Victorian Auditor-General’s report
12 October 2011
 
Supporting Changes in Farming Practices: Sustainable Irrigation
Audit summary
Irrigation is the supply of water to soil, to promote vegetation growth. Farmers irrigate to produce agricultural crops, such as fruit and nut trees, vegetables, grains, berry fruits and grapevines, or to grow pasture for livestock grazing. 
An effective and efficient irrigation system depends on the type and methods of irrigation employed, the crop and pasture being irrigated, soil type, and the weather and soil conditions at the time of application. When selecting irrigation systems, the overall quality, quantity and reliability of water supply needs to be considered. 
Irrigators are significant water users, using around 75 per cent of all water harvested in Victoria each year—around 2 500 gigalitres (GL). In contrast, Melbourne’s annual residential and industrial water use is around 350 GL. 
Inefficient irrigation practices can place pressure on scarce water resources. They can also contribute to poor environmental outcomes, such as degraded land and water quality, by increasing soil salinity and nutrient loads and elevating the water table. In addition, climate change science predicts a range of environmental threats to agriculture in Victoria—mainly related to the availability of water. 
Adapting to these threats while remaining productive requires sustainable irrigation practices that either use less water overall, or maximise the area of irrigated crop using a set volume of water.
The Sustainable Irrigation Program (SIP), administered by the Department of Sustainability and Environment (DSE), and delivered through partnerships with Catchment Management Authorities (CMA) and the Department of Primary Industries (DPI), aims to improve the sustainability of on-farm irrigation practices across Victoria. 
The audit assessed SIP outcomes and the efficiency, effectiveness and economy of programs designed to increase water use efficiency and water savings from on-farm water use.
Conclusion
DSE, CMAs and DPI have effectively planned and implemented a range of programs and projects to increase on-farm water use efficiency and reduce associated environmental impacts. Like any program, however, there are opportunities to become more effective and efficient through improvements to planning and performance reporting.
DSE and CMAs, primarily responsible for sustainable irrigation programs at a statewide and regional level, have undertaken detailed planning for SIP. This includes the development of guiding documents, establishing outcomes, objectives, outputs and performance measures, and a framework to report performance. 
This level of planning is positive, although there are opportunities to improve by assessing the relevance of key plans and updating them, and enhancing information about program effectiveness and efficiency by also reporting outcomes achieved. 
Data indicates that DSE is, for the most part, meeting program objectives and outcomes. Because DSE lacks comprehensive outcome-focused performance monitoring and reporting, it cannot adequately demonstrate that it is achieving all of the expected long-term benefits of the program. It does, however, have better information on the delivery of outputs at a regional and statewide level. 
This absence of meaningful outcome reporting is an ongoing problem across the public sector, and one that needs to be addressed if Parliament and the community can be assured that the expenditure of public finances is achieving the expected benefits.
Findings
Sustainable Irrigation Program planning
Sustainable Irrigation Program Strategic Direction
The overall purpose and direction of SIP is documented in the SIP Strategic Direction. This is the overarching program plan that identifies the program’s outcomes and objectives, and outlines strategic priorities and actions to achieve these, as well as measures to assess performance. The SIP Strategic Direction also outlines review and reporting requirements, and roles and responsibilities of key agencies.
Supporting the strategic direction is a documented program logic—an important tool that guides program planning so there is a focus on achievement of outcomes, as well as outputs.
The SIP Strategic Direction and the SIP logic model demonstrate a commitment to effective planning. However, there are limitations with both, that while not critical to the delivery of SIP projects, should be addressed to improve the effectiveness and efficiency of SIP. 
Despite the SIP Strategic Direction being the main program plan, DSE does not routinely monitor or report on progress against the actions and key performance indicators outlined in the plan. In addition, the program logic is outdated and does not reflect the current strategic direction. It demonstrates the links between management actions and intermediate outcomes and longer-term outcomes as they were before the finalisation of the SIP Strategic Direction in 2009. 
Outcomes and outputs
Demonstrating whether a program or project is effective depends upon clear and measurable outcomes and objectives. DSE has documented these, in both its SIP Strategic Direction and also in the Victorian Investment Framework for Natural Resource Management (VIF), through which DSE funds SIP projects. This has generated nine key performance indicators and four long-term outcomes for SIP. There is a lack of clarity around how the key performance indicators contribute to the longer-term outcomes. 
While the outcomes themselves are generally clear, the current suite of supporting performance measures does not enable adequate assessment of either outcome achievement or the effectiveness of the program, as a whole. 
The majority of SIP investment occurs through VIF, which determines annually what regional, multi-regional and statewide natural resource management projects DSE will fund. DSE develops an annual SIP Statement of Priorities and proponents develop proposals to address these priorities. This includes demonstrating how the proposed project will achieve the intermediate outcomes and performance descriptors (outputs) related to SIP.
Victorian Investment Framework
While VIF annual performance reports provide DSE with adequate information about whether projects are achieving their intermediate outcomes and outputs, it is unclear whether or how these outcomes and outputs link to the overall SIP objectives and outcomes. Clarifying and strengthening the links would enable clearer demonstration of how the intermediate outcomes and performance descriptors, developed through VIF, contribute to the achievement of SIP outcomes.
Performance monitoring
Performance reporting is key to accountability. It provides information on how effectively and efficiently agencies operate programs, and how economically they use public funds.
DSE has two frameworks to measure and report SIP performance—the SIP Strategic Direction and VIF. VIF has a comprehensive suite of performance measures that align with the intermediate outcomes, and provide DSE with adequate information on the achievement of outputs. In contrast, the nine key performance indicators developed for the SIP Strategic Direction are not sufficiently developed to enable DSE to assess whether it is achieving SIP outcomes. It is impossible to determine whether DSE had achieved these indicators because they have no corresponding targets. 
Regardless, DSE do not routinely monitor or report on the key performance indicators, which means that it is unable to determine whether it is meeting the SIP program’s long-term outcomes. This significantly diminishes the usefulness of the SIP Strategic Direction as the main program plan.
DSE does monitor and report annually on the performance of CMAs in achieving SIP outputs under VIF. It also consolidates this information into a SIP annual report, and this demonstrates a commitment to accountability and transparency. However, DSE could enhance the reporting by including more comprehensive data on achievement against intermediate and long-term outcomes, rather than primarily focusing on the VIF outputs to better demonstrate achievement of outcomes. Annual statewide reports include program highlights and details of output achievement, broadly covering key SIP outcome areas. 
Sustainable Irrigation Program implementation
VIF is the key mechanism for delivering on-farm sustainable irrigation projects. In 2009–10, the most recent available data, VIF funded 10 SIP projects in the central and north-west regions, in addition to statewide research and development projects.
SIP project funding has been allocated and expended as intended. SIP projects have generally been implemented as intended, and for the three audited CMAs the majority of SIP projects have met (satisfactory performance) or exceeded the VIF intermediate outcome and output targets. For 2008–09, this was 91 per cent, and for 2009–10 it was 82 per cent. 
During the period from 2003–04 to 2007–08, SIP regional investment was made through the Regional Catchment Investment Plan process—the precursor to VIF. While CMA performance reports from this period are of variable quality, reports show around 63 per cent of targets being met or exceeded during this period. The quality and consistency of reporting has improved under VIF and the most recent VIF performance reports provide more comprehensive and consistent information across CMAs on performance against targets. 
Key achievements across SIP related to increased water use efficiency include:
·	the development of whole farm plans 
·	the installation of irrigation tail water re-use systems and irrigation system upgrades 
·	the achievement of on-farm water savings of 7 200, 6 700 and 6 800 megalitres per year for the period 2007–08 to 2009–10. 
Inter-agency arrangements
Effective arrangements exist between DSE, DPI and CMAs in the delivery of SIP. The SIP Strategic Direction and service level agreements clearly describe roles and responsibilities, which are well understood. Activities are undertaken in accordance with agreed roles and responsibilities.
Recommendations
Number	Recommendation	Page	
1.	The Department of Sustainability and Environment should:
·	update the Sustainable Irrigation Program Strategic Direction and Sustainable Irrigation Program program logic so that they align with each other, clearly define the intent of outcomes and demonstrate the links between outputs, intermediate outcomes and longer‑term outcomes
·	develop relevant and appropriate targets for performance indicators in the Sustainable Irrigation Program Strategic Direction to enable the assessment of outcome achievement
·	improve its program reporting by including information on the achievement of outcomes in addition to output reporting.	13	
2.	The Department of Sustainability and Environment, Department of Primary Industries and Catchment Management Authorities should address the inefficiencies of the current reporting processes to reduce duplication and improve timeliness.	13	
Submissions and comments received
In addition to progressive engagement during the course of the audit, in accordance with section 16(3) of the Audit Act 1994 a copy of this report was provided to the Department of Sustainability and Environment, the Department of Primary Industries, Goulburn Broken Catchment Management Authority, North Central Catchment Management Authority and Mallee Catchment Management Authority with a request for submissions or comments.
Agency views have been considered in reaching our audit conclusions and are represented to the extent relevant and warranted in preparing this report. Their full section 16(3) submissions and comments, however, are included in Appendix B.