The Auditor-General, Mr Grant Hehir, has released a scathing review of the Morrison Government’s handling of the Community Health and Hospitals program (CHHP).
The Program Performance Audit, released by the Australian National Audit Office on 5 June 2023, found that the Department of Health and Aged Care’s (Health’s) administration of CHHP, under the former government, was ineffective and fell short of ethical requirements.
The governance and administration of $2 billion in funding arrangements, which included national partnership agreements with states and grants to PHNs and NGOs, was not effective, with only half of the money – $1.05 billion – spent by November 2022.
“Administration was undermined by deliberate breaches of the Commonwealth Grants Rules and Guidelines and failure to advise government where there was no legislative authority for grant expenditure,” Mr Hehir reported.
“Health’s administration of CHHP grants was not appropriate, involving deliberate breaches of the relevant legal requirements and the principles underpinning them.”
Current Federal Minister for Health and Aged Care, Mr Mark Butler, described the Morrison Government’s management of the program as a system of “waste, rorts and captain’s picks in a billion-dollar health slush fund.”
“The projects were largely selected outside of any EOI process, and with no assessment against eligibility or criteria. Several were misaligned with objectives, duplicated services already provided, or had access to alternative funds. One project wasn’t assessed at all,” Minister Butler said.
“This taxpayer money was so poorly allocated that years later, at a time when Medicare and the health system are under such strain, just half of the $2 billion has actually been spent.
“I’ve directed my department to run the ruler over the remaining projects that have stalled to ensure that Australians get value for money.”
CHHP’s purpose was to fund development that would reduce the pressure on the nation’s health-care systems, and the program has supported the establishment of 171 infrastructure and service delivery projects, costing between $50,000 to $152 million, primarily in the areas of mental health and hospital services.
However, only two of 63 national partnership agreement projects were assessed by the department as ‘highly suitable,’ seven of the 108 grants awarded had no opportunity guidelines, and it took nearly four years for the CHHP to develop a draft monitoring and evaluation framework.
“Health did not manage CHHP regulatory and compliance risks, including fraud risk,” Mr Hehir stated.
“Health established an expression of interest (EOI) process for potential CHHP projects and assessed state and territory EOIs against established criteria, however, most approved projects were selected by government outside this process.
“In advising the Minister for Health (the Minister) to agree to enter into national partnership agreements, Health did not provide advice about how the selected projects contributed to CHHP objectives or if they merited funding.
“Initial national partnership agreements were developed with limited consultation with states and territories prior to the agreement being provided.
“Health did not develop grant opportunity guidelines for seven of 108 CHHP grants, and in at least three instances this represented a deliberate decision by senior management to not comply with finance law – controls for, and reporting of, non-compliance with finance law were insufficient.”
In terms of delivery, the report found that just over half (55%) of the projects involving infrastructure were still in the preliminary or planning stage by November 2022 and only 7% of service delivery projects had been completed – though a further 83% had also commenced delivery of services.
Mr Hehir made four recommendations, three of which directed the Department to follow the existing legal requirements, while the fourth highlighted the need to establish a quality assurance process “to confirm and where necessary correct the accuracy of reporting on GrantConnect.”