Background

1. The Indigenous Australians’ Health Program (IAHP) was established in 2014 through the consolidation of four existing Indigenous health funding streams administered by the Department of Health (the department).

The IAHP aims to provide Aboriginal and Torres Strait Islander people with access to effective high quality, comprehensive, culturally appropriate, primary healthcare services in urban, regional, rural and remote locations across Australia.¹

Primary healthcare services are usually the ‘entry point’ for persons into the broader health system and can be contrasted to services provided through hospitals or when people are referred to specialists.

The IAHP access to effective high quality, comprehensive, culturally appropriate, primary healthcare services in urban, regional, rural and remote locations

2. The bulk of IAHP expenditure is via grants. Since 2015, IAHP primary healthcare grants totalling approximately $1.44 billion have been awarded with 85 per cent of this funding going to Aboriginal Community Controlled Health Organisations.

3. As at March 2018, a total of 164 organisations are receiving IAHP primary healthcare grant funding. In 2016–17, IAHP-funded services provided primary healthcare services to an estimated 352,000 Indigenous Australians. This represents 54.2 per cent of the estimated total Indigenous population.

Rationale for undertaking the audit

4. The IAHP was selected for audit because it is intended to contribute towards achieving the Indigenous health-related ‘Closing the Gap’ targets regarding life expectancy and infant mortality. The program represents the Australian Government’s largest direct expenditure on Indigenous primary healthcare.

Audit objective and criteria

5. The audit objective was to assess the effectiveness of the Department of Health’s design, implementation and administration of primary healthcare grants under the IAHP.

6. To form a conclusion against this objective, the ANAO adopted the following high-level criteria:

• Did the department design the IAHP primary healthcare components consistent with the Government’s objectives in establishing the IAHP?
• Has implementation of the IAHP primary healthcare components been supported through effective coordination with key Government and non-Government stakeholders?
• Has the department’s approach to assessing primary healthcare funding applications and negotiating funding agreements been consistent with the Commonwealth Grant Rules and Guidelines?
• Has the department implemented a performance framework that supports effective management of individual primary healthcare grants and enables ongoing assessment of program performance and progress towards outcomes?

Conclusion

7. The department’s design and implementation of the primary healthcare component of the IAHP was partially effective as it has not yet achieved all of the Australian Government’s objectives in establishing the program. The department has not implemented the planned funding allocation model and there are shortcomings in performance monitoring and reporting arrangements. However, the department has consolidated the program, supported it through coordination and information-sharing activities and continued grant funding.

8. The Government’s original objectives in establishing the IAHP are due to be fully achieved in 2019–20, four years later than originally planned. The majority of IAHP primary healthcare grant funding to date has been allocated in essentially the same manner as previous arrangements rather than the originally intended needs based model. Program implementation has been supported through appropriately aligning funding streams to intended outcomes and coordination and information-sharing with relevant stakeholders.

9. Most aspects of the department’s assessment of IAHP primary healthcare funding applications and negotiation of funding agreements were consistent with the Commonwealth Grants Rules and Guidelines (CGRGs). The exception to this was the poor assessment of value for money regarding the majority of grant funds. The grant funding agreements were fit for purpose, but the department has not established service-related performance benchmarks for funded organisations that were provided for in most of the agreements.

10. The department has not developed a performance framework for the Indigenous Australians’ Health Program. Extensive public reporting on Indigenous health provides a high level of transparency on the extent to which the Australian Government’s objectives in Indigenous health are being achieved. However, this reporting includes organisations not funded under the IAHP and, as such, it is not specific enough to measure the extent to which IAHP funded services are contributing to achieving program outcomes.

11. In managing IAHP primary healthcare grants, the department has not used the available provisions in the funding agreements to set quantitative benchmarks for grant recipients. This limits its ability to effectively use available performance data for monitoring and continuous quality improvement. Systems are in place to collect performance data, but systems for collecting quantitative performance data have not been effective. Issues with performance data collection limit its usefulness for longitudinal analysis.

Supporting findings

Program design and implementation

12. The design of the IAHP was consistent with the Government’s objectives of achieving budget savings and reducing administrative complexity through consolidation of existing grant programs. The objective of allocating primary healthcare grant funding on a more transparent needs basis will not be achieved until 2019–20, four years behind the timetable agreed by Government in establishing the IAHP.

13. Three outcomes were established for the program and set out in published IAHP grant guidelines. One of the outcomes does not clearly identify the desired end result. IAHP funding, including the primary healthcare component, are appropriately aligned to the outcomes.

14. The department uses a wide variety of forums and networks to share information and seek feedback about its current and planned Indigenous health activities, including the IAHP. Some coordination and joint planning activities relating to primary healthcare have also been undertaken through the Aboriginal Health Partnership Forums.

Awarding Grants

15. Ninety eight per cent of IAHP primary healthcare grant funding has been provided through non-competitive processes. The department obtained Ministerial agreement for these processes.

16. Most aspects of the assessment of funding proposals were undertaken consistently with the CGRGs and IAHP guidelines. The exception was assessment of value for money. Assessment records for some funding rounds, including the $1.23 billion ‘bulk’ round undertaken in 2015, lacked evidence of substantive analysis of value of money considerations. The department was also unable to provide evidence it had undertaken a value for money assessment regarding the $114 million grant to the Northern Territory Government. In virtually all cases, risk assessments formed part of the assessment process.

17. Departmental delegates were provided with sufficient advice to enable them to discharge their obligations under the Public Governance, Performance and Accountability Act 2014 in approving IAHP grant proposals. The timeliness of the advice varied, but was provided relatively quickly for the larger 2015 funding rounds.

18. Funding agreements are fit for purpose, using a grant head agreement and an IAHP-specific schedule. The specific services to be provided by each funded organisation are set out in separate Action Plans, which are appropriately referenced in the agreement schedule. The agreements with Aboriginal Community Controlled Health Organisations allow for the setting of individual performance targets, but no targets have been set. All agreements also clearly set out reporting requirements.

Monitoring and Reporting

19. The department has not established a performance framework for the primary healthcare component of the IAHP.

20. Systems are in place to collect performance data, but systems to collect quantitative performance data have not been effective. Several changes to data collection processes have resulted in an increased reporting burden on IAHP grant recipients and two six-monthly data collections being discarded or uncollected. These breaks in the data series limit its usefulness for longitudinal analysis of performance trends. The department has commenced projects to improve the quality of data, but has limited assurance over the quality of data collected before 2017 as it has not been validated.

21. The department relies on public reporting of a range of Indigenous health indicators to monitor achievement of program outcomes. The reporting includes data about services not funded under the IAHP. As such, it is not specific enough to measure the extent to which IAHP funded services are contributing to achieving program outcomes. The department was also unable to demonstrate how it used the data to inform relevant policy advice and program administration.

22. The department is not effectively using available performance data to monitor IAHP grant recipient performance and has not set quantitative national key performance indicator (nKPI) based benchmarks for grant recipients. The department’s ability to set performance expectations and assess actual performance is limited by the currency of data and variability in the content of Action Plans.

Recommendations

Summary of entity response

23. The Department of Health (‘the Department’) notes the findings of the report and agrees with the recommendations.

It is pleasing that the report finds: the program has been consolidated and supported through coordination and information sharing activities; programme implementation has appropriately aligned funding streams to intended outcomes; and the objective of reducing administrative complexity has been achieved.

Work is already underway within the Department which aligns with the report’s recommendations, and the report provides a platform to continue these efforts. In particular, the Department has introduced more robust assessment processes for primary health care grants under the Indigenous Australians’ Health Programme and has also commenced development of enhanced performance measurements of program outcomes, supported by an outcomes-focussed policy framework. The Department’s responses to the individual recommendations provide further detail.

The report identifies that the introduction of a new funding allocation model for the distribution of primary health care funding as announced in the 2014–15 Budget is yet to be completed and finds that this deferral has contributed to a partially effective implementation of the Australian Government’s objectives in establishing the programme. The Government announced in the 2018–19 Budget that the model will be implemented from 1 July 2019 and the Department will continue to work closely with Aboriginal Community Controlled Health Services to deliver this important initiative. The Department notes that this deferral occurred in the context of extensive stakeholder engagement together with significant data improvement activities designed to support a robust and well-developed funding model.

Whilst the Department is committed to continuous improvement of the administration of the Indigenous Australians’ Health Programme, the Department wishes to acknowledge and recognise the significant contribution our network of Aboriginal Community Controlled Health Services are making to improve the health of their communities under the Australian Government’s Closing the Gap agenda

1. Background

Indigenous health and government funding

1.1 In 2008, the Council of Australian Governments set targets aimed at reducing or eliminating differences in specific outcomes between Indigenous and non-Indigenous Australians. These Closing the Gap targets covered three broad areas, of which health was one. In 2013, the Australian Government released the National Aboriginal and Torres Strait Islander Health Plan 2013–23, which set out a 10 year plan for the direction of Australian Government Indigenous health policy. This was followed in 2015 by an Implementation Plan for the Health Plan. The Implementation Plan outlines the actions to be taken by the Australian Government, the Aboriginal community controlled health sector, and other key stakeholders to give effect to the Health Plan. Progress under the Implementation Plan is measured against 20 goals and 106 deliverables that were developed to complement the existing Closing the Gap targets.

1.2 While the 2018 Prime Minister’s Closing the Gap report and the 2017 Aboriginal and Torres Strait Islander Health Performance Framework report show gains have been made in some areas, Indigenous Australians continue to experience significantly poorer health outcomes than the general population.² Life expectancy is about 10 years lower. Rates of chronic disease are higher, with some tending to occur at a younger age in Indigenous Australians compared to the general population. The overall burden of disease³ for Indigenous Australians is also 2.3 times higher. Some factors potentially impacting on health, such as smoking and obesity, are higher: the overall smoking rate is 2.7 times higher and Indigenous Australians are 1.6 times as likely to be obese as the general population. Some health interventions can have a long lead time before measurable impacts are seen across the target population—for example, up to three decades in the case of many smoking-related diseases.

1.3 The Australian and state and territory governments all fund Indigenous health. Estimated total direct funding on Indigenous health⁴ has increased since the setting of the Closing the Gap targets: from $4.76 billion in 2008–09 to $6.30 billion in 2015–16.⁵ Of this, expenditure specifically targeted at Indigenous Australians was $1.44 billion in 2015–16. The remainder is expenditure on ‘mainstream’ services used by Indigenous Australians, notably hospitals, and the cost of various Australian Government subsidies, including the Medicare Benefits Scheme and the Pharmaceutical Benefits Scheme. Indigenous-related expenditure on public and community health services⁶ in 2015–16 is estimated at $1.73 billion. The Australian Government contributes 59 per cent of the total 2015–16 government expenditure on the Indigenous public and community health services category.

1.4 Measured on a per-person basis, total direct health funding on Indigenous Australians in 2015–16 by all Governments in Australia is 1.83 times greater than the direct health funding on non-Indigenous Australians. Funding on the public and community health services category of Indigenous health is 3.59 times higher.

The Indigenous Australians’ Health Program

1.5 The Department of Health (the department) has had primary responsibility for Commonwealth Indigenous health policy and funding since 1995. Since that time, the department’s role has been to improve both Indigenous Australians’ access to mainstream primary healthcare and increase the capacity of the Indigenous-specific sector to provide comprehensive primary healthcare.⁷

1.6 In the May 2014 Budget, the Australian Government announced the establishment of the Indigenous Australians’ Health Programme (IAHP). It was formed by consolidating four existing funding streams administered by the department, which between them included around 30 discrete funding components.⁸ The consolidation was intended to reduce administrative complexity and enable an improved focus on basic health needs (including clinical primary healthcare) at a local level to improve health outcomes. The stated high-level objective for the IAHP is:

to provide Aboriginal and Torres Strait Islander people with access to effective high quality, comprehensive, culturally appropriate, primary health care services in urban, regional, rural and remote locations across Australia.

1.7 A new primary healthcare grant funding allocation model was also to be developed for implementation from 2015–16. As discussed in Chapter 2, development and implementation of the new allocation model has been delayed.

1.8 With the exception of ‘social and emotional wellbeing’ activities being transferred to the Department of Prime Minister and Cabinet⁹, the range of activities funded by the department under IAHP are broadly similar to those under the pre-IAHP arrangements and funding levels have increased. In 2013–14, funding under predecessor grant programs was $682.3 million (excluding social and emotional wellbeing activities). The budget allocation for IAHP funding in 2017–18 is $856.1 million.

1.9 The bulk of IAHP expenditure is via grants. As at March 2018, $743.5 million of 2017–18 grant funds had been expended or committed.¹⁰ The largest component is grants to provide primary healthcare services to Indigenous Australians, which account for $461.5 million (62 per cent) of total IAHP 2017–18 expended and committed grant funding.¹¹ Other significant grant funding areas under the IAHP relate to activities intended to increase Indigenous Australians’ access to mainstream services¹² ($108 million, or 15 per cent) and funding for various maternal/early childhood health and anti-smoking activities (about five per cent each).

1.10 As at March 2018, 164 organisations are receiving IAHP primary healthcare grant funding. Around 140 of these organisations are Aboriginal Community Controlled Health Organisations (ACCHOs), which collectively account for 85 per cent of total IAHP core primary healthcare grant funding in 2017–18. The remaining primary healthcare grant recipients include the Northern Territory Government, various public sector regional health bodies across several states, and a small number of private sector providers and non-government organisations.

1.11 The geographical distribution of the healthcare facilities receiving IAHP primary healthcare funding is shown in Figure 1.1.

Figure 1.1: Distribution of IAHP primary healthcare funded facilities

Source: Department of Health.

1.12 The 2017–18 primary healthcare grant funding amounts according to jurisdiction and remoteness index is shown in Table 1.1.