C’s Provider Performance Review (PPR) 1 process. The expenditure was consistent with PM&C’s Indigenous Advancement Strategy grant guidelines.

3.54 PM&C approved 13 provider-proposed projects before releasing payment to the providers. A further 49 projects were approved after payment had been made to the provider and in some cases PM&C provided detailed advice to providers on reframing their project proposals. Although PM&C approved and made the provider performance payments in advance of approving some individual projects, the main criteria against which approved projects were assessed was determined ahead of payments being made and PM&C retained the right to recover money from the provider. The timing, accordingly, while not ideal, did not present a legislative or policy breach.

3.55 The majority of the projects were due to be completed and acquitted in June or July 2017. At the time of audit fieldwork⁷⁹, only one provider had reached the completion date for projects and acquitted the relevant portion of funding.

3.56 PM&C’s underspend of its budget (noted at paragraph 3.13) appeared to have been a factor in PM&C’s decision to offer the provider pre-payments.⁸⁰

3.57 In May 2017 PM&C announced ancillary funding of up to $150 000 to all providers for each of their regions to develop and implement a strategy to address the disengagement of youth. PM&C progressively sent letters of offer to low-risk providers who were required to sign and return acceptance of the offer by 29 May 2017.⁸¹ As at 6 June 2017, 15 providers had formally accepted the offer and received payments in respect of 23 CDP regions.⁸²

Is the Community Development Programme informed by ongoing consultation with key stakeholders, including with state/territory governments?

The Department of the Prime Minister and Cabinet

3.58 PM&C implemented a Communications Strategy in October 2016, with the goal of promoting the benefits and providing accurate information on the CDP and embedding consultation into the delivery of the CDP.⁸³ PM&C’s primary form of ongoing consultation with CDP providers was through regular Provider Business Meetings. Operational engagement between the jurisdictions was devolved to its regional network.

3.59 PM&C consulted with key stakeholders on potential changes to the CDP. In response to the introduction of the Social Security Legislation Amendment (Community Development Program) Bill 2015⁸⁴, PM&C undertook significant consultation with remote communities, complemented by an Advisory Forum formed in April 2016 (comprised of 10 existing CDP providers). Following the announcement of changes to the jobseeker compliance framework, PM&C initiated consultations with the relevant communities.

Providers

3.60 Providers were required to engage with their relevant communities and employers, and were assessed against this in the Provider Performance Reviews. Provider engagement with employers varied between the CDP regions. Providers noted they used a range of approaches to consult with employers, including the continued use of Workforce Development Strategies⁸⁵ as providers considered them useful to facilitate engagement with employers.

3.61 Similarly, provider consultation with communities varied between CDP regions. Stakeholders noted that there was no mechanism, for communities and councils, to provide input into the CDP. PM&C advised the ANAO that it is developing a detailed consultation plan for all stakeholders, as part of consultation on a potential new employment and participation model for remote Australia.

Has an effective performance framework for providers been established?

4.1 The key mechanisms through which the Department of the Prime Minister and Cabinet (PM&C) sets performance targets and collects data to support performance monitoring of the CDP include: the Programme Management Framework (PMF); the provider Funding Agreement and related Remote Activity Conditions (RAC) 1; and the CDP provider performance review guides.

4.2 The PM&C regional network offices were responsible for assessing the performance of providers against a list of Key Performance Indicators, which were weighted to reflect their relative importance. These Provider Performance Reviews were moderated by PM&C’s national office.

4.3 Providers that received a rating of ‘needs to improve’ or ‘unsatisfactory’ would undergo a performance management process and would need to comply with a performance improvement plan and/or be issued with a Show Cause or Breach Notice.⁸⁶ PM&C would then outline corrective actions to be taken by the provider and assess progress each month in the lead up to the next PPR.

Key Performance Indicators

4.4 The Minister for Indigenous Affairs (Minister) agreed, on 20 May 2015, to three measurable Key Performance Indicators (KPIs) proposed by PM&C. The KPIs covered 14 targets as shown at Table 4.1.

Table 4.1: The Department of the Prime Minister and Cabinet provider Key Performance Indicators

Source: PM&C Programme Management Framework.

4.5 While some of the targets were qualitative in nature, most of the targets were relevant and reliable, and provided a complete picture of each provider’s performance.^{87 88}

4.6 PM&C subsequently reviewed the KPIs to reduce the number of targets (from 14 to 9) and to consolidate some targets into a single qualitative measure.

Are the Programme’s achievements regularly and reliably monitored and reported?

4.7 PM&C regularly monitored provider performance against the KPIs and targets through their rolling six monthly Provider Performance Reviews (PPRs). As at June 2017, three PPRs had been finalised. Table 4.2 shows provider performance outcomes for the three PPRs assessed as at June 2017.

Table 4.2: Provider Performance Review outcomes

Note a: Percentages for PPR 3 will not add up to 100 per cent due to non-assessment related to a change in providers.

Source: ANAO Analysis of PM&C data.

4.8 Over the 21 month review period, the performance of providers initially declined after PPR 1, but performance ratings have since improved from PPR 2 to PPR 3.

The Regional Employment Target

4.9 Providers were assessed against KPI 3—‘100 per cent of their regional employment target (RET) is met’, noted in Table 4.1. The RET measured the number of jobseekers that reached a 26 week employment outcome in each region within a PPR period.

4.10 As shown in Table 4.2, a significant proportion of the provider’s performance assessment rating (35 per cent) was based on KPI 3. PM&C were required to inform providers of their RET six months prior to their provider performance review. Table 4.3 shows how the RET was assessed for PPR 1, PPR 2 and PPR 3.

Table 4.3: Assessment of the Regional Employment Target

Note a: This included characteristics in the region such as: current and future labour market opportunities; seasonality in the labour market; jobseeker disadvantage; concentration of jobseekers in the region; discreteness of region and opportunities for mobility; and the previous performance of providers in each region.

Source: PM&C advice.

4.11 The ANAO compared the RET outcomes for PPR 1, PPR 2 and PPR 3, shown in Table 4.4.

Table 4.4: Regional Employment Target outcomes

Note a: Training outcomes were not assessed in PPR 1.

Note b: Percentages for the PPR 2 RET and PPR 3 RET will not add to 100 per cent due to non-assessment related to a change in providers.

Source: ANAO analysis.

4.12 There was a decline in performance ratings across some categories of RET outcomes from PPR 1 to PPR 2, however, as illustrated in Table 4.3, the methodology for calculating the RET in the first six months of the CDP reflected that PPR 1 was the first assessment period and a ‘… lower bar’ was set. The RET performance outcome of providers from PPR 2 to PPR 3 showed an overall improvement.

4.13 Providers, in feedback to the ANAO, were concerned with the RET, noting that if they did not meet the RET then it was impossible to receive an overall good rating due to the RET weighting and that they were unclear on how the RET was calculated.

4.14 In response to provider concerns regarding the RET, the Minister agreed on 19 March 2017 to procure a consultant to undertake a review of the methodology used to calculate the RET and ‘… build a forecasting tool to better evaluate employment outcomes and set employment targets’. The review of the RET is expected to be finalised by PM&C by 30 September 2017.

Employment outcomes

4.15 PM&C made jobseeker employment outcome payments to providers based on the number of jobseekers who remained continuously employed for either 13 or 26 weeks. These employment outcomes relative to the number of employment placements facilitated by providers are shown at Figure 4.1.

Figure 4.1: 13 and 26 week employment outcomes as a proportion of job placements, July 2013 to May 2017^a

Note a: This period spans the implementation of the Remote Jobs and Communities Program and the Community Development Programme.

Source: ANAO analysis of PM&C data.

4.16 ANAO analysis⁸⁹ showed that outcomes had improved marginally. The proportion of 13 week employment outcomes, relative to jobseeker placements under the RJCP, averaged 41 per cent per month (254 jobseekers) compared to 47 per cent per month (311 jobseekers) for the CDP. There were 26 per cent of jobseeker placements, on average per month, that resulted in a 26 week employment outcome for the RJCP (179 jobseekers) compared to 34 per cent for the CDP (230 jobseekers).

4.17 Table 4.5 also shows that for 2015–16 and 2016–17, there were proportionally more outcomes than what PM&C forecast when costing the implementation of the CDP.

Table 4.5: Comparison of forecast and actual 13 and 26 week employment outcomes, 2016–17 and 2017–18

Source: PM&C data.

Provider monitoring and reporting

Participation in Work for the Dole activities

4.18 Providers were assessed on the extent to which they placed Work for the Dole jobseekers in appropriate work-like activities; and their monitoring and reporting on jobseeker attendance. PM&C Account Managers assessed the appropriateness of Work for the Dole ‘work like’ activities according to the regions for which they were responsible⁹⁰, including having regard ‘to local labour market needs’.⁹¹

4.19 The ANAO observed that most activities were held between the hours of 08:00 and 13:00, although some activities, such as the Community Night Patrol, were held outside of these hours. Concerns were raised by providers about the inflexibility of the hours that activities were approved to be run by some PM&C Account Managers and that the approved hours did not take into account a more modern, flexible approach to work. Some providers noted they were not able to provide facilities for doing activities appropriate to culture or seasonal factors. Reasons noted included the limited stock of available infrastructure in the community and cost.

4.20 At the end of October 2016 and May 2017, the proportion of jobseekers required to participate in Work for the Dole activities was consistent at around 53 per cent.

Monthly jobseeker engagement rate

4.21 PM&C calculated the monthly jobseeker engagement rate⁹² based on the total number of hours attended in Work for the Dole activities by all jobseekers, as a proportion of the total hours required under agreed job plans.^{93 94} Figure 4.2 shows that the engagement rate of jobseekers had improved since the start of the CDP, to just over 70 per cent as at June 2017.⁹⁵

Figure 4.2: Jobseeker engagement rate in Work for the Dole activities, 2016–17

Source: ANAO analysis of PM&C data.

Hosted placements

4.22 As noted at paragraph 2.14, hosted placements were implemented but with guidelines in place to reduce the risk of worker displacement and to ensure that the work experience gained by jobseekers led to ‘real‘ jobs.

4.23 Provider performance assessments included the KPI around provider efforts to broker hosted placements. As at 5 October 2016, hosted placements accounted for only four per cent of the total Work for the Dole jobseeker cohort compared to the 16 per cent that was forecast to be in hosted placements when the CDP commenced. There is limited evidence to suggest that providers had been active in facilitating hosted placement agreements with employers, despite there being evidence that some employers who had never been involved in hosting a jobseeker seeing the placements as potentially valuable.

4.24 Some providers noted there was a lack of financial incentive to facilitate hosted placements (PM&C recommended that providers share 50 per cent of the Work for the Dole payment they receive with host employers) and providers were concerned that the jobseeker hosted placements would risk being assessed as displacing workers in paid employment positions. There is evidence to suggest that the risk of displacement is high, with around 24 per cent of placements lasting six months or longer with some hosted placements lasting over 18 months.

Employer Incentive Fund

4.25 PM&C administered the Employer Incentive Fund (EIF) payments, which were paid to providers to assist them to stimulate job creation, increase demand for employment of eligible jobseekers, strengthen provider relationship with employers, and increase eligible jobseekers’ chances of achieving employment outcomes. Providers were eligible for payments where they had placed a jobseeker with a single employer for 26 weeks, subject to allowable breaks. Providers had to manually claim for this payment ($7500 for full-time and $3750 for part-time outcome) and then forward the payment to the employer of the CDP jobseeker.

4.26 For the period from January to April 2016, there were 183 payments totalling around $1 million claimed by providers and paid to eligible employers. Around 20 per cent of all eligible employers received the payment. Since this initial analysis, undertaken in June 2016, PM&C had done no further analysis of this data. While PM&C had recorded EIF payments claimed by providers under the CDP, it had not tracked whether providers had paid the corresponding amount to employers, as required.

4.27 PM&C had commenced development work in early 2017 to improve their ability to monitor when EIF claims were outstanding for 26 week outcomes and further enhancements were under consideration such as ways to better automate the process.

Indigenous Enterprise Development

4.28 As noted at paragraphs 2.16 and 2.17, the Indigenous Enterprise Development Fund (IED) aimed to facilitate the establishment of new Indigenous business. The IED fund was ‘… launched’ later than expected in September 2015 and the associated funding round closed on 20 May 2016. Grant and loan packages, totalling around $8.8 million as at 31 March 2017 were provided to support Indigenous businesses.⁹⁶ However, this amount included $4.5 million secured through commercial loans for seven Indigenous businesses.

4.29 The total amount of IED funding expended (out of a total pool of $99.0 million over four years from 2014–15 to 2017–18) was around $4.1 million as at 31 March 2017. This amount included $2.8 million for support packages approved or where negotiations were ongoing to secure partial private financing and $1.3 million was grant funding approved in 2015–16 but not provided until 2016–17.

4.30 Although this funding was designed to underpin the CDP, only 46 per cent of total IED funds expended up to 31 March 2017 had been provided to enterprises in CDP regions, with 33 per cent of total funds directed to non-remote areas.⁹⁷ In addition, out of 59 Indigenous businesses referred to business support services for assistance in developing their business proposals, only nine were in CDP regions. Moreover, none of the businesses who received IED funding hosted CDP jobseekers.

4.31 PM&C did not measure the total number of businesses created as a result of the IED fund. The Government had since announced the establishment of the Indigenous Entrepreneurs Fund, built on the lessons learnt from the IED.⁹⁸

Complaints and feedback monitoring

4.32 Jobseekers were able to lodge complaints about the CDP through the Department of Employment’s National Customer Service Line, Human Services social media complaints channel and Customer Feedback Tool and the provider complaints facility.

4.33 However, PM&C did not have a formal arrangement in place with Human Services to receive complaints relating to the CDP. PM&C noted that all complaints made by jobseekers to Human Services about the CDP were channelled through the Department of Employment (Employment) National Customer Service Line (NCSL). Arrangements for this service were detailed in the Memorandum of Understanding between Employment and PM&C regarding the provision of Employment Systems and Services. Employment received $15 515 per annum for administering the ‘tip off’ service.

4.34 From 1 July 2015 to 30 April 2017 there were 1690 calls to the NCSL on the CDP, of which 389 were defined as complaints. The number of complaints over this period increased slightly. On average, there were 77 calls to the NCSL line every month, 0.23 per cent of the average CDP caseload.

4.35 Providers were to establish and publicise details of their customer feedback and complaints process and keep a detailed Customer Feedback Register. Providers were required to consider feedback and investigate complaints promptly and ‘appropriately’ and be transparent in the investigation and in the communication of an outcome. Providers were expected to refer any unresolved issues to the NCSL for consideration and resolution, initially by Employment as discussed in paragraph 4.33.

4.36 Feedback to the ANAO indicated that language barriers in remote communities impeded jobseekers’ ability to understand and interact with the complaints and feedback process. The extent of feedback and complaints through both feedback channels was reported to be minimal. PM&C has not examined the reasons behind the low level of feedback or complaints.

PM&C reporting to the Minister for Indigenous Affairs

4.37 PM&C provided the Minister with information on Indigenous programs including the CDP through the Minister’s Monthly Dashboard report. PM&C also regularly briefed its Minister, including on provider performance indicators and reviews, risks to provider performance and their funding agreements, jobseeker compliance, employment outcomes, new policy proposals and other issues as they arose.

Have the Community Development Programme outcomes been evaluated?

4.38 The Government committed $1.3 million over three years from 2015–16 towards the costs of monitoring and evaluating the CDP. The Minister was required to return to Government in late 2016 with an evidence-based submission to secure further funding for the continuation of the CDP.

4.39 A working draft of a two-page evaluation strategy overview was developed more than five months after the commencement of the CDP in December 2015 to underpin the evaluation of the CDP. A comprehensive evaluation strategy was late in development, with the first draft that included detail on methodology and timelines developed seven months after the commencement of the CDP, reducing the scope to identify and collect baseline data to more accurately measure the impact of the CDP.^{99 100}

4.40 The Minister agreed on 7 April 2016 to PM&C advice on the proposed evaluation strategy overview and ‘… expenditure of up to $1.35 million (including GST) over three financial years to 2017–18, predominantly to engage one or more Indigenous research organisations’.

4.41 PM&C engaged consultants to conduct community case studies in eight remote communities through interviews and qualitative surveys, and to undertake qualitative analysis and a literature review in conjunction with reviewing the CDP program logic¹⁰¹ developed by PM&C. Further evaluation work proposed included quantitative analysis by PM&C using administrative data.

4.42 To date, a preliminary qualitative evaluation report on two community case studies has been developed, with initial findings showing reduced jobseeker engagement and some activities not being work-like. In addition, an internal PM&C CDP analysis paper on early trends was drafted with findings that showed:

• a decreasing number of jobseekers (activity tested) in the CDP region (concentrated among Indigenous people, particularly Indigenous men aged 18 to 30) which was not fully explained by an increase in job placements or movement of activity tested income support recipients to non-CDP regions;
• an increase in the proportion of participants placed in work-like activities from 40 per cent of participants in June 2015 to approximately 70 per cent in June 2016, with the increase qualified as some of the change may have been due to an increase in the number of activities that were being recorded as Work for the Dole;
• the proportion of participants placed in at least one job was almost unchanged but there was a small increase in the total number of job placements (mostly casual jobs), particularly Indigenous jobseekers;
• a minor increase in 13 and 26 week outcomes but with an increase in exits from income support which could not be fully explained by employment outcomes; and
• disengagement by jobseekers while attending activities.

4.43 The evaluation strategy contained limited detail on one of the key aspects to the evaluation—identification of an approach to undertake the impact analysis of administrative data that may provide better information on the impact of the policy.

4.44 The comprehensive evaluation strategy was not peer reviewed by a reference group.¹⁰² The alignment of planning for the evaluation of the CDP was not consistent with the Government agreed approach (see paragraphs 2.13 and 4.38), with the timeline for implementation and proposed review of the evaluation findings not aligned to inform consideration of further funding in late 2016, for the 2017-18 Budget process.

4.45 PM&C indicated their intention to establish a CDP Evaluation Reference Group in March 2017, although the group had not convened by 26 April 2017.

Appendix 1 Entity responses

Appendix 2 Community Development Programme regions

Table A.1 outlines detailed information on the CDP regions and providers.¹⁰³

Table A.1: Community Development Programme regions and providers

Note a: As shown in Figure 1.1.

Note b: As at 3 April 2017.

Source: PM&C information.

Appendix 3 Community Development Programme and the Remote Jobs and Communities Program payment models

Table A.2 provides an overview of the Community Development Programme payment model.

Table A.2: Community Development Programme payment model

Note a: Providers receive payments monthly for delivering both Basic Services and Work for the Dole activities. Providers are paid in arrears, following PM&C scheduled reviews of IT system data.

Note b: Basic Services are paid in a range of circumstances, including when a jobseeker, for example, took approved leave or had a payment suspension in place.

Note c: If a jobseeker who was not required but volunteers to participate in Work for the Dole, the provider will receive the Work for the Dole payment based on the jobseeker’s attendance, rather than the Basic Services payment.

Note d: A full-time Employment Outcome occurred where the jobseeker was off income support or fully met their hours based requirements. A part-time Employment Outcome occurred where a jobseeker worked sufficient hours to reduce their Income Support by at least 60 per cent or partially met their hours based requirements. The payment was intended for where the provider places a jobseeker (not where jobseeker obtains & retains employment independently).

Note e: The processing of Employer Incentive Fund payments was not automatic through the Activity Outcome Report, with providers required to make a manual claim to claim the payment. There was no time limit to claim. However, providers that receive the payment must pay an equivalent amount to the Employer within 10 business days of the funding being received, and must ensure an employer is only paid once for each jobseeker.

Source: ANAO analysis of PM&C documentation.

Table A.3 provides an overview of the Remote Jobs and Communities Program (RJCP) provider payment model.

Table A.3: Remote Jobs and Communities Program payment model, 2013–2014

Note a: Activity payments were paid in advance each quarter.

Note b: The Remote Youth Leadership and Development Corps (Youth Corps) was delivered by RJCP providers (either directly or through a subcontracting arrangement) and aimed to provide young aged jobseekers 24 years and under in remote communities a clear pathway into employment. The Youth Corps had 12 000 places and was allocated $89 million over five years.

Note c: Job placement payments were payable for each jobseekers or CDEP wage recipient assisted into a job by the provider, for a maximum of four payments per jobseekers or CDEP wage recipient each financial year. These payments were not available when a jobseeker or CDEP wage recipient found their own job.

Note d: Includes Principal Carers.

Note e: Full employment outcome payments were paid where a jobseeker, jobseekers or CDEP wage recipient achieved sustainable employment that resulted in the cessation, or a substantial reduction of income support, or achieving minimum hours of work per week. The outcome payment requirements varied depending on the jobseeker’s or CDEP wage recipient’s individual participation requirements and assessed work capacity.

Note f: The pathway employment outcome payments were to recognise a jobseeker’s or CDEP wage recipient’s progress towards reducing income support dependency or progress to full participation through sustainable employment (such as part-time work). The requirements were less than those for a full employment outcome payment.

Note g: The participation outcome payments were paid when jobseekers or CDEP wage recipients completed an intervention to overcome a non-vocational barrier to employment (for example, drug and alcohol addiction program). Only one participation outcome payment was payable per jobseeker per 12 months of RJCP participation.

Note h: The Participation Account was a flexible pool of funds held by the Department of the Prime Minister and Cabinet which providers could access to help pay for activities and interventions purchased for jobseekers.

Source: ANAO analysis of departmental documentation.

Appendix 4 Government reviews and reforms relevant to Indigenous employment and income support policy, 2013 to 2015

Table A.4 provides an overview of Government reviews and reforms relevant to Indigenous employment and income support policy, 2013 to 2015.

Table A.4: Government reviews and reforms relevant to Indigenous employment and income support policy, 2013 to 2015

Source: ANAO analysis.

Appendix 5 Comparison of participation requirements in approved activities between the Community Development Programme and other Government employment programs

Table A.5 provides a comparison of participation requirements in approved activities between the Remote Jobs and Communities Program, jobactive, and the Community Development Programme. An individual’s participation requirements in approved activities will be based on their assessed capacity.

Table A.5: Comparison of participation requirements in approved activities between the Remote Jobs and Communities Program, jobactive, and the Community Development Programme

Note a: The CDEP Wage Rate at 1 July 2013 was $217.71 (GST exclusive) per week for a CDEP Youth Participant and $287.57 (GST exclusive) for all other CDEP Scheme Participants.

Note b: Based on full-time activity tested jobseekers with full rate of Income Support. For those jobseekers who are principal carers or have reduced work capacity (either permanently or temporarily), their participation requirements were lower.

Note c: jobactive is the mainstream employment services program. The program was introduced on the 1 July 2015 and replaced the Job Services Australia model.

Note d: This means that the jobseeker will still be required to attend appointments with their provider, complete job search requirements (if applicable) and other activities as required. Time-off can be due to, for example, caring responsibilities during school holidays or during normal business shut-down periods and public holidays. Any time-off from activities beyond the allowed six weeks is to be approved by PM&C Regional Manager.

Note e: Indigenous cultural business refers to the cultural practices of Indigenous Australians not related to deaths and funerals. Leave can be granted for a period of up to 13 weeks and where necessary this period can be extended. The period of exemption should be limited to what is required in individual circumstances and local information should be sourced wherever possible to assist in determining the length of time that may be required for an individual jobseeker.

Source: ANAO analysis of departmental documentation.

Appendix 6 Types of provider compliance reports

Table A.6 outlines the types of compliance reports Community Development Programme (CDP) providers are required to initiate, including the triggers and effects for the jobseeker.

Table A.6: Provider compliance reports—triggers and effectsa

Note a: Jobseekers with a valid reason (given in advance) or a reasonable excuse (provided afterwards) for failing to meet a mutual obligation requirement were not treated as non-compliant. Providers could exercise discretion to not take formal compliance action if they did not consider it the most effective way to re-engage a jobseeker, but if they did so, they received no service payment for the activities missed. Providers could not take compliance action where a jobseeker had commenced work but did turn up for a day or for part of a day or chose to work fewer hours.

Note b: Human Services could choose to waive the 8-week penalty where jobseeker agreed to compliance activity for 8 weeks.

Source: ANAO, based on departmental documentation.

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Appendix 7 Timeline of the provision of the 2016–17 ancillary payments

Table A.7 outlines the provision of the 2016–17 ancillary payments.

Table A.7: Timeline of the 2016–17 ancillary payments^a

Note a: Although payment was initially made to all 22 providers, one provider’s proposed projects were ultimately declined and the provider repaid the amount in full on 18 January 2017.

Source: ANAO analysis.