We acknowledge the traditional custodians of the land on which we work and pay our respects to all Elders past and present, and to the children of today who are the Elders of the future.
Artist: Jasmine Sarin, a proud Kamilaroi and Jerrinja woman.
A NSW Ombudsman report has identified shortcomings in the design and implementation of the audit program for COVID grants. The audits were administered by Service NSW (SNSW) and Revenue NSW (RNSW).
Tabled in NSW Parliament today, the Investigation into the compliance audit program for COVID grants report identifies unfairness in outcomes for audited grant recipients, and highlights the importance of having clear and comprehensive frameworks in place prior to the commencement of audit programs.
In 2021, 3 state Government grants − the Business grant, JobSaver payment and Micro-business grant − were introduced to help keep businesses afloat and their staff employed during the COVID-19 pandemic. The grant programs ultimately provided over $10 billion in financial assistance to nearly 300,000 businesses in NSW over a 3-month period.
While agencies faced immense time pressure during the initial rollout, the design of the grant delivery program led to a large number of applications being incorrectly approved for grants. One of the reasons for this was that many of the grants were approved automatically by an online system, without any human assessment of a grant recipient’s eligibility. The online system was incapable of critically assessing eligibility. Applicants were not informed that this was the case.
This investigation was prompted by complaints from grant recipients who started receiving repayment demands from the agencies from 2022. These complainants reported that they had applied for the grants honestly and in good faith, had understood that they had been assessed by the agencies as eligible, and had long ago spent the money to keep their business afloat during the COVID-19 pandemic.
“Audits are an essential element of grant programs, to ensure the protection of public funds against fraud,” NSW Ombudsman, Paul Miller noted. “In this case, while there certainly were instances of fraud, particularly in respect of the Micro-business grant, the focus of the audits was not on identifying fraud. Rather they were essentially no more than an after-the-fact eligibility assessment.”
Many auditees were placed under financial stress by the repayment demands, despite the grants’ original purpose of providing financial security.
Key findings include the failure to develop a comprehensive audit framework prior to the commencement of audits and the failure to apply policies consistently and exercise discretion reasonably, leading to inconsistencies in processes and inequitable outcomes.
“While basic procedures and work instructions for audit staff existed, a comprehensive audit framework was not developed from the outset. That has led to inconsistent treatment of cases over the 3 years that the audit program was operating,” Mr Miller said.
“We acknowledge that improvements to the audit program were made along the way. Many issues were addressed over time. However, these could and should have been foreseen and considered from the beginning.”
Issues identified included a failure from the outset of the audits to adopt and apply a clear and consistent policy for ‘offsetting’ in cases where recipients were found to have been ineligible for the grant they received, but would have been eligible for another grant had they applied for that instead.
There was also inconsistent treatment of recipients who had applied for and received a grant after receiving incorrect advice from agency staff that had encouraged them to do so.
“Hardship and internal review policies were also not developed and applied specifically for these audits, nor did agencies always advise applicants of general rights of review in respect of state debts,” Mr. Miller continued.
The report has made 7 recommendations aimed at improving future audit programs by increasing transparency, establishing a compliance methodology from the outset, ensuring consistent application of policies, and providing clear and customer-centric communication.
It also recommended that SNSW conduct a review of certain cohorts of auditees to identify any cases where debts should now be waived, including for those who had demonstrated financial hardship.
We acknowledge the traditional custodians of the land on which we work and pay our respects to all Elders past and present, and to the children of today who are the Elders of the future.
Artist: Jasmine Sarin, a proud Kamilaroi and Jerrinja woman.