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MORRISON GOVERNMENT NEEDS TO IMPROVE VALUE FOR MONEY IN DELIVERING AID

April 17, 2020

Labor’s concerns about the growing privatisation of Australia’s aid programs have been vindicated by an Auditor-General report finding that the Morrison Government’s systems for ensuring value for money from aid contractors are falling short.

The Australian National Audit Office’s report, tabled yesterday, examined the Government’s use of aid “facilities” – large contracts awarded to private sector managing contractors to deliver all aspects of a specific aid project or program.

The report found that the Department of Foreign Affairs and Trade is not gathering the financial data needed to effectively determine whether administrative costs and overheads incurred by facilities represent value for money for Australian taxpayers.

It said the Government’s processes for designing aid programs were not including facility administration costs when assessing value for money and contractors’ supply chain risks were not being appropriately monitored.

This follows DFAT admitting in response to Labor questions in Senate estimates last month that it had not carried out any analysis of the transaction costs incurred when delivering aid projects through private contractor-led facilities rather than by DFAT or not-for-profit aid non-government organisations.

An Australian National University survey in 2018 found that a majority of aid stakeholders said facilities were increasing transaction costs while reducing the quality of aid projects.

Australian taxpayers rightly insist on value for money from the international development budget. Australians want to know that the aid projects they fund are delivering real improvements in the lives of people suffering from poverty in developing countries.

This requires a strong focus on keeping overheads down and monitoring costs, outcomes and effectiveness – it is disturbing that the Government’s push to privatise delivery of aid projects has come at the expense of effective systems to monitor and control administration costs.

Labor expects that the powerful Joint Committee of Public Accounts and Audit will seriously consider this report and the government’s failure to demonstrate value for money, given the Committee’s record of independently scrutinising government expenditure and performance.

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