Introduction

The Department of Immigration and Citizenship (DIAC) is responsible for implementing the Government's immigration policies. The department's purpose is to enrich Australia through the well managed entry and settlement of people.¹ To achieve this purpose, DIAC is responsible for achieving two Government outcomes:

• Outcome 1. Contributing to Australia's society and its economic advancement through the lawful and orderly entry and stay of people²; and
• Outcome 2. A society which values Australian citizenship and social cohesion, and enables migrants and refugees to participate equitably. ³

Outcome 2 is divided into five outputs. Settlement services are covered by Output 2.1, which focuses on building self-reliance, developing English skills and fostering links with mainstream services.⁴ Output 2.1 includes a wide range of activities, including the Settlement Grants Program (SGP).

Settlement Grants Program

SGP was introduced on 1 July 2006 following a review of DIAC's settlement services.⁵ The aim of SGP is to deliver services that assist eligible clients to become self-reliant and participate equitably in Australian society as soon as possible after arrival. Through SGP, DIAC funds settlement projects that target specified groups of new entrants.

These target groups are:

• permanent residents who have arrived in the last five years as humanitarian entrants or as family stream migrants with low English proficiency;
• dependants of skilled migrants in rural and regional areas with low English proficiency who have arrived in the last five years;
• select temporary residents (Prospective Marriage, Provisional Spouse, Provisional Interdependency visa holders and their dependants) in rural and regional areas who have arrived in the last five years and who have low English proficiency; and
• communities which require assistance to develop their capacity to organise, plan and advocate for services to meet their own needs and which are still receiving significant numbers of new arrivals.⁶

Projects funded through SGP fall into three categories, referred to as service types. The three service types are Orientation to Australia—practical assistance to promote self-reliance, Developing Communities, and Integration—inclusion and participation.⁷ Services are provided by SGP grant recipients, who are known as service providers. To be eligible for SGP funding, an organisation must be a not-for-profit incorporated community-based organisation, a local government organisation, currently funded to deliver services under the Adult Migrant English Program, and/or a government service delivery organisation in a rural or regional area.⁸

DIAC's National Office (NatO) and State and Territory Offices (STOs) share responsibility for effectively managing the program. Service providers apply for grants in response to annual advertising. DIAC assesses applications and provides funding recommendations to the Minister for Immigration and Citizenship, who makes the decisions to award grants. After the Minister announces the outcome of the funding round, DIAC negotiates funding agreements with successful applicants. At regular intervals throughout the grant period, providers report on progress and DIAC pays grant instalments.

To date there have been three annual SGP funding rounds. Just over $30 million has been allocated to SGP projects in each round, amounting to a total of $95.5 million. This has funded 669 grants: 209 in the 2006–07 funding round; 231 in 2007–08; and 230 in 2008–09.

Audit objective and scope

The objective of the audit was to assess the effectiveness of the Department of Immigration and Citizenship's management of the Settlement Grants Program. The ANAO assessed DIAC's performance in terms of how effectively it planned for funding rounds, assessed and allocated grants, monitored and evaluated the program, and managed relationships with its stakeholders. In doing so, the ANAO focused on SGP projects that received funding in the 2007–08.

Conclusion

The Settlement Grants Program assists eligible migrants to become self reliant and participate equitably in Australian society. The program funds service providers to manage projects which offer orientation, community development and/or integration services to specific groups of new migrants.

Overall, DIAC has developed an effective framework for managing SGP. DIAC has implemented the program in a manner that is consistent with Government policy and its strategic objective, and has clearly defined the program's parameters. It has also established a strategic risk management framework, focusing on managing risks at a whole-of program level, but has focussed less on risks to performance at an operational level. In addition, DIAC has developed sound procedures to:

• promote funding rounds;
• assist applicants to apply for SGP grants;
• assess applications and allocate grants; and
• monitor individual grant recipients' compliance with funding agreement conditions.

DIAC provides its officers with adequate guidance documents and training on essential elements of SGP and supports service providers to apply for grants and deliver funded projects. DIAC's grant managers and service providers reported that their relationships were positive and productive.

However, DIAC has not developed or implemented effective performance indicators and a performance management framework that would assist it to measure, monitor and assess the performance of individual projects and the program as a whole. Further, the department should provide more meaningful settlement needs information to assist applicants to better target settlement needs. Also, the current Grants Management System does not support the effective administration of SGP.

In some areas DIAC has not effectively implemented its procedures for assessing grant applications and monitoring grant progress reporting, which are interpreted and applied inconsistently across DIAC's STOs. Also, DIAC has poorly documented the basis of funding recommendations, including actions taken in response to discussions with the Parliamentary Secretary. The standard of documentation supporting grant assessment processes has been a recurring theme in some recent ANAO audits of grants administration.⁹ Without adequate documentation, departments are not able to demonstrate that all applicants have been treated equitably, and applications have been considered on their merits having regard to the program's objectives.

The ANAO has made six recommendations to improve DIAC's management of SGP. These are aimed at developing and implementing an effective performance management framework, improving settlement needs information, ensuring key decisions are adequately documented, and evaluating the program.

Key findings by chapter

Policy and Planning

DIAC has both articulated an objective for SGP, and implemented a program in a manner that is consistent with Government policy and its strategic objective. However, performance indicators for SGP do not fully address the key elements of the program's objective. As such, it is difficult for DIAC to measure the impact of the program and whether it is effectively achieving its objective.

DIAC has developed a risk framework for SGP which satisfactorily addresses the major program-level risks for SGP. However, the framework does not address grants administration risks encountered by STOs responsible for the day-to-day management of SGP. At the individual grant level, risks are identified by SGP applicants and considered by DIAC during the grant application assessment process. During the life of the grant, progress reports do not explicitly mention risks and grants managers are not required to refer to, or record changes to, risks identified during the assessment process or to record emerging risks.

DIAC funds SGP projects based on an assessment of settlement needs. While DIAC has established a system to collect settlement needs information from its STOs, the way in which STOs reported needs data varied.

Assessing and Allocating Grants

DIAC provides settlement needs and arrivals information, for each State and Territory. However, needs information is described in a general manner, not associated with specific geographic areas. The information does not provide any real guidance to applicants about the type of projects required in specific geographic areas to target specific sections of the SGP target group.

DIAC has developed an on-line grant application form. Grant applicants are generally positive about the concept of an on-line form. However, the instability of the system is frustrating for applicants.

DIAC has established processes to promote and assess grant applications, including a two tiered assessment, and the documentation to support those processes. STOs had varying approaches to assessing grant applications, but within each STO the chosen approach was consistently applied.

Documentation of key funding decisions is poor. Grant application assessors do not document when referring to, or relying on, knowledge or documentation other than the assessment form and the basis of funding recommendations was often poorly documented and unclear. In this context, in the 2008–09 funding round, the Parliamentary Secretary for Multicultural Affairs and Settlement Services discussed with DIAC his concerns about funding to various community groups in Western Sydney. In response, the department recommended that projects targeting four community groups, including two communities in the Parliamentary Secretary's electorate, be funded from additional monies made available following the 2008–09 Federal Budget. The list of recommended projects was approved by the portfolio Minister. DIAC did not clearly and adequately document the circumstances surrounding, and its actions in response to, discussions with the Parliamentary Secretary. In the context of this audit, DIAC provided the ANAO with advice that at no time did the Parliamentary Secretary direct a particular outcome, nor did he raise specific projects he wanted to see funded. DIAC has also advised the ANAO that it has revised its processes around documentation of key actions and decisions.

Negotiating Funding Agreements

DIAC employs a formula to calculate the distribution of monies to STOs for allocation to projects following assessment of grant applications. The formula has several variables, including whether projects are in metropolitan or rural areas, type of target group and the length of time clients have been in Australia.

The details of successful grants are made public prior to the applicants being advised of the outcome of the round. Following the announcement negotiations between DIAC and the service provider usually result in differences between the particulars in the application and the final project, such as location of services and length of and/or funding amount of grant.

The outcome of the funding round allocation cannot be announced prior to the release of the Federal Budget in May, and DIAC has decided that the SGP funding year will start on 1 July of each year. The timing of the announcement impacts on STOs and grant applicants. Applicants submit applications in October, seven months prior to the announcement. The uncertainty about the outcome inhibits providers' ability to plan for the forthcoming financial year. For STOs, an announcement in late May leaves only one month to negotiate funding agreements with successful applicants. As a result, very few funding agreements are executed prior to the start of the financial year.

Consistent with government policy, a majority (62 per cent) of the SGP funding available for allocation to grants has been awarded to one year grants. DIAC advised that, limiting forward financial commitments provides the flexibility to respond to emerging and/or changing needs. However, work programs of multi-year grant recipients are renegotiated annually, giving DIAC the flexibility to negotiate changes to the project. Short term grants impact on grant recipients in terms of, inter alia, decreased ability to plan, difficulty attracting and retaining competent staff and disruptions to service provision. There is also an administrative impact on DIAC of granting a higher percentage of one year grants. It would be beneficial for DIAC to review the balance of one year and multi-year grants, taking into account the Government's need for funding flexibility and the impact of short term grants on recipients.

Monitoring and Evaluating Grants

DIAC monitors SGP grants through a structured progress reporting regime whereby grant recipients are required to provide DIAC with reports of their progress against work program outputs. Due to the instability of SGP systems, reporting is often done off-line. There are differences in the approaches of STOs when reviewing progress reports.

DIAC's On-line Settlement Client Activity Reports (OSCAR) system captures direct client contacts by organisations. The system measures limited activities within service type; data that providers also report on as part of the progress reporting process. DIAC does not use the statistics generated by OSCAR in any meaningful way.

Grant payments to SGP providers were timely and consistent with funding agreements. However, as at mid-November 2008, 43 per cent of completed SGP grants had not been appropriately acquitted. DIAC is currently focusing on improving the grant acquittal process and has advised the ANAO that, by May 2009, it has reduced the number of unacquitted grants.

DIAC analyses application and funding recommendation outcomes. This is useful analysis that provides an overview of the program at the application stage. However, during the funding year DIAC does not analyse the available SGP data, such as that collected through the grants monitoring process, at a whole-of-program level or collect data that would assist it to monitor the program or determine if it is meeting its objective.

DIAC's evaluation of individual grants is limited and focussed on administrative compliance. DIAC has developed a quality assurance program for SGP that focuses on grant recipients' management of individual grants. DIAC has not progressed a planned quality assurance program beyond the pilot stage. At the program level, DIAC has not undertaken a formal evaluation of its management of SGP or whether it is assisting eligible clients to become self-reliant and participate equitably in Australian society.

Managing Relationships

Generally STO grant managers, which are responsible for managing ongoing relationships with grant recipients, reported positive and productive relationships with service providers. DIAC has not established effective procedures for referring clients from Integrated Humanitarian Settlement Strategy providers to SGP providers or from one SGP provider to another. The absence of such procedures increases the possibility that entrants will not be made aware of available settlement services.

An internal Statement of Output Expectations outlines the services of DIAC's NatO and STOs. The SGP Handbook describes the roles and responsibilities of relevant NatO and STO staff in greater detail. The ANAO found that the effectiveness of communication and consultation between and within NatO and STOs varied.

There are several sources of written guidance available to SGP staff, including the SGP Handbook. Despite it being a useful reference tool, the SGP Handbook is not used by most STO personnel. In addition to the guidance produced by NatO, some STOs have developed their own guidance documents. DIAC has not reviewed these additional materials to ensure they are consistent with prescribed program guidance.

NatO provides staff with adequate training on elements of SGP, including training for assessors, information sessions on the terms and clauses of the funding agreement and courses about the OSCAR system. Staff responses to training were mixed. At the STOs, there is a reliance on new starter induction and ongoing on-the-job training to instruct staff working on SGP about the program. The quality of local induction and training was variable and depended upon the knowledge and competency of the instructing supervisor or colleague.

DIAC provides training to SGP service providers in accordance with a National Training Strategy. Service providers reported that the training they had attended was generally useful. DIAC provides support to potential grant recipients when applying for grants, holding information sessions and providing a comprehensive Application Information Booklet. In addition, service providers described grant managers as approachable, responsive and dedicated.

SGP Systems

The Grants Management System (GMS), and its sub-systems, does not support DIAC personnel to effectively administer SGP or service providers to propose or implement SGP projects. DIAC staff and service providers universally expressed frustration with the SGP systems and the impact the systems have in terms of inefficient use of time and resources. System issues included instability and unavailability of the system (outages), inefficient and time-consuming off-line reporting, lack of reporting functionality and GMS's inability to interact with DIAC's financial management information system, SAP. GMS is considered a low risk system relative to other DIAC systems. As such, the Settlement Grants Section has experienced difficulty in obtaining support for changes to overcome GMS shortcomings and the future of the system is uncertain.

Summary of DIAC's response

The Department of Immigration and Citizenship (DIAC) notes the findings of the Audit of the Department's Administration of the Settlement Grants Program. DIAC further notes that the ANAO has concluded that, overall, DIAC has developed an effective framework for managing the SGP, implemented the program in a manner that is consistent with Government policy and its strategic objective, and clearly defined the program's parameters. In addition, DIAC notes the ANAO has concluded that its two-tier assessment is a sound approach.

With regard to some of the improvements this report suggests could be made to the SGP, DIAC continually explores ways in which grants administration and program management can be improved. DIAC notes the ANAO's positive comments concerning continuous improvement of the SGP in recent years. Recent initiatives enhance the guidance provided to staff through all stages of program development and delivery, and establish appropriate standards of accountability and monitoring. Staff are consistently reminded about the use of agreed templates and the need for acquitting grants at the end of the program year.

DIAC acknowledges the findings concerning the importance of documenting key actions and events when making funding decisions. DIAC has developed extensive training for its assessors which focuses on documenting the rationale for decision-making, including where information other than that which is contained in the application is used to support a decision. These measures have progressively been put in place since October 2008 and have been consistently applied while assessing applications for the 2009-10 funding round.

There are a range of measures that have been put in place which help evaluate the effectiveness of the SGP at the grant level. More broadly, there are a number of challenges which make evaluating a program like the SGP difficult when what constitutes `successful settlement' is so often dependent upon a range of government programs, community support and individual factors. Notwithstanding these issues, DIAC is exploring how a more effective macro evaluation of the SGP can be achieved through targeted research and measurement, particularly focused on client feedback.

DIAC is currently exploring the option of an alternative grants management system which will address the concerns raised in the report.

The department accepts the recommendations of this report and notes that it has already put in place a number of measures which address the issues raised. Other initiatives will be progressively implemented.

Footnotes

¹ Department of Immigration and Citizenship, Annual Report 2007–08, Commonwealth of Australia, Canberra, 2008, p.16.

² Department of Immigration and Citizenship, Budget Statements 2008–09, Immigration and Citizenship Portfolio, Budget Related Paper No. 1.12, Commonwealth of Australia, Canberra, 2008, p. 23.

³ ibid., p. 39.

⁴ Department of Immigration and Citizenship, New Beginnings, Commonwealth of Australia, 2008, p. 3.

⁵ Department of Immigration and Citizenship, Report of the Review of Settlement Services for Migrants and Humanitarian Entrants, Commonwealth of Australia, May 2003.

⁶ Application Form, Settlement Grants Program 2009–10.

⁷ ibid.

⁸ ibid.

⁹ ANAO Audit Report No.14 2007–08, Performance Audit of the Regional Partnerships Programme, Department of Transport and Regional Services and ANAO Audit Report No.39 2006–07, Distribution of Funding for Community Grant Programmes, Department of Families, Community Services and Indigenous Affairs.