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Settlement Engagement and Transition Support Program

Type: Performance audit

Report number: 28 of 2025-26

Portfolios: Home Affairs; Social Services

Entities: Department of Home Affairs; Department of Social Services

Date tabled/scheduled: 1 April 2026

Audit Summary : show

Summary and recommendations

Background

1. The Settlement Engagement and Transition Support (SETS) program is an early intervention program intended to contribute to humanitarian entrants and other eligible vulnerable migrants and communities achieving full participation in Australian society as soon as possible, reducing the chance of long-term welfare dependency and isolation. The objectives of the SETS program are to:

equip and empower humanitarian entrants and other vulnerable migrants with the tools to address their settlement needs and improve social and economic participation, and community integration;
build the capacity of small and/or ethno-specific organisations to better support their local communities; and
foster a whole-of-community approach to achieve settlement and integration outcomes.

2. SETS commenced on 1 January 2019 as a revised version of the Settlements Grants program. The Settlement Grants program had commenced on 1 July 2006.

3. Funding has been awarded to SETS service providers primarily through two funding rounds, with 205 grants awarded worth $579 million across the two rounds.

4. Most providers who have received SETS grants have a long history with the program (see paragraph 1.3). Continuing providers have received a greater share of the available funding than new providers both in the transition to SETS and comparing the second and first SETS funding rounds.

Rationale for undertaking the audit

5. The Home Affairs portfolio is responsible for significant grants programs. Reflecting this, grants administration is an area of ANAO audit focus for the portfolio. SETS is a long standing and high value grant program for the department. The audit provides assurance to Parliament over the effectiveness of the management of the grants in achieving the objectives of the SETS program.

Audit objective and criteria

6. The objective of the audit was to assess whether the management of funding under the Settlement Engagement and Transition Support program was effective in achieving the program objectives and consistent with the Commonwealth Grant Rules and Principles (CGRPs).¹

7. To form a conclusion against the objective, the following high-level audit criteria were applied.

Are appropriate grant agreements in place?
Has there been active management to support effective delivery of the grant agreements?
Are the services being provided to humanitarian entrants and vulnerable migrants?

Conclusion

8. The management of funding under the SETS program has been partly effective in achieving program objectives and partly consistent with the Commonwealth Grant Rules and Principles. The management of grant funding awarded under the SETS program has not placed Home Affairs in a sound position to assure itself that the program has been effective in assisting humanitarian entrants and vulnerable migrants to achieve full participation in Australian society as soon as possible, thereby reducing the chance of long-term welfare dependency and isolation. With the next round of program funding due to commence in July 2027, there is an opportunity to improve the design and administration of the program in pursuit of its objectives.

9. Grant agreements are in place for each grant that was awarded and accepted by the applicant. The signed grant agreements are not appropriate, as they do not:

include each of the key performance indicators (KPIs) that the grant opportunity guidelines stated would be used to assess service provider performance; and
clearly and directly link grant payments to the progress with, and performance of, the funded grant activity by each service provider.

10. Variations to the agreements, particularly the variation to extend first round funding by two years, did not adequately address how value for money would be achieved.

11. The approach to managing grant agreements has not been effective in ensuring that service providers consistently meet the requirements of the grant agreements.

A consistent feature of program administration has been late reporting and data quality issues with reports when they are received. For example, for 11 or more of the 13 reporting periods to date, performance reports submitted by the majority of providers either failed to meet the reporting requirements or required follow up to address service delivery and data quality issues.
94 per cent of critical incidents are not reported to Home Affairs, including circumstances where SETS clients have died. Critical incident reporting identifies possible program issues and is a risk management measure which supports the achievement of program outcomes. Home Affairs’ approach has given insufficient weight to the insights that can come from a robust approach to critical incident reporting, instead focussing on reputational risks relating to critical incidents being associated with the program.
Rollover of annual funding amounts has been common, with less than 35 per cent of service providers reporting that they had fully spent grant funding to provide services to clients each year. In addition, $1.1 million of unspent first round funding was rolled over to the 2024–25 financial year for 28 providers (36 per cent), following which $4.44 million was then rolled over from 2024–25 to 2025–26 for 42 providers (41 per cent). Rollover processes did not seek to identify opportunities to redistribute funding to providers who were fully spending their grant with the potential to then assist further clients.
55 per cent of planned assurance visits to providers did not occur. This included visits not occurring for providers identified as having recurring issues with their reporting, and/or as high risk. Where they have been conducted, the visits do not often result in action items being directed to service providers to improve performance. No action items have been directed to any service provider since 2021–22.

12. Services are being provided across Australia, with individual clients primarily located in major cities. Program data indicates that the program has become less successful at targeting recent humanitarian entrants and other vulnerable migrants. There has been mixed performance in aggregate for the program, and within service providers, in relation to key program metrics relating to the clients being assisted and the events/services being provided for the grant funding that was awarded. Performance has also been mixed in terms of the extent to which the data demonstrates the program is improving client independence, participation in Australian society and wellbeing.

Supporting findings

Grant agreements

13. Grant agreements are in place for each grant that was awarded and accepted by the applicant. There were delays in having grant agreements in place for each round. The amount of grant funding specified in the grant agreements varies considerably, with a small number of large providers (or lead entities in a consortium arrangement) receiving a significant proportion of the grant funding. In the first funding round administered by DSS, the obligation to report to the Finance Minister a decision by the Minister to award funding to a not recommended application was not met. (See paragraphs 2.1 to 2.16)

14. Grant agreements have not included a fit-for-purpose framework of measurable deliverables and performance indicators. The approach taken provided benefits for DSS in terms of ease of management of the grant agreements. It was not consistent with the grant opportunity guidelines and does not place Home Affairs, as program owner, in a sound position to assess whether service providers are performing satisfactorily and, consequently, whether program objectives are being met and intended outcomes are being achieved.

15. Under the terms of the grant agreement, an Activity Work Plan (AWP) is to be agreed to identify how the grant activity will be delivered and to measure the success and outcomes achieved for the funded grant program. For the second round, 33 per cent of AWPs were identified by Home Affairs to be missing important information relating to deliverables and timeframes for services to be provided. There have also been delays in AWPs being finalised. (See paragraphs 2.17 to 2.29)

16. Appropriate payment arrangements have not been established. The approach taken does not clearly and directly link grant payments to the progress with, and performance of, the funded grant activity by each service provider. As a result, it does not support proper use and management of relevant money. (See paragraphs 2.31 to 2.44)

17. Value with relevant money was not appropriately addressed in considering and approving grant agreement variations. (See paragraphs 2.45 to 2.62)

Management of grant agreements

18. Grant administration is not ensuring that the grant recipients have met, and are meeting, their reporting obligations.

Performance reports: Most performance reports (on average 80 per cent) submitted by the grant recipients are incomplete, and/or reveal service delivery or data quality issues. In the 13 reporting periods to date across both rounds, no more than 10 per cent of performance reports have been assessed as receiving a pass. For five of the 13 reporting periods, more providers failed to meet their reporting obligations than were assessed to have met them. Issues have persisted, highlighting that follow up action has been ineffective.
Milestone reports: Reports are consistently late. For example, 27 per cent of Activity Work Plans (AWPs) have been provided late and 37 per cent of AWP progress reports have been late.
Critical incident reporting: This reporting was introduced in the first SETS round following a review of the predecessor program. The design of the reporting obligation, and its administration, for that round undermined the intent of, and value from, this reporting. For the second round, the grant agreements did not include a requirement to report critical incidents. Most (94 per cent) critical incidents are not reported to Home Affairs, including circumstances where SETS clients have died. (See paragraphs 3.1 to 3.33)

19. Administration of payments has not been in line with the grant agreements. The most significant issue relates to the rollover of unspent grant funds, with less than 35 per cent of service providers reporting that they had fully spent grant funding for each financial year of the term of the agreement. Rollovers are common across each year covered by the grant agreements for the two rounds. In addition, and at odds with the published grant opportunity guidelines for the second round, Home Affairs allowed $4.44 million of unspent first round funding to be rolled over to the 2025–26 financial year for 42 providers. (See paragraphs 3.34 to 3.55)

20. The arrangements in place provide inadequate assurance over the accuracy and completeness of performance data reported by grant recipients. Following a 2020 internal audit, an April 2021 strategy to address identified data quality issues was not fully and effectively implemented, with data quality issues continuing to be identified in a 2023 evaluation commissioned by Home Affairs and in the ANAO’s Performance Statements Audit work.

21. A key assurance activity for each round was to be a program of site visits to providers. More than 55 per cent of site visits that should have been conducted between 2019–20 and 2024–25 have not been conducted. The planned but not conducted site visits include those to providers where the departments have identified ‘serious governance/service delivery issues’ and some with a history of low quality/late reports. Where they have been conducted, the engagements do not often result in action items being directed to service providers to improve performance. No action items have been directed to any service providers in 2022–23, 2023–24 or 2024–25. (See paragraphs 3.56 to 3.73)

Provision of services to humanitarian entrants and vulnerable migrants

22. The grant agreements included the service locations to be covered by each service provider, with service providers engaged to provide coverage planned for all states and territories. Service provider reporting indicates that services are being provided across Australia, with individual clients primarily located in major cities. Rather than specifying the type and quantum of services to be provided, program design involved the departments identifying key indicators against which service provider performance would be assessed by benchmarking each provider’s performance against other similar providers. Data reported by service providers indicates that over the six years to June 2025, one million individual sessions and nearly 202,000 group sessions were provided to 192,618 clients through 651 service provider outlets. (See paragraphs 4.2 to 4.9)

23. The data reported by grant recipients reveals mixed performance against the performance indicators specified in their grant agreements. It also shows considerable variability in the extent to which service providers, and the program more broadly, appear to have assisted humanitarian entrants and other vulnerable migrants to participate in Australian society. (See paragraphs 4.10 to 4.54)

Recommendations

Recommendation no. 1

Paragraph 2.28

To demonstrably achieve value for money in the use of grant funding, the Department of Home Affairs work with the Department of Social Services and service providers to implement arrangements to benchmark provider performance in accordance with the performance framework established in the grant opportunity guidelines and reflected in the terms of the signed funding agreements.