The auditor-general has criticised the Department of Regional New South Wales, saying the process for fast-tracked grants in the Bushfire Local Economic Recovery Program (BLER Fund) "lacked integrity".
The BLER Fund was established after the 2019-2020 Black Summer bushfires, which burned more than 24 million hectares across communities in New South Wales, Victoria and Queensland.
It aimed to help communities rebuild infrastructure and create new employment opportunities to replace those lost in the fires.
NSW auditor-general Margaret Crawford called out issues with administration, threshold caps and conflicts of interest with the accelerated scheme in a report released this morning.
She said assessment processes for the fast-track stream "deviated" from guidelines that aimed to ensure fair dispersal of funds.
"The department developed a set of guidelines for the fast-tracked stream based on draft Commonwealth funding criteria, but the department's guidelines lacked sufficient detail to ensure transparent and consistent decision-making," she said.
"The guidelines also did not contain detailed information on how the assessment and approval processes would work.
"The department did not implement conflict of interest declarations for staff involved in the assessment process."
Ms Crawford also scrutinised a funding threshold decision and the overall role of the office of then deputy premier John Barilaro.
"For example, the guidelines did not set out a role for the then deputy premier or his office in the assessment process, but the deputy premier's office played a key role in project selection," she said.
"At the direction of the Deputy Premier's office, a $1 million minimum threshold, not mentioned in the guidelines, was applied to projects, below which, projects would not be funded.
"This resulted in a number of shortlisted projects in areas highly impacted by the bushfires, including all shortlisted projects located in Labor Party-held electorates, being excluded without a rationale being documented at the time."
Department responds
The BLER Fund was established to support "job retention and creation in bushfire impacted regions, strengthening community resilience and reducing the impact of future natural disasters", according to the department's website.
"More than $500 million has been committed to support bushfire impacted communities through immediate, medium and long-term funding," it says.
A response from the Department of Regional New South Wales was published in the auditor general's report.
Department secretary Rebecca Fox said it was important to consider the context of the time in which the fast-tracked stream of the BLER Fund was developed and implemented.
"Communities were deeply traumatised and needed rapid investment in projects to help them recover," she said.
"This urgency was reflected in the timelines imposed by the Commonwealth Government, writing to the premier and deputy premier on two separate occasions (July 14, 2020 and October 5, 2020), requesting rapid project selection."
Ms Fox said the Commonwealth Government did not finalise the BLER Fund program guidelines until September 21, 2020, meaning the Department of Regional NSW was working through projects before receiving those guidelines.
"In terms of the projects that were not funded in the fast-track round (including some excluded due to the $1 million threshold), many of these were subsequently funded in other programs that were in simultaneous development ... and were better suited to those types of projects."
