Protecting Critically Endangered Grasslands

Tabled: 17 June 2020

4 MSA program oversight

A governance framework should have the structures, systems and practices to ensure:

  • decisions align with strategic intent and direction
  • services are delivered
  • policies, programs and plans are implemented effectively and efficiently
  • risks are monitored and adequately controlled
  • performance is monitored, reported and used to drive continuous improvement.

Sound governance is achieved through strong leadership, clear accountability, good communications, and appropriate committee structures that change in response to program needs and requirements.

4.1 Conclusion

DELWP was slow to establish governance arrangements for the MSA program and changed them several times. This has limited their effectiveness and meant DELWP missed key oversight activities or did not always do them consistently or to expected standards.

DELWP’s arrangements are not adequate to effectively oversee the MSA program’s future delivery, including ensuring risks are effectively managed and progress adequately communicated to key stakeholders.

4.2 Impact of governance changes

Delivery of the MSA program requires the involvement and coordination of multiple government departments and agencies. DELWP has overall responsibility for ensuring the state meets its commitments to the Australian Government.

Initial governance structure (2010–16)

DELWP did not fully establish formal governance arrangements until 2013, three years after the MSA program was endorsed. This means that at its critical startup phase, the MSA program lacked necessary leadership and oversight.

The initial intended governance structure included an IDC, a Project Control Board and a Project Management Group. Figure 4A details their responsibilities. However, this was not in place until several years into the MSA program.

Figure 4A
Key MSA Program governance committees and responsibilities 2010–16

Committee

Reported to

Responsibilities

IDC(a) The Minister

Responsible for MSA program oversight by:

  • providing direction for the resolution of emerging cross-portfolio agency issues
  • ensuring effective coordination of cross portfolio policy to support MSA program implementation
  • ensuring appropriate governance arrangement and risk management
  • ensuring effective communication of MSA program objectives, status and outcomes to stakeholders.
Project Control Board DELWP Secretary Provide departmental management, direction coordination and decision making for MSA program implementation.
Project Management Group Project Control Board Ensure effective implementation of the MSA program on the ground.

(a) The IDC comprised multi-agency representatives from departments and agencies involved in MSA Program delivery as well as the Departments of Premier and Cabinet and Treasury and Finance.
Source: VAGO, from DELWP documentation.

Issues with leadership and oversight

The government appointed the IDC in mid-2010 to provide whole of government direction and coordination to effectively implement the MSA program.

Given the MSA program’s scale and breath, the IDC was to operate as the peak project governance body. Its terms of reference stated it would meet quarterly, with more regular meetings to deal with key issues during the startup phase. However, the IDC first met in March 2013, three years after it was established. It met again in September 2013, but there is no evidence of it meeting since then.

Working groups

DELWP established working groups at the start of the MSA program, to provide specialist advice and inform planning and implementation. These included the:

  • Land Prioritisation Advisory Group
  • Stakeholder Reference Group
  • Ecological Reference Group
  • Environment Stakeholder Group
  • Adaptive Management Working Group
  • Local Government Liaison Group.

DELWP has disbanded some of the groups as there is no longer a need for them, while others have an ongoing role in MSA program delivery.

Governance since 2016

Since 2016, DELWP has managed and reported on the MSA program internally, as shown in Figure 4B.

Figure 4B
Current governance and reporting structure

Figure 4B  Current governance and reporting structure

Source: VAGO, from information provided by DELWP.

Oversight and reporting

The current MSA program governance is integrated into DELWP’s business reporting processes. External oversight occurs via the Minister and DTF. There is no formal external oversight body such as the IDC.

Reporting processes include:

  • monthly reporting to the relevant group executive team, the finance and performance committee, and the Minister as required
  • monthly dashboards providing the senior executive team with a high-level view of performance, detailed notes explaining material variations, key risks and next steps
  • quarterly reports to the Secretary
  • one-on-one meetings between divisional directors and senior executives.
Priority service project reporting

Priority service projects are key policy deliverables for government and often reflect legislative obligations.

In 2018, DELWP identified the MSA program as a priority service project. These projects have additional reporting requirements, including:

  • progress on KPIs and financial milestones as captured in the group’s business plans, noting percentage complete and explanations
  • an overall project status of ‘on-track’, ‘monitor’ or ‘off-track’ with commentary
  • next steps, risks and budget commitments.

Our review of monthly reports identified that DELWP:

  • reported the MSA program as ‘on-track’ against its annual business plan outputs, since listed as a priority project in 2018 through to 30 September 2019. When a project’s status is ‘on-track’, DELWP’s senior executive do not receive reports for review.

DELWP also:

  • reports MSA program progress and risks to its senior executive through other avenues, such as briefings and informal meetings
  • has reported to government on the MSA program through briefings relating to development of the MSA Act.

However, government briefings have focused on the legal and financial risks associated with the MSA program. They did not adequately reflect the impact of delays in acquiring land on meeting commitments to the Australian Government to establish the reserves by 2020.

4.3 Managing risk

Risk management is designed to identify, analyse, evaluate, treat and monitor risks that impact a program’s delivery and achievement of its objectives. It covers strategic as well as operational, financial and compliance risks.

The MSA program is to be implemented over the next 40 years and has been significantly impacted by uncertainty due to factors such as sluggish development growth, insufficient revenue and unexpected compensation claims.

DELWP’s risk management practices

Although DELWP has a department-wide risk management framework, it has not adequately managed risk around the MSA program. This includes not identifying all risks, as well as poorly or reactively managing issues as they materialise without appropriate mitigation.

DELWP’s risk management guidelines are consistent with Australian and New Zealand standards and the government’s Risk Management Framework—March 2015. DELWP regularly reviews its strategic and corporate risks via:

  • annual risk workshops
  • six-monthly executive team meetings
  • business planning meetings.

Managing MSA program risks

DELWP’s risk management for the MSA program between 2010 and 2013 was poor. A draft risk register dated December 2013 identified 14 MSA program risks. However, DELWP did not finalise this or assess or put in place actions to manage or mitigate these.

Recording and reporting risks

Since 2015, DELWP’s MSA program delivery team has been responsible for recording and maintaining the MSA program risk register. DELWP advised us that most risks are managed on a day-to-day basis by the project team and not recorded in the register. As a result, there are no records of the potential risks or issues discussed and considered.

DELWP did not maintain records of potential risks or issues it considered during risk workshops. This would have provided insight into DELWP’s process to identify risks and issues and shown whether its approach has met DELWP’s risk management guidelines.

The corporate risk register only includes one MSA program risk, as seen in Figure 4C. DELWP advised us that it is not common to have multiple operational risks recorded for the same program.

Figure 4C
MSA program’s operational risk included on DELWP’s corporate risk register

As at November 2019, DELWP’s corporate risk reporting system had one operational risk identified for the MSA program.

This item related to the need for legal certainty so that revenue generated would keep pace with the increasing costs associated with MSA program delivery. The MSA Act is partly designed to address this risk.

This risk was rated ‘significant’ and, in line with DELWP’s risk management framework, it was not required to be reported to the senior executive team or DELWP’s Risk and Audit Committee. This only occurs for risks rated ‘high’.

Source: VAGO, from information provided by DELWP.

MSA program operational risks

Not meeting the MSA program’s 2020 deadline

In seeking approval for the cost recovery model in 2013, DELWP advised the government about the financial risk associated with the MSA program’s 2020 deadline. The advice indicated that the habitat compensation cost recovery approach would slow the rate of land acquisition and that the state would need to renegotiate the agreed MSA program targets with the Australian Government.

DELWP advised DTF and the Department of Premier and Cabinet that the Australian Government would need to amend the conditions of an approval issued under the EPBC Act to give the states and territories increased powers for approvals and allow them to renegotiate targets. However, this amendment did not occur and DELWP and the Australian Government now consider that an amendment of the approval is not necessary.

DELWP does not have legal advice confirming whether there are legal risks for DELWP not meeting the 2020 timeframe. In November 2019, the Australian government advised DELWP in an email that it does not consider the failure to meet the 2020 timeframe as a legal risk.

Ecological risks of extended timeframe

Not meeting the 2020 deadline for acquiring WGR land creates risks for its overall value and ecological condition. As previously noted, current monitoring practices cannot fully reveal the impact of this delay on grassland quality. Unacquired grassland may be further degraded by poor land management practices.

Financial risks

Land price increases

The Valuer-General estimated that from 2017 to 2019 increases in land prices led to a tripling of MSA program costs. Figure 4D shows the changes in price estimates.

Figure 4D
Increases in land values from 2017 to 2019

Vegetation

Area (ha)

Total estimated value

Percentage increase

Jun 2017

Feb 2019

WGR

13 800

$430 m

$1 290 m

200%

GEWR

1 200

$62 m

$124 m

100%

36 conservation reserves within UGB

4 330

$25 m

$30 m

20%

Further reserves outside the UGB

1 345

$13 m

$13 m

0%

Total

 

$530 m 

$1 457 m

175%

Source: VAGO, from DELWP documentation.

Increases in land value to February 2019 and delayed land acquisition have contributed to the increase in MSA program costs.

Cost recovery

Prior to the recent passing of the MSA Act, there was a significant financial risk that habitat compensation fees—for each habitat area—would not recover the cost of delivering the MSA program’s conservation commitments.

The MSA Act introduces a new environment mitigation levy for each habitat area from 1 July 2020, as shown in Figure 4E.

Figure 4E
Existing habitat compensation fee amounts compared to the environment mitigation levy introduced in 2020–21

Habitat area

Existing habitat compensation amount
($) per hectare

Environment mitigation levy 2020–21
($) per hectare

Native vegetation

95 075

113 441

Scattered Tree(a)

13 218

15 768

Growling Grass Frog

7 529

7 846

Golden Sun Moth

7 914 

10 005

Spiny Rice-flower

7 937

8 522

Matted Flax-lily

11 196

11 351

Southern Brown Bandicoot

4 015

4 138

(a) Scattered Tree is charged per tree lost or removed.
Source: VAGO, from information provided by DELWP.

The environment mitigation levy will be indexed annually to 2024–25 and is intended to achieve full cost recovery. Over the life of the MSA program it is expected that this will provide sufficient revenue to enable the state to meet its commitment to the Australian Government to establish the two reserves.

There is an ongoing risk that slow land development will mean that DELWP will have insufficient revenue to enable timely land acquisition for the MSA program. DELWP considers land acquisition timely if it keeps pace with land cleared for urban development. However, this does not address the issue of ecological degradation of land not yet acquired.

4.4 Evaluation framework

Monitoring, evaluation, reporting, and improvement are integral components of any successful program. These promote accountability, enable the impact, appropriateness, effectiveness and efficiency of a program to be assessed, and help identify and address strengths and weaknesses.

The Monitoring and Reporting Framework

DELWP developed the MSA program’s MRF in May 2015. It is supported by two additional technical documents, both published in June 2015:

  • Technical Protocol for Program Outputs (MRF: Program Outputs).
  • Technical Protocol for Program Outcomes (MRF: Program Outcomes).

These documents provide a framework for how the Victorian Government will provide assurance to the Australian Government that it is meeting the MSA program’s ecological outcomes.

Public reporting was not a commitment of the MSA program. DELWP’s inclusion of public reporting on outputs and outcomes in its framework has improved transparency and accountability. However, this reporting has been ad hoc.

Monitoring MSA program outputs and outcomes

DELWP has developed KPIs to measure the MSA program’s performance. It has grouped these according to outputs and outcomes.

Output KPIs

MSA program output KPIs are not adequate to allow for meaningful, transparent reporting. KPIs and targets for the Natural Temperate Grassland and Grassy Eucalypt Woodlands outputs are listed in Figures 4F and 4G.

Figure 4F
Output KPIs and targets for establishment and management of the WGR

KPI

Target

Parcels under interim management None
Number of landowners participating in interim management None
Units of interim management undertaken None
Hectares of land secured 15 023 hectares
Per cent of reserve secured 100%
Hectares of EPBC-listed community secured None
Hectares of ecological vegetation class secured None
Units of land management (DELWP standard outputs) undertaken None

Source: VAGO, from information provided by DELWP.

Figure 4G
Output KPIs and targets for management and protection of the GEWR

KPI

Target

Hectares of land secured None
Percent of reserve secured None
Total hectares secured through purchase by the Crown None
Hectares of land secured through permanent protection on-title agreement with management plan None
Hectares of land secured through permanent protection on-title agreement None
Hectares of EPBC-listed community secured None
Hectares of ecological vegetation class secured None
Units of land management (DELWP standard outputs) undertaken None

Source: VAGO, from information provided by DELWP.

The lack of output targets associated with the KPIs means there is a limited understanding of what ‘good’ performance looks like.

Deficiencies with the MSA program output KPIs and targets

DELWP’s KPIs and targets for the MSA program outputs do not allow DELWP to analyse performance and determine areas for improvement.

While the KPIs …

They …

For example …

are quantity based measures of performance 

do not provide meaningful insight into the quality of performance

the KPI ‘Parcels under interim management’ does not have associated targets or timeframes. It only measures aspects of progress/ activity, is quantity-based and provides limited information about quality of the activity.

specify hectares, percentages and units

do not align with actions or performance measures identified in the MSA program

the KPI for establishment of the WGR is ‘hectares of land secured’.  In the MSA program, an action for establishing the WGR is to publicly acquire 15 000 hectares of land within 10 years and a performance measure is to purchase and reserve land in the WGR by 2020.

DELWP has not included this performance measure in its KPIs.

Outcome KPIs

KPIs and targets for the Natural Temperate Grassland and Grassy Eucalypt Woodlands outcomes are listed in Figures 4H and 4I.

Figure 4H
Outcome KPIs and targets for the composition, structure and function of Natural Temperate Grasslands

KPI

Target

Hectares making transition between grassland states 0 hectares make undesirable transitions between states
Cover of native perennial herbs  The mean cover of native perennial herbs in each Natural Temperate Grasslands state remains above the baseline
Diversity of native perennial herbs The mean diversity of native perennial herbs in each Natural Temperate Grasslands state remains above the baseline
Cover of Kangaroo Grass The mean cover of Kangaroo Grass in each Natural Temperate Grasslands state remains above the baseline
Cover of native perennial grasses The mean cover of native perennial grasses (excluding Kangaroo Grasses) in each Natural Temperate Grasslands state remains above the baseline
Per cent of plots that have bare ground cover between 25–75 per cent 5–30 per cent (inclusive) of plots have per cent cover of bare ground between 25–75 per cent every year
Per cent of all perennial vegetation comprised of weeds Mean change in per cent cover of perennial vegetation that is comprised of weeds across all permanent plots in each Natural Temperate Grasslands state remains below the baseline

Source: VAGO, from information provided by DELWP.

Figure 4I
Outcome KPIs and targets for the composition, structure and function of Grassy Eucalypt Woodlands

KPI

Target

Hectares making transition between states 0 hectares make undesirable transitions between states
Cover of native perennial herbs The mean cover of native perennial herbs in each Grassy Eucalypt Woodlands state remains above the baseline
Diversity of native perennial herbs The mean diversity of native perennial herbs in each Grassy Eucalypt Woodlands state remains above the baseline
Cover of target grass species The mean cover of target grass species in each Grassy Eucalypt Woodlands states remains above the baseline
Relative abundance of woodland structural types The percentages of plots in each woodland structure category are within the target range for each category
Per cent of plots with Eucalypt recruits 25–75 per cent of plots have some Eucalypt recruits
Per cent of all perennial vegetation comprised of perennial weeds Mean change in per cent cover of perennial vegetation that is composed of weeds across all permanent plots in each Grassy Eucalypt Woodlands state remains below the baseline

Source: VAGO, from information provided by DELWP.

DELWP’s monitoring of MSA program outcomes is well-placed and done with strong, scientific rigour. KPIs developed for MSA program outcomes are comprehensive and clear. KPIs logically relate to the relevant outcome and give a performance benchmark that is measurable.

Once DELWP has purchased properties, it completes thorough onsite assessments through flora and fauna inventory reports. These reports detail the quality and quantity of vegetation, the species present on each purchased site and the location of threats.

However, DELWP has not acquired land in a timely manner, which has affected the ability to conduct comprehensive monitoring of its KPIs in the WGR. Five of the seven KPIs are unable to be assessed, with only two assessed as ‘met’.

Monitoring condition

DELWP does not monitor properties it has not yet acquired—this only occurs once a property is purchased. Delayed acquisition impacts the baseline against which improvement is measured.

When DELWP has acquired three sites with the same baseline state, which reflects the condition of the grassland, it then sets the baseline state for that land parcel. DELWP then continues to assess grassland condition across multiple sample plots for five years.

To set the baseline from which the KPI improvement is measured, DELWP determines an annual mean averaged across the five years. The relevant attribute must then remain above (for desirable species, such as populations of threatened species) or below (for undesirable species, such as weeds) this to meet the target.

Progress reports

DELWP committed to publishing annual progress reports on MSA program outputs. Figure 4J shows the reporting schedule and the status of each report.

Figure 4J
Required MSA program reporting schedule and status

MRF task

2014–15

2015–16

2016–17

2017–18

2018–19

Progress report on MSA program outputs

Source: VAGO, from DELWP documentation.

DELWP has not published progress reports for 2017–18 or 2018–19 as these reports have not been finalised. This has decreased the MSA program’s transparency and accountability, as the broader community has not had an opportunity to scrutinise progress in these years.

Independent monitoring

Under the MSA program, DELWP is required to appoint an independent monitor to provide the Australian Government with a report to cover all projects. Figure 4K shows the reporting schedule for independent monitoring under the MRF.

Figure 4K
Schedule of independent monitoring

MRF task

2014–15

2015–16

2016–17

2017–18

2018–19

2019–20

Independent audit of Stage 2

Required

 

Required

 

 

 

Independent audit of Stage 3

 

 

 

Required

 

 

Note: Green cells mean the task is complete. Red cells mean the task is not complete.
Source: VAGO, from DELWP data.

DELWP has therefore not complied with its independent monitoring obligations under the MSA program or the MRF.

Moving forward

The MSA Act implements controls to ensure comprehensive independent monitoring of the MSA program. It delegates responsibility for reporting to the Commissioner for Environmental Sustainability.

The Commissioner will conduct strategic audits—and prepare a report—on the implementation of MSA program conservation outcomes every two years. The Commissioner must submit the report to the Minister, who will table it in Parliament. The first report is due by 1 July 2022.

DELWP advised us that the MSA Act regulations will specify the conservation outcomes the Minister must publish.

The inclusion of these provisions in the MSA Act are important and will benefit the MSA program by strengthening accountability and transparency. The Commissioner is intended to act as an independent voice to the Minister, the Australian Government and the community on the state’s progress in implementing the MSA program’s conservation commitments.

MSA program evaluation

The MRF states that the Victorian Government will evaluate the MSA program’s implementation every five years. The Australian Government agreed with the MRF’s commitment for the first evaluation, which was due to occur in 2015.

The evaluation of the MSA program aims to:

  • determine the effectiveness of program activities and processes to deliver program outputs
  • test assumptions made as part of the MSA program’s logic
  • inform a review of the habitat compensation fee and prices
  • inform any necessary adaptive improvements to the implementation of the MSA program.

DELWP has not yet completed an evaluation of the MSA program delivery.

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