Introduction

1.1 The concept of Australian citizenship has been enshrined in legislation since 1949. A person may become an Australian citizen automatically (generally persons born in Australia to one or more parents who are citizens or permanent residents) or by application.

1.2 According to a 2016 report, more than 60 per cent of the seven million immigrants who had settled in Australia since 1945 had become Australian citizens.³ Australian citizenship brings privileges, such as being able to apply for an Australian passport, ask for consular assistance from an Australian official while overseas, re-enter Australia freely and to apply for work in the Australian Public Service or Australian Defence Force. Australian citizenship also brings obligations, such as to defend Australia should the need arise, to serve on a jury if called to do so and to vote in federal and state or territory elections.

1.3 Persons can apply for one of four types of citizenship by application: descent; adoption; resumption; and conferral. Citizenship by conferral is the largest component. Of the 259,815 applications for citizenship lodged in 2017–18, 92 per cent sought citizenship by conferral.

1.4 ‘Citizenship by conferral’ means to be given citizenship. There are seven conferral pathways, each with its own eligibility requirements. The pathways are: general eligibility; permanent or enduring physical or mental incapacity; person aged 60 or over, or with hearing, speech or sight impairment; person aged under 18 years; person born to former Australian citizen; person born in Papua; and statelessness.

1.5 Most applicants aged 18 to 59 years apply through the general eligibility pathway and are required to:

• be of good character;
• satisfy the residence requirements, which generally involve living in Australia on a valid visa for the four years immediately before applying (including as a permanent resident for the last 12 months);
• intend to reside in, or maintain a close and continuing association with, Australia; and
• pass a citizenship test to demonstrate that they:
  • have an adequate knowledge of Australia and the responsibilities and privileges of Australian citizenship;
  • possess a basic knowledge of the English language; and
  • understand the nature of their application.⁴

1.6 There was a steady increase in conferral applications received in each of 2014–15, 2015–16 and 2016–17, with a more substantial increase in 2017–18. The increase has been in less complex applications from the skilled migration stream, which increased by 41 per cent over the four years. Applications from the humanitarian migration stream, which are relatively more complex to process, decreased by nine per cent over the four years.

1.7 If a person lodges a valid application then the Minister must approve or refuse the person becoming an Australian citizen. Even if they are eligible, the Australian Citizenship Act 2007 may require the Minister to refuse on grounds relating to non-satisfaction of identity, national security, non-presence in Australia, offences or recent cessation of Australian citizenship. In 2017–18, there were 80,776 applications approved and 4956 applications refused for citizenship.

1.8 For less than one per cent of approved applicants, such as those who applied through the ‘permanent or enduring physical or mental incapacity’ pathway, citizenship begins the day their application is approved. For the remainder, citizenship begins the day they or their responsible parent make a public pledge of commitment to Australia. Usually people make the pledge at a citizenship ceremony organised by their local council.

Program administration

1.9 The Department of Home Affairs administers the citizenship program and the citizenship legislation. It was established in December 2017 and assumed all the citizenship and other functions of the former Department of Immigration and Border Protection (in addition to discrete functions from other agencies). This report refers to ‘Home Affairs’ or ‘the department’ as being the administering agency.

1.10 Applications for citizenship by conferral are usually processed and decided by officers in the department’s nine Visa and Citizenship Offices located around Australia. Most of the decision-making powers of the Minister have been delegated to departmental officers at Australian Public Service Level 4 or above.

1.11 The majority of applicants are required to attend a citizenship appointment and to sit the citizenship test. These are held at the Visa and Citizenship Offices. They are also held at some regional locations by officers of the Department of Human Services who then provide the results to Home Affairs but who do not have decision-making powers.

1.12 Home Affairs’ national office has overarching responsibility for governance of the citizenship program, including for the development and application of relevant policies, procedures, systems and templates. There were some 300 full-time equivalent staff working in the citizenship program area as at March 2018 (see paragraph 2.5).

Audit rationale and approach

1.13 The Office of the Commonwealth Ombudsman, the Refugee Council of Australia, Members of Parliament and others have publicly expressed interest in the length of time being taken to process applications.⁵ Reasons include a reported increase in processing times, an increase in complaints received from applicants about delays and the Federal Court of Australia judgement of December 2016 that there had been an unreasonable delay in deciding two plaintiffs’ applications for citizenship by conferral.⁶ In May 2017, the Joint Committee of Public Accounts and Audit identified ‘citizenship function administration’ as an audit priority of the Parliament.

Audit objective, criteria and scope

1.14 The objective of the audit was to examine the efficiency of the processing of applications for citizenship by conferral by the Department of Home Affairs.

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

• Have applications for citizenship by conferral been processed in a time-efficient manner?
• Have applications for citizenship by conferral been processed in a resource-efficient manner?

1.16 The audit scope covered the processing of applications from receipt to decision-making stage. Out of scope was examination of the ceremony stage and the operations of entities external to Home Affairs.

Audit methodology

1.17 The audit methodology included:

• examining Home Affairs records;
• analysing Home Affairs application, financial and staffing data;
• interviewing key officials in the department;
• targeted testing and the examination of samples of applications randomly selected from within cohorts displaying particular characteristics; and
• observing the processing of applications, including the conduct of citizenship interviews and tests, at two Visa and Citizenship Offices.

1.18 The data analysed by the ANAO on citizenship applications lodged, decided and on hand was extracted from departmental systems by Home Affairs at varying points in time. As the data reports were drawn from a dynamic system environment, figures may differ slightly from previous or future reporting.

1.19 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of $288,000.

1.20 Team members for this audit were Tracey Bremner, Tiffany Tang and Brian Boyd.

Has the rate of decisions taken been keeping pace with applications lodged?

2.1 In an efficiently administered demand-driven program, the rates at which applications are lodged and applications are finalised will balance out over the processing cycle. As a measure of time-efficiency, the ANAO compared the rate at which applications for citizenship by conferral have been lodged with the rate at which decisions have been taken. These rates last balanced in 2014–15 as demonstrated in Figure 2.1.

Figure 2.1: Applications lodged, decided and on hand per year

Source: ANAO analysis of Home Affairs data.

2.2 The rate of decisions taken has been declining, falling far behind the lodgement rate. A backlog of applications on hand has resulted. Over the past four financial years the number of applications for citizenship by conferral:

• lodged increased by 25 per cent to be 239,413 in 2017–18;
• decided decreased by 47 per cent to be 101,422 in 2017–18; and
• on hand increased by 771 per cent to be 244,765 at 30 June 2018.

2.3 To identify whether the decline was limited to the decision-making stage or was evident at an earlier stage in the processing cycle, the ANAO examined data on the number of citizenship tests administered each year. Most applicants aged between 18 and 59 years need to sit the citizenship test. While the number of such applicants has been rising, the number of computer-based citizenship tests administered decreased by 38 per cent over the past four years as outlined in Table 2.1. This indicates that the processing rate has been declining.

2.4 In addition, the alternative course-based citizenship test ceased being available from June 2017 when the contract with the course provider expired.⁷ Its cessation was consistent with Australian government policy as outlined in Strengthening the Test for Australian Citizenship of April 2017.

Table 2.1: Computer-based and course-based citizenship tests

Source: ANAO presentation of Home Affairs data.

2.5 The decrease in the processing and decision-making rates was not caused by a decrease in program staffing. While the number of processing staff did not increase to the same extent as the number of applications received, Home Affairs’ advice to Parliament was that staff working in the citizenship program area had increased, specifically:

Between 1 July 2015 and 31 March 2018, the number of full-time equivalent (FTE) staff working in the Citizenship Program area, including support staff, increased by 16 per cent from 257.47 FTE to 299.68 FTE.⁸

Has Home Affairs been achieving its target timeframe for deciding applications?

2.6 The Australian Citizenship Act 2007 states that a decision to approve or refuse a citizenship application must be taken but it does not specify a time limit. Until March 2017, Home Affairs had a target timeframe for deciding applications that it publicly reported against. The target was then abolished and, as at November 2018, the department had not established a replacement. This sequence of events is outlined below.

Target timeframe

2.7 Prior to March 2017, Home Affairs published a service standard for the processing of applications for citizenship by conferral. The department explained on its website that ‘Our service standards describe the level of service we aim to deliver’. The service standard in place from November 2009 to June 2014 was to decide applications within 60 days of lodgement. On 1 July 2014, the department increased the timeframe to 80 days. It explained in a related ministerial briefing that:

Over the last eighteen months, the Citizenship network has been unable to meet service standards in the conferral category. There is likely to be an increasing number of more complex cases resulting from identity issues within the Illegal Maritime Arrival (IMA) caseload. Service standards have been adjusted accordingly to address both the time required to process conferral applications and the possible increase in IMA caseload.⁹

2.8 The percentage of decisions made within the service standard was a key performance indicator for the citizenship program, with the target set at 80 per cent. As per departmental advice to the Minister in 2016, ‘service standards have been the traditional Key Performance Indicator (KPI) for the Department in measuring performance against government objectives and providing accountability to the Parliament and public for visa and citizenship delivery.’

2.9 In November 2016 the department sought and obtained ministerial approval to remove the service standard for citizenship and to replace it with a new internal processing target and with the regular publication of average processing times. Reasons outlined included ‘to provide an ongoing internal accountability measure and … to provide clients and stakeholders with meaningful, current information’. The proposed implementation date was March 2017.

2.10 The service standard was removed from the department’s website in March 2017 and replaced with ‘global processing times’ (see paragraphs 2.16 to 2.22).

2.11 As at November 2018, two years after the department had sought and obtained approval to remove the service standard, an internal processing target had not been set and, therefore, there was no target timeframe for citizenship decision-making in 2017–18. More broadly, the department had no internal or external key performance indicators in 2017–18 for the processing of citizenship applications.

Performance against the target timeframe

2.12 As a measure of time-efficiency, the ANAO examined the department’s performance against the target that was in place for the three years of 2014–15 to 2016–17, which was to decide 80 per cent of applications within 80 days of lodgement. The ANAO also considered the types of decisions that were taken within the 80 days, being:

• to approve the person becoming an Australian citizen;
• to refuse the person becoming an Australian citizen; or an
• other finalisation action, such as the department assessing the application as invalid for processing or the applicant withdrawing their application.

2.13 The percentage of decisions being taken within 80 days of lodgement has been declining, as demonstrated in Figure 2.2.

Figure 2.2: Percentage of decisions that were taken within 80 days of lodgement

Note: Not visible in the 2017–18 data column due to their low values are citizenship approvals at 0.4 per cent and refusals at 0.1 per cent.

Source: ANAO analysis of Home Affairs data.

2.14 The department did not achieve its timeliness target in 2016–17; reporting a result of 45 per cent against its target of 80 per cent.

2.15 The ANAO calculated that, of the 101,422 decisions taken in 2017–18:

• 15 per cent occurred within 80 days of lodgement — 96 per cent of which were to decide the application was invalid for processing; and
• 80 per cent occurred within 337 days of lodgement — more than four times the former service standard.

Published processing times

2.16 Since March 2017 the department has published ‘global processing times’ for citizenship and visa applications on its website and has updated these monthly. For citizenship by conferral, two time periods are published and are calculated as follows:

• for each applicant who acquired citizenship during the preceding month, the department calculates the time period between their application being lodged and citizenship being conferred upon them (usually at a ceremony);
• the resulting time periods are ordered from smallest to largest; and then
• the department calculates the 75^th and 90^th percentile and rounds each up to the nearest month for reporting purposes.

2.17 The published processing times for March 2017 are copied below, with citizenship by conferral being the first line item in the report.

Figure 2.3: Example of published processing times

 

 

Note: Applications for citizenship by ‘conferral’ are the subject of this audit report. You would instead apply for citizenship by ‘descent’ if you were born outside Australia and one or both of your parents were Australian citizens when you were born. Existing citizens can apply for a citizenship certificate as ‘evidence’ of being Australian.

Source: Home Affairs website.

2.18 The March 2017 processing times provide a baseline from which to measure time-efficiency gain or loss. As per Figure 2.4, performance to September 2018 trended toward time-efficiency loss. That is, processing times had increased relative to March 2017.

Figure 2.4: Published times for acquiring citizenship by conferral

Source: ANAO analysis of the processing times published on the Home Affairs’ website each month.

Shortcomings

2.19 The published processing times help to show at what level the department is performing but do not state at what level the department should be performing.

2.20 The published processing times include the time it takes to attend a citizenship ceremony after an application is approved. Ceremonies are usually organised by the applicant’s local council (not by the department) and their scheduling varies by month and by Council. Accordingly, a shortcoming with the published processing times is that the time taken by Home Affairs to process conferral applications from lodgement to approval is not also being published.

2.21 A further shortcoming in the department’s approach is that the time taken to refuse applications for citizenship are not represented in the published report.

2.22 For comparison purposes the ANAO calculated the times taken from lodgement to approval, and from lodgement to refusal, for each of the months from March 2017. The results at the 75th percentile are presented in Figure 2.5 and at the 90th percentile in Figure 2.6. The published processing times to acquire citizenship from lodgement to ceremony are included in these Figures (being the blue line in each). The results indicate that the times taken to refuse citizenship fluctuate per month and can be substantially longer than the time taken to approve or to acquire citizenship, particularly at the 90th percentile.

Figure 2.5: Time taken to acquire, refuse and approve citizenship at the 75th percentile

Source: ANAO analysis of Home Affairs data and of the processing times published on the Home Affairs website.

Figure 2.6: Time taken to acquire, refuse and approve citizenship at the 90th percentile

Source: ANAO analysis of Home Affairs data and of the processing times published on the Home Affairs website.

Has the complexity of the applications lodged increased?

2.30 The number of both complex and non-complex applications lodged per year has been increasing. Lodgements overall increased by three per cent in each of 2014–15, 2015–16 and 2016–17 and then by 17 per cent in 2017–18. The ANAO examined whether the proportion of complex applications lodged had also increased as this may impact average processing times.

2.31 The ANAO used three measures of complexity and the combined results indicate that the complexity of applications lodged has decreased. These results are at odds with Home Affairs’ reported experience. For example, Home Affairs advised Parliament at Senate Estimates on 23 October 2017:

…we have talked to this committee before about this — that the case load complexity is rising as we are seeing a flow-through of previous humanitarian entrants. It might well be the case that there are bigger delays now because the cases we are looking at now are actually more complicated.¹³

Applications lodged by migration stream

2.32 The general residence requirements for citizenship include having lived in Australia on a valid visa for the past four years (including as a permanent resident for the past year). The type of visa held by the applicant is used to categorise their citizenship application as having come from the skilled stream, family stream, humanitarian stream or other migration stream. Citizenship applications from the humanitarian stream have been identified by Home Affairs as being the most complex to process on average and applications from the skilled stream as being the least complex. The ANAO therefore used the migration stream as a proxy measure of complexity.

2.33 The recent increase in lodgements was driven by the skilled migration stream, as demonstrated in Figure 2.7.

Figure 2.7: Applications lodged by migration stream

Note: The ‘Other’ migration stream includes New Zealand citizens (subclass 444 visas) as well as holders of obsolete visas or where visa information is unavailable.

Source: ANAO analysis of Home Affairs data.

2.34 Applications from the skilled stream increased by 41 per cent over the four years to 2017–18 from a high base. There were 147,224 applications from the skilled stream lodged in 2017–18, accounting for 61 per cent of all lodgements. These applications are relatively non-complex to process for reasons including that people who arrived in Australia on skilled visas tend to present good supporting documents for citizenship that can be readily verified.

2.35 Applications from the humanitarian stream decreased by nine per cent over the four years to 2017–18 from a low base. There were 21,626 applications from the humanitarian stream lodged in 2017–18, accounting for nine per cent of all lodgements. Former illegal maritime arrivals are a sub-set of the humanitarian stream and accounted for 1702 out of the 21,626 lodged from that stream or 0.7 per cent of all lodgements in 2017–18. Applications from the humanitarian stream are identified by the department as requiring greater work effort to process.

2.36 Advice from Home Affairs in October 2018 included that complex applications lodged in previous years ‘continue to be in our pipeline and considerable resources continue to be devoted to them’. Applications from the humanitarian stream accounted for 77 per cent of the 7669 applications that had been on hand for more than two years as at 30 June 2018, compared with 11 per cent of the 237,096 applications that had been on hand for less than two years.

Applications on hand by likely work processing effort

2.37 The ANAO also used the department’s categorisation of on hand applications according to their likely work processing effort to measure complexity. This approach factors in the compounding effect on the on hand caseload of complex applications lodged in previous years.

2.38 Home Affairs’ Citizenship Case Prioritisation Tool identifies possible risk indicators within an individual applicant’s departmental records. The tool identifies risk ‘flags’ that need to be investigated and resolved by processing officers and it categorises each application as likely to require a business-as-usual, low, medium or high work processing effort. The higher the likely work processing effort, the higher the likely complexity of the application.

2.39 The Citizenship Case Prioritisation Tool was rolled out nationally in December 2016 and a report is usually generated weekly. ANAO analysis of four reports generated at six-month intervals indicated that, while the number of applications in each category increased, the most substantial increase was in the ‘business as usual’ category. Over the 18 month period examined, the number of applications categorised as ‘business as usual’ increased by 375 per cent while the number categorised as ‘high’ increased by 18 per cent. Accordingly, the proportion of on hand applications in the ‘medium’ and ‘high’ work processing effort categories had decreased, as outlined in Table 2.2. This indicates that complex applications decreased proportional to non-complex applications.

Table 2.2: Categorisation of applications according to likely work processing effort

Source: ANAO analysis of Home Affairs data.

Applications on hand referred to complex case officers

2.40 Another proxy measure of complexity used was the proportion of applications on hand that had been referred to ‘complex case officers’ (formerly known as ‘caseload assurance officers’). These are higher-level staff who assess complex applications with higher identity risks. There were 26.11 full-time equivalent staff undertaking this role as at 30 June 2018. The strength of this proxy measure is reduced by the variability of factors that may result in an application being formally referred via the department’s processing system. Nevertheless it can indicate the direction of change in the caseload.

2.41 For each of the four dates used in the previous analysis on work processing effort, the ANAO identified the proportion of on-hand applications that were currently or previously ‘batched’ in the department’s processing system as ‘assurance’. This denotes that the application had been referred to a complex case officer at some point during the processing cycle.

2.42 The results, as outlined in Table 2.3, indicate that complex applications decreased proportional to non-complex applications.

Table 2.3: Referral of applications to complex case officers

Source: ANAO analysis of Home Affairs data.

What impact did the announcement of proposed reforms to the citizenship requirements have?

2.43 On 20 April 2017 the Australian Government announced proposed changes to the requirements for citizenship by conferral that, subject to the passage of legislation, would apply to applications received from 20 April 2017 onwards. These changes included, among other things, requiring applicants to have lived in Australia as a permanent resident for at least four years (instead of on a valid Australian visa for four years with at least the last one year as a permanent resident) and the introduction of a formal English language test for some applicants together with an increased proficiency threshold.

2.44 The related Australian Citizenship Legislation Amendment (Strengthening the Requirements for Australian Citizenship and Other Measures) Bill 2017 was introduced into the House of Representatives on 15 June 2017. In preparation for the proposed changes, Home Affairs formed an implementation team drawn from its national and state offices to undertake scenario planning, system changes and other project implementation work.

2.45 The Bill was discharged from the Senate Notice Paper on 18 October 2017 and so the proposed changes to the citizenship requirements were not introduced.¹⁴ Home Affairs then advised on its website that:

On 18 October 2017, the Government proposed amendments to the Bill … As a result of the proposed amendments and subject to the passage of legislation, the new requirements for citizenship will come into effect on 1 July 2018 …

If you applied for Australian citizenship before, on or after 20 April 2017, your application will be assessed against the eligibility criteria in place when you applied.

2.46 As at November 2018: the requirements for citizenship had not changed; the Australian Government had not introduced an amended Bill; and an Australian Citizenship Legislation Amendment (Strengthening the Commitments for Australian Citizenship and Other Measures) Bill 2018, sponsored by Senator Pauline Hanson, was before Senate.

Impact on lodgements

2.47 The number of applications lodged per month fluctuated significantly between April 2017 and June 2018. There was a correlation between the number of applications being lodged each month and changes to the requirements for citizenship being proposed, as per Figure 2.8. That is:

• there was an immediate but brief influx of applications when the proposed changes were announced;
• this was followed by a decline, with July, August and September 2017 each having the fewest lodgements since December 2012;
• lodgements then increased substantially from 19 October 2017 when the Bill was discharged, with November 2017 having the most lodgements in a single month since the Australian Citizenship Act 2007 started; and
• lodgements in June 2018 were higher still, being the month before the amended requirements were proposed to take effect (the government had initially proposed that amendments would take effect on 20 April 2017 and then, on 17 October 2017, proposed that they would, instead, take effect on 1 July 2018).

Figure 2.8: Applications lodged per month from January 2017 to June 2018

Source: ANAO analysis of Home Affairs data.

Impact on processing

2.48 When they were announced, the proposed changes to the Australian Citizenship Act 2007 were to apply retrospectively to applications received from 20 April 2017 onwards. Home Affairs advised the ANAO in June 2018 that:

Staff were advised that the post 20 April applications were subject to the new requirements, however the requirements were not yet law. Therefore the applications were not able to be assessed against the existing requirements or the new ones announced by Government.

2.49 The applications received from 20 April 2017 were:

• ‘batched’ in the department’s processing system as ‘Awaiting Processing’ and with batch descriptions such as ‘Z–AWAITING DIRECTION–20/04/17 CHANGES’ or ‘Awaiting direction–20 April 2017 changes’;
• statements such as the following were recorded in the case notes of individual applications: ‘App recd post 19 April 2017 pending processing due to Citizenship Reforms’; or ‘Application received post 19 April 2017. Awaiting Citizenship reforms’; and
• system reports were amended to distinguish pre- from post-20 April lodgements.

2.50 Of the 83,832 applications received from 20 April 2017 to 18 October 2017, seven were approved prior to the Bill being discharged.

2.51 Between 20 April and 18 October 2017 the department finalised nearly half of the approximately 80,000 applications on hand that had been received before 20 April.

2.52 Processing of applications received from 20 April commenced following a bulk mail out to affected applicants in late October 2017. The mail out to applicants stated:

On 20 April 2017, the Australian Government announced the strengthening of requirements for Australian citizenship.

On 18 October 2017, the Government proposed amendments to the legislation so only applications lodged on and after 1 July 2018 will be assessed against the new criteria, subject to the passage of legislation through the Australian Parliament.

This means that your application will be assessed against the existing eligibility criteria for Australian citizenship. [emphasis as per original]

Impact on processing times

2.53 To measure the impact on processing times, the ANAO compared the average time it took applications received on 13 April 2017 (a week before the announcement) to reach initial processing milestones with like-applications received on 27 April 2017 (a week after the announcement). The ANAO examined 227 applications that had been lodged on these dates by adults under the general eligibility pathway at two of the Visa and Citizenship Offices.

2.54 The sampled applications lodged a week after the announcement took around 10 times longer to reach the first substantial processing milestone as recorded in the system, or for the applicant to be invited to attend a citizenship interview, than those lodged the week before. The results of the targeted testing are summarised in Table 2.4.

Table 2.4: Results of targeted testing comparing the processing times of applications received shortly before and after the 20 April 2017 announcement

Note a: This figure excludes six applicants who had not been invited to interview as at 2 November 2018, which is 554 days after their applications were received.

Source: ANAO analysis of the records in Home Affairs’ processing system for 227 applications across two offices.

2.55 Case study 1 is provided to illustrate the handling of applications received from 20 April 2017 and provide an example of the impact on processing times for affected individuals.

What impact did the introduction of increased integrity screening have on processing times?

2.56 Under the Australian Citizenship Act 2007 the Minister must be satisfied that the person is of good character, and be satisfied of the identity of the person, ‘at the time of the Minister’s decision on the application’. Home Affairs will have previously assessed citizenship applicants against the identity and character requirements set out in the Migration Act 1958 as part of their visa application processes and have determined them to be of good character. Home affairs advised the ANAO in October 2018 that:

It should be noted that the identity threshold for citizenship applicants is much higher than the threshold for migration (visa) applicants. Under citizenship legislation the Minister/delegate MUST be satisfied of the client’s identity, whereas under the Migration legislation the delegate can make an ‘on-balance’ decision, which can take into account the client’s story. There is very limited opportunity for subsequent cancellation of citizenship if the Dept subsequently becomes aware that a client has obtained citizenship through a fraudulent identity, and the importance of getting this right has been highlighted in various national security fora.

2.57 Checks conducted of citizenship applicants include, among other things, onshore and overseas police checks and Movement Alert List checks. Applicants who present with factors that may indicate identity, criminality or other integrity concerns are also subject to ‘enhanced identity and integrity checks’.¹⁵ This includes applicants with no or limited identity documents and those with indications of changing or obfuscating identity details to hide familial relationships, nationality and citizenships details, criminal records and security concerns.

2.58 While in response to adverse information a citizenship applicant may only be refused under the Australian Citizenship Act 2007, there are powers under the Migration Act 1958 which may result in an applicant for citizenship having their visa cancelled and being removed from Australia.¹⁶ Where serious adverse information is obtained during the processing of a citizenship application, the case may be referred to the Character and Cancellation Branch of the department for further consideration and possible visa cancellation.

Introduction of increased integrity screening

2.59 From 9 June 2017 Home Affairs introduced increased integrity screening checking processes. At the 22 May 2018 Budget Estimates hearings the department advised that it ‘has increased the integrity screening checking processes from a national security and criminality risk perspective and enhanced the way it does those activities’.¹⁷

2.60 Home Affairs advice to the ANAO in November 2018 included that:

Integrity screening was established at the direction of the Secretary, in response to intelligence concerning national security threats in the citizenship by conferral caseload. The purpose of integrity screening is to draw on sources not available to decision makers to detect individuals who may present a threat in terms of national security, serious criminality or other threats to community safety. This information gathering effort is intended to support administrative decision making, and ensure that decisions are informed by all available information held in relation to an applicant.

Moreover, the contribution and value of integrity screening isn’t limited to individual decisions; integrity screening contributes to the Department’s understanding of the threats which exist within the Citizenship Program, and the development of specialised capabilities which will have application and utility within other programs administered by the Department.

Impact on approvals

2.61 The introduction of increased integrity screening checking processes on 9 June 2017 for existing and new applicants caused an immediate drop in citizenship approvals, as per the weekly data presented in Figure 2.9 and the monthly data in Figure 2.10. Processing staff were instructed not to approve applicants for citizenship until they were integrity screening cleared.

2.62 In July 2017 nearly 19,000 applicants were returned to the citizenship program for business as usual processing while the integrity screening process was being established. These had been identified as low threat applicants from the skilled migration stream that had satisfied the security checks undertaken by the citizenship program and had lodged prior to 20 April 2017. The first cohort of integrity screening cleared applicants were returned to the citizenship program in September 2017 (as per Figure 2.11).

Figure 2.9: Applications approved in the weeks before and after 9 June 2017

Source: ANAO analysis of Home Affairs data

Figure 2.10: Applications decided by month by decision type

Source: ANAO analysis of Home Affairs data.

2.63 While it was not the sole cause, the integrity screening process was a significant driver of the decrease in approvals throughout 2017–18 and consequently of the increased processing times and backlog of applications on hand. There were 101,422 applications decided in 2017–18; the fewest since 2010–11. The new screening process was also a significant contributor to the misalignment that occurred between the profile of applicants seeking citizenship (such as their former nationality) and the profile of those approved in 2017–18.

2.64 Following examination of the related records, the ANAO concluded that these consequences were partially due to the nature of integrity screening. Adding checking processes to the workflow impacted timeframes, particularly during the implementation phase given the number of applications on hand requiring clearance. Home Affairs’ adoption of a risk-based approach results in some applicants taking longer to integrity screen than others but it has the advantage of limiting the overall impact on time and resources.

Establishment phase

2.65 The magnitude of the impact on processing times was primarily due to the time taken to establish and implement the integrity screening checking processes. The time taken was, in part, a reflection of there being limited similar capabilities on which to model the integrity screening process and that implementation required access to information sourced from outside the department and required the recruitment and vetting of staff. The ANAO’s analysis indicates that the magnitude of the impact was also due to some inefficiencies.

2.66 Establishing the integrity screening process and resourcing to support the effort was achieved progressively over a number of months. Of note in this respect:

• the Secretary of Home Affairs asked on 8 June 2017 to be briefed on options for applying integrity screening to the citizenship by conferral caseload and approvals ceased the following day;
• it was six weeks before a proposed model for integrity screening was put to the Secretary for approval;
• advice to the ANAO from the department was that it was 10 weeks before the first cohort of (relatively low risk) applicants were referred for integrity screening and 13 weeks before the first of these were cleared and so returned to the citizenship program for processing;
• resourcing of 15 full-time equivalents was approved 23 July 2017, staff joined the team over September–November 2017, and the section was officially stood up on 29 December 2017;
• tracking the integrity screening status of applicants initially involved the manual handling of multiple spreadsheets with resulting data integrity issues (such as applicants having the wrong status recorded or appearing on both the ‘clear’ and ‘not clear’ lists) taking resources to identify and resolve;¹⁸ and
• more than a year after increased integrity screening was introduced, agreement with some external entities for bulk checking against their systems had not been reached¹⁹ and the extent to which their information could be disclosed, and therefore used to inform a citizenship decision, was largely unresolved.

2.67 The rate of the release of applicants back to the citizenship program for processing following integrity screening fluctuated, as per the monthly data presented in Figure 2.11.

Figure 2.11: Number of applicants integrity screening cleared per month

Source: ANAO analysis of Home Affairs data.

Efficiency and effectiveness

2.68 The processing officers are not privy to the checks or findings of the integrity screening and so a result of ‘clear’ cannot provide a higher level of assurance to these decision-makers as to an applicant’s character or identity. The processing officers undertake the same checks and considerations in reaching a decision to approve or refuse citizenship as they did prior to the introduction of increased integrity screening.

2.69 The extent to which information gathered through integrity screening contributes to citizenship decision-making is also impacted by limitations on the disclosure of such information. If the integrity screening process returns a result of ‘not clear’ then the reasoning behind the basis for this result is provided to a senior decision-maker where that information is disclosable and can be put to the applicant for comment under natural justice provisions. However, if the information is non-disclosable, then this information is not passed to the decision-maker.

2.70 Home Affairs advised the ANAO that ‘As at 8 October 2018, one citizenship case has been identified through integrity screening and, as a result, the decision-maker is undertaking the necessary natural justice processes.’ That is, adverse information was obtained on one of the 167,421 applicants screened by October 2018, which had not already been identified by citizenship processing officers and may be of sufficient weight for refusal of the citizenship application. If the decision-maker intends to take adverse information into account, they need to give the applicant procedural fairness and to put these issues to them. The applicant’s response is to be weighed against the other information already held by the department.

2.71 The integrity screening arrangements should be made more efficient so as to lessen their impact on processing times. During the course of the audit, Home Affairs commenced an internal review of the integrity screening arrangements for applicants. It advised the ANAO in October 2018 that the review:

is evaluating the performance of the integrity screening process to date, operating model, processes, roles and responsibilities across Intelligence Division and the Citizenship program, with a view to recommending efficiency and effectiveness improvements for endorsement by the Senior Executive. The draft report on the review is being finalised, with proposed enhancements currently under consultation with impacted areas. The Minister will be briefed on the outcomes of this review through regular briefing processes.

2.72 In December 2018, more efficient and effective ways to conduct the integrity screening process were identified through the review and were approved for implementation. Immediate benefits outlined included the release of over 100,000 applicants back to the citizenship program for processing within four to six weeks of implementation, which is substantial in light of the data on applicants integrity screened per month presented in Figure 2.11 above. This provides an example of the scope for, and benefits of, realising efficiencies.

Has the risk of ‘unreasonable delay’ in decision-making been adequately addressed?

2.73 The Joint Committee of Public Accounts and Audit identified citizenship function administration as an audit priority and suggested to the ANAO that the audit give ‘particular reference to issues raised in the December 2016 Federal Court Case’.

2.74 The Federal Court had declared in December 2016 that there had been unreasonable delay in making a decision to approve or refuse two plaintiffs’ applications for citizenship by conferral.²⁰ The Court Orders included that the Minister make a decision to approve or refuse the two applicants becoming Australian citizens and pay the applicants’ costs of the proceedings.

2.75 The Australian Citizenship Act 2007 states that a decision to approve or refuse a citizenship application ‘must’ be taken but it does not specify a time limit. Where a time limit is not specified for a statutory obligation then the Courts have held that a ‘reasonable time’ is implied. If the Minister fails to make a decision within a reasonable time then, in accordance with the Administrative Decisions (Judicial Review) Act 1977 (Cth), the aggrieved applicant may apply to the Federal Court or the Federal Circuit Court for an order of review on the ground that there has been unreasonable delay.

Characteristics of an unreasonable delay

2.76 Justice Bromberg outlined the characteristics of an ‘unreasonable delay’ in his reasons for judgement in the 2016 Federal Court case, including that:

the delays in question were caused by very lengthy periods of inactivity. The extent of inactivity in the processing of the applications calls for a meaningful explanation to be provided by the Minister as to why that inactivity occurred and why the delay thereby caused ought not be regarded as unreasonable.

The time taken to actively consider and assess an application for citizenship is unlikely to provide a foundation for a claim of unreasonable delay. But inactivity, long periods where an application simply sits around waiting to be processed or waiting for some particular step in the process to be taken, provide a more compelling basis for establishing unreasonable delay.²¹

2.77 Justice Bromberg found ‘that the Department took no steps to progress [the two] applications for some 14.5 months from the time at which each of those applications was categorised as a “complex case”.’ The period of ‘inactivity’ commenced in March 2015 for one applicant and in April 2015 for the other applicant and, at this time, the department had recorded the following in their application files: ‘UNDOCUMENTED ARRIVAL Filed Undocumented arrival drawer’.²² Both applicants had arrived in Australia as illegal maritime arrivals.

Periods of unexplained inactivity during the processing of applications from former illegal maritime arrivals in 2015–16

2.78 According to correspondence of October 2017 from Home Affairs to the Office of the Commonwealth Ombudsman, ‘the Department’s view is that the court case, in its findings related to “unreasonable delay”, has only a narrow application applicable to the specific circumstances of the case’.

2.79 A reliable report on periods of processing inactivity cannot be generated from the Home Affairs processing system to identify if the findings of the court case had wider application. To provide insight into whether the risk of ‘unreasonable delay’ extended beyond the two plaintiffs in 2015–16, the ANAO manually examined the records of 15 applications selected at random from 315 applications that had been lodged before March 2015 by former illegal maritime arrivals and had then been approved or refused sometime after 30 June 2015.²³ The examination focussed on whether there were periods of unexplained inactivity.

2.80 For all 15 applications examined, the records indicated periods of unexplained inactivity that included March–April 2015 and that extended into 2015–16. These periods of inactivity ranged from nine months to 22 months and averaged 15 months. Seven of the records noted that the application had been ‘Filed Undocumented arrival drawer’, ‘placed into IMA tambour’ or ‘placed in “Undocumented Arrivals” cabinet’.

2.81 There were relatively few decisions taken in 2015–16 to either approve or refuse applications from former illegal maritime arrivals, as outlined in Table 2.5.²⁴ The decisions to approve or refuse citizenship totalled 262 in 2015–16 compared with 1697 decisions that the applications were invalid for processing. While the number of new applications lodged dropped to 1702 in 2017–18, the low decision-rate for this cohort across the years culminated in 9121 applications being on hand requiring decision at 30 June 2018.

Table 2.5: Applications lodged by former illegal maritime arrivals and decisions taken

Source: ANAO presentation of Home Affairs data.

Ongoing risk of unreasonable delay

2.82 Home Affairs states on its website that ‘We assess applications on a case-by-case basis, and actual processing times can vary due to individual circumstances’. During the course of this audit, the ANAO examined the records of some applications where the individual circumstances were complex and took a long time to resolve for reasons such as awaiting information from external agencies and giving the applicant the opportunity to comment on adverse information.

2.83 The ANAO also examined the records of some applications, both non-complex and complex, where there were long periods of inactivity that were not explained in the records. For example, according to the records of a relatively:

• non-complex application, Home Affairs assessed it as valid two days after lodgement and then took no further action for 26 months;
• complex application, information was requested from the department’s overseas-based staff but was not examined until 25 months after it arrived in Australia, during which time the application sat in the ‘Awaiting processing Tambour’.

2.84 In the departmental records examined by the ANAO, there was an absence of acknowledgement of the occurrence of long periods of inactivity or acknowledgement of the associated risk of unreasonable delay in decision-making. In reference to the Federal Court judgement of ‘unreasonable delay’, an investigation report by the Commonwealth Ombudsman stated:

No doubt, this judgment is critical for [Home Affairs] to consider in administering the citizenship program … In responding to this investigation on the questions of what is a reasonable amount of time to take, the department answered in a manner which suggests that it considers that decision-making will take as long as it needs to take in order to resolve the complexity of issues presented to ensure the integrity of decisions, and that the question of true identity of the applicant can be satisfied. The department did not address the issue examined by the court concerning periods of unexplained inactivity, and what this means for the department when it comes to making lawful decisions.²⁵

Periods of unexplained inactivity during the processing of non-complex applications

2.85 The majority of applications do not present Home Affairs with a ‘complexity of issues’ requiring lengthy resolution. Home Affairs categorised 95 per cent of the applications it had on hand at 1 July 2018 as likely to require a business-as-usual to low work processing effort to resolve (see Table 2.2 on page 28).

2.86 To gain insight into the extent of the risk of unreasonable delay, the ANAO examined the records of 51 applications that Home Affairs had identified as being of relatively low complexity.

2.87 Home Affairs had established a taskforce of around 28 additional staff in March 2017 to help finalise applications of low complexity.²⁶ The 51 applications examined by the ANAO were all those finalised by the taskforce in its second and its fourth week of operation that had been on hand for more than a year. As there is no agreed definition of what constitutes a ‘long’ period of inactivity, the ANAO examined whether there were one or more periods of unexplained inactivity that exceeded 80 days, being Home Affairs’ former target timeframe for finalising applications.

2.88 Of the 51 applications examined, 13 applications (25 per cent) did not have a period of unexplained inactivity that exceeded 80 days. It was noted that seven of these 13 applicants had been invited to attend citizenship interviews scheduled between 100 days and 139 days in advance and hence these time periods were explained in the records.

2.89 The records of the other 38 applications (75 per cent) evidenced one or more periods of unexplained inactivity that ranged from 110 days to 601 days and averaged 348 days. The longest combined period of unexplained inactivity was 746 days. An example of an application examined is presented in case study 2 below.

Risk of unreasonable delay due to the time taken to commence processing applications

2.90 At the time of this audit, a reliable report could not be generated from Home Affairs’ systems to identify the number of applications that had not yet been processed beyond the initial validity check. Home Affairs advised the ANAO in October 2018 that it was building a new dashboard that will provide this information through ‘regular reports on caseload segmentation at the various stages of pipeline processing’. Further advice from Home Affairs to the ANAO in January 2019 was that:

This system is for work allocation and is not designed as a reporting tool.

Three interactive Citizenship performance monitoring dashboards at the ’Executive’, ’Management’ and ’Operational’ levels were implemented in December 2018 and provide the network with a real-time tool to analyse the caseload at various stages of processing, which will drive the allocation of resources to focus efforts for maximum efficiency.

2.91 To obtain some insight the ANAO identified applications that were assigned to a ‘batch’ in the department’s primary processing system, and also to a ‘folder’ in its secondary system, with descriptions that indicated the applications had not yet been progressed. For example, paper-based applications still assigned to one of the ‘Awaiting direction–20 April 2017 changes’ batches (see paragraph 2.49) and e-lodged applications still assigned to a computer-generated batch (applications are then to be re-batched by a human operator).

2.92 Some 179,000 applications were assigned to the ‘batches’ and ‘folders’ identified by the ANAO. A third of these had been on hand for six months or more, with the oldest lodged on 20 April 2017. As an indicator of whether these applications may have been progressed beyond the initial validity check, ANAO examined the records of 110 of the applications selected at random. For none of the 110 applications was substantive work recorded in the department’s primary processing system between the initial validity check and 30 June 2018. An example is provided in Case Study 3.

Note: Applicants who lodged on or near 26 April 2017 should not assume that the case study is of their application. The department received 1714 applications on 26 April and included them in the bulk mail outs.

Source: Screen shot of Home Affairs system taken by the ANAO on 25 August 2018 showing all processing events recorded up to that date for the application examined.

2.93 The findings of the ANAO’s testing do not factor in the integrity screening process because it was not then visible in the system records. Following a system change, an ‘integrity screening’ status (being required, clear or not clear) is recorded for each applicant. On 2 November 2018 the ANAO re-examined the records for the application used in case study 3, which had been lodged on 26 April 2017. The records remained unchanged other than an integrity screening status of ‘clear’ having been recorded on 19 October 2018.

Has Home Affairs optimised the efficiency of its processing staff?

3.1 Efficiency is primarily about entities making the most of available resources — that is, optimising the use of inputs to deliver the intended outputs. Achieving efficiency in the processing of applications for citizenship by conferral, therefore, involves Home Affairs optimising the use of its processing staff and related resources so as to finalise applications to the quantity, quality and timing required.

Ratio of staff to decisions

3.2 A common approach to measuring efficiency is to calculate ratios of inputs to outputs. The ANAO therefore calculated the ratio of processing staff to decisions-taken in 2016–17 and in 2017–18.

3.3 The number of staff processing applications for citizenship by conferral fluctuates throughout the year and some staff (particularly in smaller offices) may have duties outside of the conferral stream. Home Affairs provided the ANAO with data on the number of staff considered to have been primarily allocated to the processing of citizenship by conferral applications (from lodgement to decision) per month from 1 July 2016 to 30 June 2018. When this data is averaged out over the respective financial year the number of full-time equivalent staff allocated to processing in 2017–18 was 182.2, which is six per cent lower than the 193.6 staff allocated in 2016–17.

3.4 The ratio of staff to decisions taken for each financial year is presented in Table 3.1. The results indicate an efficiency loss in 2017–18. This result is consistent with the efficiency loss apparent in the growing gap between the rates of applications lodged and applications finalised each year (see Figure 2.1 on page 18).

Table 3.1: Ratio of staff to decisions taken per year

Source: ANAO analysis of Home Affairs data.

3.5 In January 2019, Home Affairs advised the ANAO that:

this analysis could be interpreted as staff being inefficient, when we know that finalisation rates were directly impacted by the introduction of the integrity screening measures. This is a simplified interpretation of what we know was a complex time for the program and what actually occurred during the program year.

Optimising the efficiency of staff

3.6 Home Affairs has a suite of system improvements and other initiatives in train that are designed to improve efficiency. Initiatives relating to how the citizenship program is managed and resources are allocated include:

• the program has shifted from a Total Case Management model, where an officer would ‘own’ a case from start to finish, to a Global Case Management model based on the shared ownership of a case where multiple processing officers may interact with a case from commencement through to finalisation;
• caseloads with similar characteristics and complexity have been centralised to realise economies of scale and ensure consistent treatment;
• the processing of applications requiring referral to the Department of Human Services for the citizenship interview and test component has been centralised to achieve efficiencies through economies of scale and consistent engagement with this partner²⁸;
• the use of WMAN (a workload management tool) has been mandated since 1 July 2018 to assist the citizenship program to manage caseloads;
• the program is planning to transition from its current Citizenship Case Prioritisation Tool to a Program Management Pipeline Tool (or PROMPT) to ‘achieve optimal processing benefits through large-scale data matching across multiple departmental systems and using this consolidated information to prioritise unallocated or on-hand caseload pipeline based on agreed risk/threat/work-effort settings’; and
• multi-disciplinary taskforces have been established to address identity issues across complex caseloads. The first of these taskforces commenced in August 2018, with 29.11 full-time equivalent staff drawn from the department’s Citizenship and Multicultural Affairs Branch and Identity and Biometrics Specialist Branch.

3.7 The department is seeking to increase the proportion of applicants who choose to lodge online and, via system enhancements, to enable all applications to be lodged online.²⁹ This will allow the redirection of resources currently used to enter data from paper applications. The proportion of applications lodged online rose from 57 per cent in 2016–17 to be 72 per cent in 2017–18. The department is also seeking to put arrangements in place to digitise all paper applications on hand (at 30 June 2018 it had 74,899 paper applications on hand for processing).

3.8 Home Affairs has been slow to implement initiatives related to improving efficiency through the tools and guidance available to processing officers. These include:

• Case Note Generator, a tool for compiling consistent case notes by using a combination of free text and check boxes that can be completed by the processing officer. An internal review of 2015–16 had recommended it be made available to citizenship processing officers. Home Affairs advised the ANAO in August 2018 that three principal templates required to record case notes for citizenship by conferral are scheduled to be available to all onshore conferral processing officers by October 2018³⁰;
• Enterprise Correspondence System, a tool that contains template letters to improve efficiency (by reducing manual effort) and consistency in correspondence. An internal review of 2015–16 had recommended that the citizenship program use this system but, as at August 2018, few citizenship-related templates were available to processing officers; and
• producing a full set of instructions (35 in total) to replace the current Australian Citizenship Instructions. Home Affairs advised the ANAO in August 2018 that one instruction had been cleared (but not published), three were undergoing clearance and the remainder were at various stages of drafting. The one instruction cleared was ‘Assessing Identity under the Citizenship Act’. It was cleared in July 2018 and addresses an ANAO recommendation that the department had agreed to in May 2015.³¹

Onshore Work Effort Review

3.9 In 2016, the department conducted a review to measure the work effort required to deliver the citizenship program, including processing activity for citizenship by conferral. The Onshore Work Effort Review Report included 13 recommendations for action by the citizenship program, aimed at business improvement opportunities to increase consistency and efficiency. The first stage of the agreed implementation and monitoring process was for an action plan to be put in place by mid-January 2017.

3.10 There was no action plan put in place to implement the 13 recommendations.

3.11 Home Affairs advised ANAO in August 2018 that another review would be conducted ‘to baseline the current process and undertake ongoing monitoring to assess best practices and gains for further efficiency initiatives planned’. This review was expected to commence in the last quarter of 2018 and be completed in the first quarter of 2019.

Impact on time-efficiency of the number of processing staff

3.12 As part of the Onshore Work Effort Review, in 2015–16 the department timed the work effort that its onshore citizenship offices took to complete each stage in the processing of an application. The department calculated that it took 86 minutes of work effort on average to process an application from receipt to decision. In 2018 the department revised its estimation for planning purposes to be that 80 per cent of applications would indicatively take 88 minutes each to finalise, with medium and high complexity applications taking more time than this.³²

3.13 The various initiatives the department has in train to optimise the efficiency of its staff should help reduce the number of work effort minutes it takes to process each application on average and so have a positive impact on resource-efficiency.

3.14 While reducing average work effort will improve time-efficiency, there is also an opportunity for improvement by reducing the amount of time associated with inactivity. The amount of time applications spend inactive awaiting processing can be substantially longer than the active work effort involved, given ANAO’s analysis on delays in decision-making in Chapter 2 of this audit report and given:

• Home Affairs’ estimation that 80 per cent of applications would indicatively take processing officers 88 minutes of work effort from receipt to decision (excluding integrity screening); combined with
• the ANAO’s calculation that 80 per cent of applications were decided within 337 days of receipt (see paragraph 2.15).

Proposed temporary increase in staff

3.15 Home Affairs advised the ANAO of the ‘externally imposed [Average Staffing Level] Cap which prevented the Department from increasing staffing commensurate with increased activity’. The department further advised the ANAO that:

The Department operates an agile budget process to manage competing priorities and operate within funding constraints. The Department’s budget allocation is regularly reassessed to deliver on organisational objectives efficiently and effectively. Funding allocations reflect reprioritisation decisions, performance to date, changes in available funding and takes into account other relevant information.

3.16 In May 2018, the citizenship program put forward an internal request for an additional 156 full-time equivalent staff (FTE) ‘to support the program increase finalisations, revenue and reduce processing times’.

3.17 Home Affairs advised the ANAO in November 2018 that, following a budget exercise, the Refugee, Citizenship and Multicultural Programs Division staff ceiling was increased ‘by an additional 100 full-time equivalents to address the Citizenship backlog, with an opportunity to request additional staff at a later date’. Further, that this ‘allows for growth of up to 128 additional FTE for the Division this financial year’ and that:

The bulk of the additional FTE will be allocated to the citizenship by conferral caseload…

Staffing numbers fluctuate over time, based on a large number of factors including staff turnover, the ability of the Department to recruit replacements quickly, internal movements, staff leave, etc. However it is estimated that around 300 FTE will be allocated to the processing of citizenship by conferral applications in June 2019…

Based on current projections the Department is forecasting around 190,000 finalisations for the citizenship by conferral stream this financial year. However, this will be dependent on a range of factors including: the actual caseload mix and time taken to process individual cases across the low-high complexity spectrum, the time taken to on-board and train all new staff, the capacity of new staff to become productive quickly, and any emerging strategic objectives of the Department/Government.

3.18 If the department’s indicative forecasting of 190,000 applications being finalised in 2018–19 is achieved, then this would represent an 87 per cent increase on its 2017–18 results. This is likely to start reducing the numbers on hand.

First-quarter performance in 2018–19

3.19 The number of decisions taken in the first quarter of 2018–19 increased significantly (by 81 per cent) compared with the number taken in the first quarter of 2017–18. This indicated an improvement in processing performance compared with the equivalent period of the prior year. There was also an increase in the proportion of decisions to approve citizenship (86 per cent in the first quarter of 2018–19, up from 67 per cent in the first quarter of 2017–18), largely the result of fewer applications being assessed as invalid (down from 27 per cent in the first quarter of 2017–18 to nine per cent in the first quarter of 2018–19). The proportion of refusal decisions remained similar (six per cent in the first quarter of 2017–18 and five per cent in the first quarter of 2018–19).

3.20 The number of decisions in the first quarter of 2018–19, whilst well above that in the first quarter of 2017–18, was below that being achieved prior to 2017–18. This is illustrated by Figure 3.1.

Figure 3.1: Decisions taken in the first quarter of the last five years

Source: ANAO analysis of Home Affairs data.

Has Home Affairs checked the quality of the decisions taken?

3.21 There is often a balance to be struck between the quality, quantity and timing of the outputs delivered when seeking to improve efficiency. ANAO therefore examined whether Home Affairs had checked the quality of the decisions taken.

Quality Management Framework

3.22 Home Affairs’ Visa and Citizenship Quality Management Framework is intended ‘to guide the processes of assuring that decisions made in visa and citizenship processing are of good quality’. According to the framework, quality assurance checks are to be conducted on at least two per cent of the citizenship applications finalised each month.³³ The checks are to be conducted using the department’s EQuiP tool (Evidence of Quality in Performance) which was designed in-house specifically to measure the quality of visa and citizenship decisions. EQuiP contains sets of questions that are ‘devised to test the quality of decisions within a business process’. Quarterly reports are provided to the department’s executive.

3.23 The quarterly reports include the total number of quality assurance checks conducted via EQuiP of applications for citizenship by conferral, for citizenship by descent and for evidence of Australian citizenship (combined). The data provided to the department’s executive each quarter over the period July 2015 to June 2018 is presented in Figure 3.2 and shows a marked decline in checks conducted.

Figure 3.2: Number of quality assurance checks conducted per quarter on finalised applications for citizenship by conferral, citizenship by descent and evidence of citizenship (combined)

Source: ANAO presentation of Home Affairs’ data.

Checks conducted of applications for citizenship by conferral

3.24 Only one quality assurance check was conducted through EQuiP in 2017–18 in respect of the applications for citizenship by conferral; that is, one out of the 101,422 applications finalised (0.001 per cent) was formally checked. The previous year, quality assurance checks were conducted on 742 of the 153,879 applications finalised (0.5 per cent), which was still well below the two per cent sample required. In respect of the number of checks undertaken, Home Affairs advised the ANAO in August 2018 that:

The decline was due to the perception across the citizenship program that the established formal QA process through the EQUIP tool was not producing meaningful outcomes. Quality Assurance activities declined in anticipation of an improved process.

3.25 Home Affairs also advised that the Quality Management Framework was under review and that it anticipated a revised framework would be implemented in 2019–20.

External review of citizenship decisions

3.26 In relation to external review of citizenship decisions, in 2016–17 and 2017–18 the Administrative Appeals Tribunal either affirmed or set aside the department’s decision in respect to a total of 278 applications. Across those two years, the Tribunal in total set aside 55 per cent of the decisions (55 per cent in 2016–17 and 56 per cent in 2017–18).

Implementation of previous ANAO recommendations

3.27 The ANAO undertook a 2014–15 performance audit to assess the effectiveness of the identity verification arrangements for applicants in the citizenship program.³⁴ The recommendations made in the 2014–15 audit included the following two that relate to checking the quality of decisions taken:

Recommendation No. 2

To more effectively assess and report on the objectives of the Citizenship Program, the ANAO recommends that the Department of Immigration and Border Protection develops and reports against key performance indicators assessing the quality of the department’s citizenship decisions.

Recommendation No. 3

To improve the quality assurance process for the Citizenship Program, the ANAO recommends that the Department of Immigration and Border Protection extends its quality assurance program to include a risk based approach and consideration of the appropriateness of decisions, including whether the identity of the applicant has been properly verified.

3.28 Home Affairs agreed to the recommendations in May 2015. As at August 2018, it had not implemented Recommendation No. 2.

3.29 Home Affairs had partially implemented Recommendation No. 3. In late 2015 the department conducted a risk-based quality assurance exercise on applicants who had been approved but who had not yet attended a citizenship ceremony so as to address issues raised by the ANAO around identity verification. The department quality checked 502 applications that it considered to be of higher risk. Of those checked, 351 were considered to have no unresolved findings that required further action and so the applicants proceeded to ceremony.

3.30 The remaining 151 applications (30 per cent) were found to require further consideration under the relevant sections of the Australian Citizenship Act 2007. The resolution of these applications, and the ongoing processing of complex applications that present higher identity risk, has been aided by the introduction of complex case officers from June 2015. As at 30 June 2018 there were 26.11 full-time equivalent officers in this role at the higher Australian Public Service 5 and 6 levels.

3.31 Notwithstanding the quality assurance activity of late 2015, the previous audit’s findings underpinning Recommendation No. 3 were still applicable in 2017–18, being that:

The department is, however, yet to incorporate into its quality assurance activities:

• a risk based approach, so that quality assurance efforts focus on higher-risk cases; and
• a focus on the appropriateness of the decision, so that the department has insight into the quality and consistency of decision-making across the decentralised citizenship network.³⁵

3.32 Home Affairs advised the ANAO in October 2018 that:

A formal review has commenced of the Immigration and Citizenship Services Group’s (ICSG) approach to quality management, and broader processes, systems and support material. Outcomes from this Group-level review will inform the development and implementation of an overarching structure within ICSG to deliver greater oversight, management and reporting of assurance efforts and results, and position the Group to better manage and respond to new and emerging risks. The revised Quality Management Framework will mandate expectations and requirements relating to quality activities, and will monitor compliance with required levels.

It is anticipated that the revised quality management framework, a key element of the Visa and Citizenship Operating Model (VCOM2020), will be implemented in the 2019–20 program year. This will inform enhanced quality approaches across Divisions and Branches. Citizenship has been identified as the first caseload to be incorporated into the revised quality management framework.

Informal quality checks continue to be undertaken across the program. This generally includes reviewing the decisions (refusals and approvals) of new staff and random checks as required for more experienced staff. A supervisor reviews most refusal decisions, including all complex decisions, prior to being finalised.

3.33 In December 2018, the ANAO sought from Home Affairs evidence that: informal quality checks are undertaken; the decisions of new staff are reviewed; random checks of the decisions of more experience staff are conducted; and a supervisor reviews most refusal decisions prior to being finalised, including all complex decisions. In response, Home Affairs asserted that:

The department has an expectation that all draft refusal decisions are reviewed by a team leader/manager prior to finalisation. Team Leaders and managers also undertake consistent reviews of their team’s performance through regular interactions and team meetings which occur on an ongoing basis.

These general interactions, including feedback on cases, are generally provided verbally. The department acknowledges that these less formal quality control measures can be strengthened by implementing a formal quality checking regime using Equip. A project team will be stood up in January to progress this work.

There are many checks and balances for the program built into business as usual processing and system requirements. For example, the delegation of staff members to make decisions under the Act is regularly reviewed, while the ICSE processing system has several inbuilt functions to ensure case officers consider specific information (e.g. adverse MAL alerts) and prevent decisions being made where indicators haven’t been addressed (e.g. a case officer cannot approve an application if integrity screening is outstanding).

There are existing feedback loops built into the program which also ensure the integrity of decision making. These include;

• The Citizenship Helpdesk which regularly provides advice to decision makers on cases
• The review of AAT outcomes and application of any findings for future cases
• Consideration of issues raised through the Global Feedback Unit and Ministerial Correspondence and adjustment to procedures as appropriate
• The issuing of formal direction to the network on issues such as policy or procedural changes, identification of best practice or solutions to identified issues, all support processing consistency.

3.34 The above quoted assertions do not provide a basis on which the ANAO could conclude that the recommendation has been implemented.

Is the administration of the citizenship activities consistent with the Australian Government cost recovery framework?

3.35 The Australian Government charges for a range of regulatory activities by recovering some or all of the efficient costs of those activities. The efficient costs are the minimum costs necessary to provide the activity while achieving the policy objectives and legislative functions of the Australian Government. The citizenship activities are regulatory charging activities.

3.36 Home Affairs is to recover the efficient costs of the citizenship activities by charging applicants on a full cost recovery basis. Cost recovery activities such as these are subject to the Australian Government Cost Recovery Guidelines (the ‘Guidelines’). The Guidelines set out the requirements and better practice under which government entities design, implement and review cost recovered activities. The Australian Government Charging Framework builds on the Guidelines; it encourages a common approach and supports the legislative responsibilities of Commonwealth entities as detailed in the Public Governance, Performance and Accountability Act 2013.

Policy approval to cost recover

3.37 Home Affairs complied with the requirement in the Guidelines that ‘the responsible government entity must have policy approval from the Australian Government to cost recover’. In the 2015–16 Budget the Australian Government decided to move from partial to full cost recovery for citizenship activities from 1 January 2016. Home Affairs was to recover the full costs associated with the processing of certain applications made under the Australian Citizenship Act 2007 for:

• Australian citizenship by conferral, by descent and through adoption; and
• evidence, resumption and renunciation of Australian citizenship.

Statutory authority to charge

3.38 Home Affairs complied with the requirement in the Guidelines to ‘have statutory authority to charge’. The Australian Citizenship Act 2007 states that an application made for citizenship must ‘be accompanied by the fee (if any) prescribed by the regulations’. Schedule 3 of the Australian Citizenship Regulation 2016 sets out the fee to accompany each type of application.

3.39 To implement the decision to move to full cost recovery, the majority of the fees set out in Schedule 3 of the applicable regulations were amended by the Migration Legislation Amendment (2015 Measures No. 3) Regulation 2015.³⁶ The amended fees commenced on 1 January 2016 and are outlined in Table 3.2.

Table 3.2: Citizenship application fees amended on 1 January 2016

Note: Generally you can apply for citizenship by: ‘descent’ if you were born outside Australia and one or both of your parents were Australian citizens when you were born; ‘adoption’ if you were adopted in accordance with the Hague Convention on Intercountry Adoption or a bilateral arrangement; ‘resumption’ in certain cases where you previously ceased to be an Australian citizen; or by ‘conferral’ if you cannot apply under the other categories and you are a permanent resident of Australia. Existing citizens can apply for a citizenship certificate as ‘evidence’ of being Australian or can apply to ‘renounce’ their Australian citizenship if they already have another country’s citizenship.

Source: ANAO analysis of citizenship legislation.

3.40 Items in Schedule 3 that provided for a concessional, reduced or nil fee were not amended as the Australian Government decided not to increase the amounts recovered against these items. These provisions may result in expenses not being fully cost recoverable.

Alignment between expenses and revenue

3.41 A requirement of the Guidelines is that the entity ensure alignment between the expenses of the activity (the costs involved in providing it) and the revenue (the income generated through charges for it).

3.42 In accordance with the financial reporting rules, the financial statements of the entity must include a note providing financial information for its regulatory charging activities at an aggregate level. The note is intended to provide ‘industry, the Parliament and the public with assurance that these activities are being managed in a way that aligns expenses and revenues over time’.³⁷

3.43 Home Affairs has complied with the requirement to provide a note in its financial statements. The note for 2017–18, which includes 2016–17 comparison figures, was:

The Department implements cost recovery arrangements for processing applications to acquire, renounce or resume Australian citizenship. Activities that are cost recovered include the assessment of applications and management of citizenship test resources, the provision of call centre and online support to applicants, the production and distribution of certificates, and the facilitation of some citizenship ceremonies. Costs are recovered through fees charged on applications, which are administered in nature. Fees differ by the type of application and eligibility of the applicant, and are set to recover the cost of processing each application. Charges recovered in relation to citizenship totalled $61.986 million (2016–17: $51.600 million). Expenses totalled $58.757 million (2016–17: $63.045 million).

3.44 The revenue generated by the 250,514 applications on hand at 30 June 2018 has been recognised in the financial statements but the costs to finalise these applications will extend into future financial years.

3.45 While revenue exceeded expenses by five per cent in 2017–18, this result was overbalanced by lodgements exceeding finalisations by 84 per cent (as can be calculated from the figures presented in Table 3.3).

Table 3.3: Aggregate revenue, expenses and application data for citizenship activities

Note: The figures in this table relate to applications: for citizenship by conferral, by descent or through adoption; and for evidence, resumption or renunciation of citizenship.

Source: ANAO analysis of Home Affairs citizenship activity summary reports and financial data.

3.46 Applications for citizenship by conferral accounted for 81 per cent of total revenue generated for citizenship activities in 2017–18. Expenses are not costed at the individual activity level.

Application fees to reflect the full efficient cost

3.47 According to the Guidelines, the application fees should be set to recover the full efficient costs of the specific citizenship activity. An indication of actual costs relative to application fees can be derived from the figures presented in Table 3.3. That is, in:

• 2016–17 the cost per application was $278, which was 48 per cent higher than the $188 in revenue generated per application (on average); and
• 2017–18 the cost per application was $354, which was 74 per cent higher than the $203 in revenue generated per application (on average).³⁸

3.48 The above analysis suggests that actual costs have increased beyond that foreseen in 2015. This does not necessarily mean that application fees should be increased to reflect the full actual cost. The overall findings of this ANAO audit indicate that actual costs likely exceed the efficient costs of processing applications for citizenship by conferral (which accounts for the majority of the costs recovered). For this reason it could not be determined if the application fees are currently set to recover the full efficient costs of the citizenship activities.

Portfolio charging review

3.49 Departments of state are to conduct periodic reviews of all existing and potential charging activities within their portfolios at least every five years, in accordance with a published schedule of portfolio charging reviews or at other times agreed by the Minister for Finance. Home Affairs is scheduled to conduct a portfolio charging review in 2018 with the review outcomes to be brought forward in the 2019–20 Budget context. A portfolio charging review report must be submitted to the responsible minister and a copy must be provided to the Minister for Finance.

3.50 The potential gap between the efficient cost and the actual cost of each citizenship activity should be considered in the portfolio charging review and in other reviews of the citizenship application fees. This is as per the requirements of the Guidelines and of the Australian Government Charging Framework.

Publicly available documentation and reporting

3.51 Home Affairs has largely complied with the requirements outlined in the Guidelines to ‘maintain up-to-date, publicly available documentation and reporting’ of its cost recovery arrangements.

3.52 In addition to reporting at an aggregate level in its annual financial statements, Home Affairs published activity-level information on its website in the ‘Cost Recovery Implementation Statement: Australian Citizenship Charges 2015–16’. This document was published before the amended application fees commenced, as was required. Home Affairs should have since republished it with updated financial and non-financial performance information. This is because such Statements are intended by the Guidelines to be a ‘continuous disclosure tool’.

Does the funding model contain an incentive to finalise applications efficiently?

3.53 The citizenship services funding model has fixed and variable components. Variable funding is adjusted to reflect actual movements in workload drivers, being the number of citizenship applications finalised. As part of an annual funding model reconciliation process, any movements in funding earned are recognised as adjustments to Revenue from Government in the current financial year.

3.54 In simple terms, while applicants pay the required fee upfront, Home Affairs is in part ‘paid’ per finalisation. The price per finalisation is common across the citizenship activities and is adjusted at each budget round to take into account the annual wage cost increase and annual efficiency dividend applied. The price per finalisation in 2016–17 was $262.77 and in 2017–18 was $257.25.

3.55 The assumptions on which the funding model was based have become outdated. For example, in 2007–08 (the year on which the funding model was based) 0.8 per cent of applications for citizenship by conferral were assessed as invalid, whereas 15 per cent of applications were assessed as invalid in 2017–18. To decide an application is invalid costs the department less than to process an application through to approval or refusal stage. Another example is that the model does not factor in the costs associated with the introduction of increased integrity screening of applicants from June 2017.

Appendix 1 Entity response

 

 

 

 

 

 

ANAO notes on page 2 of Home Affairs’ response

a: In its response, Home Affairs uses 2010–11 as the date from which it calculates application growth. The department’s 2010–11 Annual Report stated that the number of applications received in 2010–11 was 32 per cent less than for 2009–10 and that a likely reason for this decrease was that transitional residence requirements ceased at the end of 30 June 2010. As per paragraph 2.2 of this Auditor-General report, application lodgements increased by 25 per cent between 2014–15 and 2017–18.

b: Applications from former illegal maritime arrivals are a sub-set of those from former humanitarian visa holders. Applications from former humanitarian visa holders decreased by nine per cent between 2014–15 and 2017–18 from a low base. Applications from the skilled visa stream, which are relatively non-complex to process, increased by 41 per cent over this same period from a high base (see paragraphs 2.34 and 2.35).

c: Chapter 2 of this Auditor-General report outlines the evidence and analysis in support of the ANAO’s independent assessment of the department’s time efficiency, including that processing times have increased, long delays are evident between applications being lodged and decisions being taken on whether or not to confer citizenship, along with significant periods of inactivity being evident. Similarly, chapter 3 examines resource efficiency.

d: The lack of externally reported key performance indicators for processing time efficiency means transparent and meaningful information is not being provided to the Parliament and other stakeholders so as to hold Home Affairs accountable for its performance. Publishing service standards and targets, and performance against them, is an approach used in other countries (see paragraph 2.28).

e: Paragraphs 3.19 and 3.20 of this report recognise that the number of decisions in the early part of 2018–19 was well above the equivalent period in 2017–18. The ANAO’s analysis, outlined in Figure 3.1, was that the number of decisions taken in the early part of 2018–19 nevertheless remained well below that being achieved prior to 2017–18.