Community health and hospitals grant program "ineffective": ANAO

The Department of Health and Aged Care’s administration of the $2 billion Community Health and Hospitals Program (CHHP) was “ineffective and fell short of ethical requirements”. This is according to a report by the Australian National Audit Office (ANAO) recently tabled in parliament.

The CHHP program included 171 projects totalling $2 billion of taxpayer funding that were selected and announced by the former government — 108 projects were administered as grants, with the remaining 63 projects entered into as national partnership agreements with state and territory governments.

Of the 63 partnerships, more than half (34) were selected outside of any expression of interest (EOI) process, with no EOI proposal and no assessment against eligibility or assessment criteria. Of the 29 projects that were assessed via the EOI process, 1 in 4 were neither “suitable” nor “highly suitable”. Several were misaligned with program objectives, duplicated services already provided or had access to alternative funds. One project in Queensland wasn’t assessed at all.

“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,” said Minister for Health and Aged Care Mark Butler in a statement.

“I’ve directed my department to run the ruler over the remaining projects that have stalled to ensure that Australians get value for money,” Butler said.

The ANAO report found that the administration of the 108 CHHP projects administered as grants was “not appropriate, involved deliberate breaches of the relevant legal requirements and the principles underpinning them”.

For example, a $4 million grant captain’s pick from the former Prime Minister to the Esther Foundation was entered into without a financial viability assessment, audited financial statements or even the legal authority to support the expenditure, said the department in a statement. “Subsequently, deeply distressing allegations against Esther House were aired and a West Australian parliamentary inquiry was held into allegations of sexual and psychological abuse at the foundation. The Esther Foundation later entered into liquidation in May 2022.

“As late as November 2022, more than half the CHHP projects involving infrastructure were stuck in the preliminary or planning stage, and a little over half the CHHP’s $2 billion funding has been expended.”

The ANAO made four recommendations to the Department of Health and Aged Care addressing compliance with finance law, grants assessment processes, the quality of advice to government and GrantConnect reporting.

The department has accepted all the recommendations of the ANAO report. The department has already strengthened its internal procedures and is taking additional and broader actions in response to the findings to support best practice administration.

This will include a comprehensive external review of its financial controls and assurance framework to ensure it is fit for purpose and help inform the response to the ANAO’s recommendations.

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