· document no: d17/3013 page i of ii status: final version: 1.0 . table of contents . 1....

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Evaluation of Catchment Action NSW

Funding provided to Local Land Services

by the Office of Environment & Heritage

2013-14 through 2016-17

Prepared by the NSW Natural Resources Commission

December 2017

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Enquiries

Enquiries about this report should be directed to: Name Amy Dula

Phone (02) 9228 4844

Fax (02) 9228 4970

E-Mail [email protected]

Postal address GPO Box 5341, Sydney NSW 2001

List of acronyms

ACH Aboriginal cultural heritage

CANSW Catchment Action NSW program

The Commission NSW Natural Resources Commission

LLS Local Land Services

MER Monitoring evaluation and reporting

NRM Natural resource management

OEH NSW Office of Environment and Heritage

This work is copyright. The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism and review. Selected passages, table or diagrams may be reproduced for such purposes provided acknowledgement of the source is included. Document No. D17/3013 ISBN: 978 1 925204 26 1

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Document No: D17/3013 Page i of ii

Status: FINAL Version: 1.0

Table of Contents

1. Executive Summary 1

1.1 Recommendations 3

2. Background 6

2.1 Evaluation approach 6 2.2 Sample project and site selection 7 2.3 Evaluation of Aboriginal engagement 8 2.4 CANSW program 8

3. Summary of program 10

3.1 State funding profile 11 3.2 Regional funding profile 13 3.3 Overview of program outputs and outcomes 16

4. Probity and accountability 20

4.1 Transparency of financial reporting 20 4.2 Funding spent on staff, overhead and administration 21 4.3 Funding of support staff 22 4.4 Ability to match outcomes to funding 23 4.5 Ability to demonstrate probity 25

5. Program Coordination and Communication 28

5.1 Communication 28 5.2 Collaboration in development of priorities 29 5.3 Timeliness 29

6. Funding strategy 31

6.1 Alignment of state needs with regional needs and capacity 31 6.2 Program outcomes and outputs 31 6.3 Alignment with investor expectations 32 6.4 Selection of regional projects 34

7. Aboriginal Cultural Heritage 36

7.1 Appropriate engagement of Aboriginal people and communities 37 7.2 Outcomes 41 7.3 Responsibility for Aboriginal engagement and cultural heritage 43

8. Effectiveness and efficiency of program implementation 47

8.1 Committed and engaged LLS staff 47 8.2 Long-term monitoring 48 8.3 Impact of short timeframes 48 8.4 Program logic 49 8.5 Project planning standards 49 8.6 Monitoring and reporting 50

9. Program Design 52

9.1 Determining reasonable project costs 53 9.2 Delivery mechanisms to achieve long-term NRM outcomes 55 9.3 Private land conservation and NRM 58

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Document No: D17/3013 Page ii of ii


10. Attachments 61

Attachment A – Key evaluation questions and sub-questions 61 Attachment B – Interview List 65 Attachment C – Key evaluation questions and sub-questions versus Findings 72 Attachment D - Documents review by project 76 Attachment E – Site visit details 83 Attachment F – Aboriginal cultural heritage evaluation framework 86 Attachment G – Mid-term review findings 92

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Natural Resources Commission Final Report

Published: December 2017 Catchment Action NSW Program Evaluation

Document No: D17/3013 Page 1 of 93


1. Executive Summary

Catchment Action NSW (CANSW) is the NSW Government’s investment program for natural resource management and is critical for Local Land Service’s (LLS’) delivery of its natural resource management function. The Natural Resources Commission (the Commission) undertook a mid-term review of LLS’ delivery of CANSW and identified several areas for improvement. This evaluation focuses on the final two years of the program. Since the 2013-14 financial year, CANSW funding has been delivered to LLS via the Office of Environment and Heritage (OEH). The funding was agreed to be for on-ground activities and to augment, but not replace, other funding sources including recurrent funds. From 2017-18, the funding will be delivered directly from NSW Treasury and administered by LLS. As such, recommendations for OEH are intended for consideration for similar investment programs OEH administers in the future. Significant progress has been made since the mid-term review in addressing the risks identified, including improved communication and cooperation between OEH and LLS, better alignment with OEH’s specified themes and expectations, and improvements in reporting and accounting. The appointment of the OEH liaison for the program was particularly successful in facilitating improved communications. Several areas of the program worked well. The Commission found that LLS staff on the ground are experienced and committed to their work, which is a key factor in the success of projects. The Aboriginal staff working on the Aboriginal Cultural Heritage (ACH) projects were vital to the success of projects, due to their efforts in building strong relationships with the local Aboriginal communities. LLS is using its Catchment Action Plans to guide selection of priority projects for its regions. Further, regions are generally meeting their project commitments in terms of achieving outputs. Funds were allocated according to the agreed model. In the final year, LLS as a whole met the funding limits for various spending categories agreed to with OEH. Specific assessment of the ACH theme indicates that there is a genuine effort to engage Aboriginal people and communities in the majority of LLS regions. Aboriginal Cultural Heritage projects address an important need in many Aboriginal communities by facilitating connection to Country, despite significant funding and timeframe constraints. The development of LLS-wide standards for engagement, Aboriginal decision-making, and cultural awareness would provide more assurance that engagement is appropriate and adequate. There are also opportunities to build-upon and strengthen environmental, social and economic outcomes through greater coordination within LLS and across agencies. LLS is already making significant progress to improve in these areas through regional engagement strategies, the draft Reconciliation Action Plan and the appointment of a state-wide coordinator for Aboriginal programs. Despite the progress made, there remain substantial areas to improve. In particular, there are areas to improve in regards to transparency and accountability for expenditure of funds, program design and strategy, communication, and monitoring, evaluation and reporting (MER). There is a significant lack of transparency in financial reporting to OEH. This is in part due to financial reporting requirements being high-level. The lack of transparency in regards to funding of staff with CANSW funds is of particular concern. Several support staff, such as financial and administrative staff were identified to have been funded in full for the 2015-16 financial year, despite spending only a portion of their time on CANSW. Improvements in this regard were made in the final year of the program. However, there remains room to improve financial reporting to provide a clear breakdown of CANSW spending, including the amount spent on different types of staff, administration and direct project costs, as well as a justification for spending decisions.

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The four funding themes were established by Government when funding was transferred to OEH. The selection strategy for the four funding themes is not evident. The themes were loosely defined for the first three years of the program and three of the four themes overlapped considerably, reducing their usefulness for guiding actions. Strategic priorities were developed in the final year. However, the efficiency and effectiveness of the program would likely have been improved with a more collaborative and strategic approach to defining themes that aligned with OEH’s objectives, while taking into consideration LLS regional priorities and capabilities. Due to ongoing organisational changes, LLS did not have a consistent and empowered coordinator to communicate with the OEH liaison and across regions. As a result, there remains significant variation across the regions in terms of understanding and meeting OEH’s expectations, particularly in regards to reporting and allocation of funds within projects. The Commission identified several opportunities to improve the efficiency and effectiveness of the program and on-ground projects. There is significant variation in regards to the quality of project planning and implementation across regions, and not all projects had project plans. Further, there was considerable inconsistency in the reporting between regions, making it difficult to aggregate data or assess progress of the program. The program could be improved through the adoption of standardised processes in relation to planning and reporting methods, and development of sound program logic. Further, 12 month timeframe for projects created significant inefficiencies, particularly in relation to administration, and reduces likely long-term effectiveness of the program. Overall, the MER framework does not sufficiently allow for meaningful assessment of outcomes achieved or likely to be achieved by the program. The Commission appreciates that MER is difficult for ecological and social programs and outcomes are not likely to be seen for several years. However, the Commission identified a number of opportunities to improve in this area, which included strengthening reporting requirements, improving quality and consistency of reports, ensuring reporting is outcome focused, and outputs are consistently and logically aligned with outcomes.

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1.1 Recommendations

Recommendations

Probity and accountability

R1. OEH should provide detailed guidance to delivery agencies in regards to key financial reporting expectations:

a. This should include clarity around key expenditure categories, expenditure limits and definition of direct project costs.

b. Eligible and ineligible expenditure, and categorisation of expenditure should be clearly understood by both parties.

c. OEH should engage with delivery agencies to identify efficient ways to report on financial data.

d. OEH should define what constitutes a ‘project’, to ensure project management requirements are appropriate for the scale of funding.

R2. LLS should use consistent internal systems to improve their ability to track and report CANSW funded project and program costs in clear categories, such as grants paid, motor vehicle costs, contractor costs and staff costs.

R3. OEH should require transparency around the type of support staff proposed to be funded, and seek to improve efficiency, including requiring the delivery agency to:

a. provide detail on the percentage of the salary that will be funded and how their staff funded will contribute to the project or program

b. clarify which staff are funded through the allowed ‘administrative’ funding versus other project funds

c. consistently implement a cap of 10 percent on administrative functions.

R4. OEH should consider an appropriate cap for staff spending to ensure funds remain targeted on on-ground outcomes. Regardless of the cap set, OEH should require that the amount of funding allocated to staff is clearly justified and that projects include expected outcomes related to staff funding (i.e. that projects do not just automatically take the maximum cap).

R5. LLS should implement state-level quality assurance processes for review of regional reports to ensure that aggregated reporting includes consistent and accurate data and meets the investor’s expectations.

Program coordination and communication

R6. LLS should identify and empower a state-wide coordinator for major investment programs, responsible for liaising with the investor to ensure their needs are consistently understood, communicated and adopted across LLS.

a. The coordinator should also drive consistency in project planning, managing and MER across regions.

b. To support the LLS coordinator, LLS should implement systems to coordinate input from regions in regards to any issues that need to be resolved or clarified with the investor.

R7. Continuing with good practice, prior to funding an agency such as LLS, OEH should :

a. develop a collaborative relationship

b. undertake a needs analysis and risk assessment

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c. co-design the program to the extent feasible to align OEH’s desired outcomes with delivery agency capabilities.

R8. In order to improve timeliness of actions, OEH should establish a communication strategy for engaging with the delivery agency at the start of the program. This should include:

a. roles and responsibilities within OEH and the delivery agency, including identifying liaisons at the start of the program

b. timely provision of guidelines and required documentation for the delivery agency

c. routine, scheduled discussions on progress, key risks and identification of any necessary actions to address identified concerns

d. documented agreement with the delivery agency as to how they will ensure state-wide adoption of any decisions

e. timeframes for key deliverables, decisions and meetings, and identification of how missed deadlines or conflicts will be handled and addressed in a timely manner.

Funding strategy

R9. OEH should strategically select and clearly define program priorities.

a. OEH should work with the delivery agency to develop measureable and achievable outcomes matched to the amount and timeframe of funding.

b. If ‘themes’ are used they should be strategically selected, distinct to the extent feasible, and derived from the key outcomes the investor seeks to achieve.

R10. LLS should implement a set of minimum standards for project selection to ensure that regions are consistently applying an appropriate level of rigour in allocating funds.

Aboriginal cultural heritage

R11. LLS should implement actions under the draft LLS Reconciliation Action Plan, in particular:

a. finalise regional Aboriginal engagement plans and embed cultural heritage considerations in all project planning at the regional level

b. develop a state-wide Aboriginal community engagement framework, inclusive of cultural protocol documents and a due diligence policy that is in line with cultural heritage legislative reform and policy (LLS should ensure alignment with OEH due diligence policies in the interim)

c. foster community capacity building, partnerships and joint ventures with Aboriginal communities

d. deliver integrated cultural awareness training for LLS staff, including possibility for online training, in collaboration with LLS Aboriginal engagement staff.

R12. LLS should clearly identify their role in supporting self-determination through Aboriginal land management, in line with NSW Government Policy.

a. To improve outcomes in this space, LLS should strategically align and partner with other government agencies and organisations where CANSW funding can be used to leverage investment and outcomes in existing programs. This should focus in particular where self-determination, socioeconomic and employment outcomes can be achieved.

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R13. If possible, LLS should ensure there is at least one Aboriginal identified staff member in each region to assist in Aboriginal engagement and ACH project implementation (and a male and female employee where possible). In addition:

a. For existing positions, LLS should ensure roles are clearly defined, with adequate resources and skills development to assist in management, including providing assistance to Aboriginal community members.

b. LLS should develop requirements for inclusion of Aboriginal people within LLS in decision-making.

c. LLS should consider how to ensure appropriate support for the particular sites being accessed (for example, male and female sites and specific Aboriginal heritage).

R14. LLS should implement their plan to engage a state-wide coordinator for Aboriginal programs. State-level responsibilities should focus on providing strategic oversight and driving accountability for Aboriginal programs and engagement, oversee development and adherence to cultural protocols and due diligence regulation, and facilitate regional sharing of lessons and a ‘community of practice’ for Aboriginal Engagement Officers.

R15. LLS should consider entitling similar programs ‘Aboriginal Land Management’, with priority outcomes for Aboriginal communities and the environment strategically determined and defined.

Effectiveness and efficiency

R16. Projects should be funded for a minimum of three years to allow for effective implementation likely to achieve long-term outcomes.

R17. LLS should complete implementation of their performance framework and seek to improve the ability to consistently report including on outputs and targeted long-term outcomes. This should include:

a. negotiating clear and feasible reporting requirements with the investor, including for how progress will be reported and how the program will be evaluated

b. implementing a standardised reporting approach at the start of the funding cycle for major programs, using a consistent format to support timely reporting

c. implementing minimum standards for project planning consistent with good practice, as outlined in Section 8.5 of this report

d. all regions reporting on and measuring a set of agreed prioritised outputs and outcomes, and collecting consistent baseline data where needed

e. an agreed upon methodology for assessing potential long-term outcomes, including the data necessary for the assessment in the agreed reporting template.

R18. In the future, OEH should work with delivery agencies, and LLS with investors, to ensure that output and outcome measurements cover the range of objectives the program is targeting, including social outcomes.

R19. LLS should establish standards for development of project logic to ensure that actions funded are likely to support the achievement of expected outcomes.

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2. Background

Catchment Action NSW (CANSW) is the NSW Government’s Natural Resource Management (NRM) Program. Funding for CANSW was provided to Local Land Services (LLS)1 from the Office of Environment and Heritage (OEH). The provision of $112 million for CANSW is subject to a Funding Agreement between the Minister for the Environment and LLS for the four years from 2013-14 to 2016-17. The funding for the financial year 2017-18 is being provided directly to LLS by NSW Treasury. OEH requested the Commission to undertake this end of program evaluation to provide high-level assurance around LLS’ delivery of the CANSW funding provided by OEH.2 The proposed scope for the CANSW evaluation includes a combined project audit and an end of program evaluation.

2.1 Evaluation approach

The aim of the evaluation was to provide:

assurance around LLS’ implementation of the CANSW program

useful, strategic advice to OEH to inform potential future programs

insights for LLS that will allow them to improve their ability to develop and manage NRM programs, and meet investor preferences.

The evaluation methodology, including key evaluation questions, project sampling and proposed methods to investigate key questions was developed in conjunction with OEH and LLS (see Attachment A for key evaluation questions). The evaluation included:

a review of documentation provided by OEH and LLS regions3

telephone and face-to-face interviews with grant recipients, LLS staff, members of the LLS State Operations Group and OEH staff (see Attachment B for full list)

on-ground visits to a selection of project sites.

The Commission has addressed all of the evaluation questions. The report focusses on key issues identified through the evaluation of all of the questions. The findings and recommendations have been presented in a logical manner so as not to be repetitive. Attachment C provides a brief overview of evidence used to assess each question, and the section(s) of the report that most significantly relate to the question.

1 LLS was established in 2013, taking on former responsibilities of Catchment Management Authorities and Livestock Health and Pest Authorities, as well as some responsibilities of the Department of Primary Industries. It has responsibilities for regional biosecurity,

emergency management, natural resource management and agricultural extension. 2 The Commission has previously undertaken a mid-term review of funding years 2013-14 and 2014-15. 3 Key documents reviewed included:

- grants contracts and agreements

- project planning documentation - CANSW MER and funding guidance documentation

- LLS governance procedures

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2.2 Sample project and site selection

2.2.1 Sample project selection

In order to undertake detailed evaluation and engagement with project participants, it was necessary to select a sample from the projects funded by the CANSW program between 2015 and 2017 (see Attachment D for a summary of projects selected). Each LLS region used the CANSW funds to implement a number of high-level projects (referred to as ‘Level 1’ projects). Level 1 projects have intended outcomes and outputs and are reported against in the CANSW Annual Reports. Level 1 projects were often comprised of a number of sub-projects (‘Level 2’ projects). For example, a region may have had a Level 1 project that aimed to increase community capacity in natural resources, which was implemented through a number of different Level 2 sub-projects such as community grants for land management and awareness raising events. The Commission selected a set of 66 representative Level 1 projects for review to reflect the range of projects funded overall. This represented approximately 30 percent of the total number of projects. Sample projects were selected based on the following criteria:

all projects identified by OEH as sample projects (38 projects)

all sites that were greater than $500,000 in value, as these are considered higher risk (19 projects)

additional sites that considered a spread of funding ranges, risk categories, regions, funding themes and funding years.

2.2.2 Site visit selection

The Commission undertook site visits to three LLS regions; North Coast, Riverina and North West (see Attachment E for details). Preference was given to regions that had not been audited as part of the mid-term review,4 and that reflected a range of coastal (North Coast) and inland sites (Riverina and North West). Logistic feasibility was also considered. Project sites within the regions selected were then based on the selection criteria listed in Table 1.

Table 1: Summary of criteria for selecting field visits

Selection Criteria North Coast Riverina North West

Include a range of funding themes

Projects from all funding themes represented



Include projects from both funding years

1 projects from 2015-16, 3 projects from 2016-17

4 projects from 2016-17 4 projects from 2015-16, 1 project from 2016-17

Visit sites from >40% of the region’s sample projects

4 out of 8 projects visited 4 out of 7 projects visited 5 out of 6 projects visited

Range of risk rankings included5

1,2,3,4 included 1,2,3 included 2,3 included

4 Central West, Hunter and Northern Tablelands were subject to the mid-term review. 5 Risk categories were provided by OEH.

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2.3 Evaluation of Aboriginal engagement

The Commission’s evaluation framework included specific questions related to the delivery of projects that involved Aboriginal stakeholders (provided in Attachment A). These related to the level of engagement of Aboriginal people and communities in project delivery and decision making, the cultural appropriateness of engagement, and the definition of Aboriginal cultural heritage activities. The Commission’s sample selection included 16 projects funded under the Aboriginal Cultural Heritage (ACH) theme, which were analysed in line with the Commission’s evaluation framework. In addition to this, the Commission more broadly examined LLS’ approach to funding ACH projects and engaging Aboriginal people and communities in the CANSW program across all regions at the request of OEH. A framework and criteria were developed to assist with the evaluation of Aboriginal engagement and management of ACH projects (see Attachment F). The framework included engagement criteria, success statements and interview prompts for interviews with both LLS staff and project proponents. Using the framework as a guide, the Commission undertook 22 interviews with LLS staff involved in the implementation of ACH theme projects, seven interviews with project participants6, and visited six ACH theme sites. Interviews with OEH and LLS state-level staff also covered aspects of ACH. The Commission engaged three consultants with relevant experience in the management of ACH and Aboriginal engagement to assist with the development of the Aboriginal engagement framework, phone interviews and site visits, and with the analysis of findings. One of these consultants identified as an Aboriginal person.

2.4 CANSW program

CANSW has provided funding to LLS (and previously Catchment Management Authorities) for regionally-delivered projects to address state NRM priorities since 2008. In April 2013 Cabinet approved the current round of CANSW funding for the four year period from June 2013 to June 2017. Prior to the Cabinet decision in 2013, CANSW funding was being provided by the Minister for Primary Industries via NSW Trade and Investment. The 2013 Cabinet decision changed the source of this funding, specifying that funding was to be drawn from the Waste and Environment Levy under the Minister for the Environment. However, the first payment for the current program of CANSW funding in 2013-14 was paid to the Department of Primary Industries who then provided the funding to Catchment Management Authorities. Significant institutional change took place in 2013-14 as Catchment Management Authorities transitioned into LLS in January 2014. As new state and local strategic plans were not yet in place, the funding was required to be invested in on-ground activities in line with regional NRM priorities set out in approved Catchment Action Plans. The program was administered under a Funding Agreement between OEH and Local Land Services that commenced on 22 September 2014, and applied until 30 June 2017. Under the

6 The Commission sought to speak to as many project participants as possible. However, given the timeframes of the evaluation period,

as well as the limited availability and time of many members of Aboriginal organisations, it was not possible to arrange interviews with project participants from all regions.

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Funding Agreement, LLS had to invest in activities under the funding themes specified in a letter from the Minister for Primary Industries, consistent with state and regional priorities. The identification of specific investor themes was a significant departure from previous funding arrangements. There were four funding themes identified:

native vegetation (40 percent)

biodiversity conservation (30 percent)

threatened species (20 percent)

Aboriginal cultural heritage (10 percent).

In November 2015, the Commission undertook a mid-term review of the CANSW program. This review identified seven key risks that may impact the successful delivery of the program, as well as opportunities to address these risks. The risks and opportunities identified by the Commission in the mid-term review are outlined in detail in Attachment G and include:

ongoing differences in interpretation of the funding themes

sub-optimal alignment of LLS activities with OEH investor priorities

CANSW Annual Business Plan and Annual Report not meeting investor expectations

Monitoring, Evaluation and Reporting Plan not meeting investor expectations

lack of investor assurance for integrated projects

limited examples of best practice

inconsistent regional compliance with funding themes or reporting requirements.

The evaluation framework included consideration of progress against the Commission’s mid-term review recommendations. Progress in regards to the mid-term review is discussed throughout the report as appropriate.

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3. Summary of program

Key Findings

Funding delivered to LLS regions according to model: Funding distributed to regions was in line with the recommended funding allocation model.

Types of grant recipients varied: Grant funding allocated by LLS to land managers was predominately spent on private land, although in both funding years there is significant across and within regions in the types of grant recipients who received funds.

Leveraging of additional funds: Nine of eleven regions leveraged funds from other sources on CANSW projects. The National Landcare Programme was the primary source of additional funds although the diversity of additional funding sources increased between the funding years.

Outputs largely reported as achieved: Based on the information in the annual reports, the majority of targeted outputs appear to have been achieved. Over 76 percent of projects mostly met, met, or exceeded the planned outputs for the project in both 2015-16 and 2016-17.

Projects generally implemented as planned: Site visits identified that for the majority of projects achievements and outputs were in line with the project planning documentation. There were isolated cases where on-ground outputs did not appear to meet what was reported in project documentation, indicating that continued investor-led audits to spot check and identify any areas of concern may be appropriate.

Activities carried out: The majority of projects focused on pest animal and weed management, and native vegetation rehabilitation and restoration. Key activities completed most often included weed removal, planting and installing fencing. The program also funded community engagement, capacity building and training (including Aboriginal communities).Limited information on long-term impacts: There is insufficient data to determine environmental outcomes achieved, and the likelihood of long-term impacts.

This section provides a summary of the program results for the funding years 2015-16 and 2016-17, including:

where and how CANSW money was spent at the state and regional scale

what outputs and outcomes were delivered and targeted by the program.

Chapters 4 to 9 provide analysis of these findings and recommendations.

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3.1 State funding profile

Figure 1 shows the NSW Government’s CANSW funding for the four year period from June 2013 to June 2017.

Figure 1: Catchment Action NSW funding to regional bodies 2013-14 to 2016-17

3.1.1 Alignment with agreed funding allocation models

Under the 2015-16 and 2016-17 CANSW Business Plans, funds were distributed to the 11 LLS regions using the decision matrix detailed in the Commission’s reviews of CANSW funding allocation in 2013 and 2014. In most cases, regional funding allocation aligned with the Commission’s funding distribution model, with no region allocated less than 95 percent of the regional funding recommended by the model (Figure 2). Two regions received 5 percent more funding than allocated in the model; North West LLS received an additional $405,540 (8.5 percent of their budget over the two years) and Western LLS received an additional $247,861 (6 percent of their budget over the two years). LLS indicated that additional funding in these regions was to address boundary alignment issues within the regions. Funding allocation to regions also aligned with OEH’s proposed allocation model for funding themes (Figure 3).

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Figure 2: Proportional allocation of funding to each LLS region during the 2015-16 and 2016-17 financial years7

Figure 3: State-wide allocation to funding themes during the 2015-16 and 2016-17 financial years

7 First Person Consulting 2017. CANSW Evaluation Document review - A report for the Natural Resources Commission. Melbourne

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3.2 Regional funding profile

3.2.1 Grant allocation

To get a sense of how funds were allocated to various landholders. Data were provided from four regions, the Commission asked a sample of five LLS regions to provide data on grants LLS had provided to landholders and managers in 2015-16 and 2016-17.8 Three of these regions provided adequate information to determine grant payments for work performed on public and private land. The majority of grants delivered on-ground activities on private land (68 percent in 2015-16 and 59 percent in 2016-17). There was an increase in grant funding to public land in 2016–17, from 24 percent to 36 percent of total grant funding issued within the sample regions (Figure 4).

Figure 4: Breakdown of expenditure on public and private land in 2015–16 and 2016–17

Of the five regions asked, four provided adequate information to determine funding distribution to different types of grant recipients. The types of recipients receiving grant funding for both public and private land in the four regions assessed can be seen in Figure 5. Differences in funding profiles is likely to reflect different regional priorities and needs, which is appropriate for the regional model. Private landholders received the highest number of grants (239 across the four regions in 2015-17) with a smaller average grant size of approximately $8,500. The size of grants issued to private landholders did not vary significantly. Recipients who did not own land, such as community groups, received fewer grants (119 across four regions in 2015-17). These grants were generally higher in value (averaging approximately $50,000), but had a greater variation in grant size than private landholder recipients. It is not possible to identify trends or draw clear conclusions from only two data points. There are limited data to demonstrate the impact (positive or negative) of any variation or change. The shift towards public land or specific landholders may reflect variation that would be expected due to an annual turnover of projects. LLS have indicated that there was a conscious effort to shift funds towards public lands in response to clearer investor expectations and delivery objectives, and that the change is due to this intentional shift.

8 Note: Three of the four regions provided data only for a proportion of their grant payments. This proportion was based on the

Commission’s sample project selection, so was considered to be representative. One region provided data for all grant payments for the

period, which may skew data in this case. Data was provided while LLS was still compiling its Annual Report. As such, figures are based on raw, year-end data, prior to internal reconciliation by LLS. This data may not reconcile with financial information provided to

OEH in the CANSW Annual Reports. Annual Reports should be considered the most accurate data. This data has not undergone

internal quality assurance processes by LLS State Operations.

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Figure 5: Proportion of total grant expenditure by recipient type for select LLS regions across public and private land

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3.2.2 Co-funded projects

There are multiple funding sources for NRM activities within NSW, each with varying focuses. While different investors have different priorities, there is often opportunity to leverage funding from different sources to achieve more efficient on-ground outcomes at a landscape scale. Similarly, Aboriginal cultural heritage issues are associated with complex environmental, social and economic outcomes that are the responsibility of multiple agencies and groups at different levels. Leveraging funds for these projects can help achieve a broader range of integrated outcomes. All but two regions9 leveraged funding from sources external to CANSW to fund the projects assessed in the evaluation sample (Figure 6a and b). Across the regions that co-funded projects, the proportion of funds coming from CANSW ranged from 28 to 90 percent in 2015-16 and 32 to 85 percent in 2016-17. On average, CANSW funded 60 percent of co-funded projects across the state. Between 2015-16 and 2016-17, four regions increased the amount of additional funds leveraged, while five regions decreased this amount. Between funding years there was an increase in the number of different investors leveraged on CANSW projects. The Commission notes that increasing the range of investors is a strategic priority for LLS aimed at providing greater security for its NRM function. In 2015-16, additional funding primarily came from the National Landcare Programme, while in 2016-17 a wider range of investors were leveraged, including Saving Our Species and Aboriginal Land Councils. It is difficult to quantitatively demonstrate the benefits that this additional funding provided. However, interviews with project proponents indicated that leveraging additional funds improved the achievement of outcomes, allowed for a wider range of outcomes and increased the timeframes available to carry out works.

Figure 6a: Total project expenditure and CANSW project expenditure for LLS regions in 2015-16

9 North West reported that they budgeted for co-funding in 2016-17, but did not report any co-funding in actual spend.

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Figure 6b: Total project expenditure and CANSW project expenditure for LLS regions in

2016-17

3.3 Overview of program outputs and outcomes

3.3.1 Project activities

The Commission has assessed information available on outputs in the CANSW Annual Reports to determine the types of activities funded by CANSW. There are some limitations to this approach. The Commission used judgement to allocate projects into activity categories based on the description of project outputs, as project applications and reporting do not clearly categorise the primary focus and activities of individual projects. In some cases, project outputs were not reported in the CANSW Annual Report. Table 2 provides a high-level summary of program outputs, collated from the information provided in the 2015-16 and 2016-17 Annual Reports on the Commission’s sample projects. The majority of projects focussed on pest animal and weed management, and native vegetation rehabilitation and restoration. Key activities completed most often included weed removal, planting and installing fencing. The program also funded community engagement, capacity building and training (including Aboriginal communities).

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Table 2: Project outputs reported for sample projects

Output Group Outputs

Aboriginal Cultural Heritage Sites 13 sites

Aboriginal Employment and Training 59 trainees or

staff

Aboriginal Participation 186 people

Agreements (Landholders, Conservation) 71 agreements

Communications (media, studies, fact sheets, written products, signage)

175 products

Community Groups (including partnerships) 63 groups

Events (workshops, meetings, forums, training, field trips, activities, study tours) 371 events

Invasive Species Management (animal, weeds) 272,212 hectares

Native Vegetation enhanced/ rehabilitated (habitat, riparian, terrestrial)

109,122 hectares

Off-stream Water Points 24 points

Revegetation 466 hectares /

1800 plants

Riparian Fencings 12 kilometres

Surveys (roadside, land, flora & fauna, cultural heritage, mapping, assessments) 38 surveys

Sustainable Land Management (improved grazing practices, groundcover, soil erosion)

68,502 hectares

Threatened Species protection and abatement of threatening processes 21 sub-projects

Wetland Management 1,147 hectares

3.3.2 Projects generally implemented as defined

Site visits and a review of project planning and implementation documentation by the Commission indicates that projects were generally implemented as defined. Based on the information in the annual reports, the majority of targeted outputs appear to have been achieved. The Commission undertook 17 site visits and observed the majority of projects had outputs and outcomes in line with those described in project planning documentation. The Commission identified two projects that did not appear to fully complete or report planned actions. The Commission acknowledges that given the variable nature of NRM activities, projects can face uncertainty and unforeseen circumstances that cause the project to deviate from planned activities. The program provided flexibility through a high-level variation process to allow managers to adapt projects to variable natural conditions, which is good practice. However, the differences in intended and completed outcomes in these two projects did not appear to be the result of variable or unforeseen circumstances. In one case, the project was not yet complete and LLS indicated actions would be completed before the end of the funding period, although it was not evident that this would be possible. In the other project, there appeared to be limited outputs for the project, with the majority of funds used for LLS staff positions. This indicates that it is reasonable and good practice for OEH to continue to

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follow up on projects that demonstrate less clear alignment with expectations and value for money, and conduct spot checks. The Commission reviewed the available project implementation documentation for the 66 Level 1 sample projects (across both 2015-16 and 2016-17). This process was constrained significantly by the lack of information, with only 24 projects of the 66 sampled supplying information on implementation. Approximately 79 percent of projects (16) who supplied information reported projects being implemented as planned or implemented with minor levels of justifiable changes. Only one project required substantial changes to the plan. The Commission also reviewed the achievement of outputs for all Level 1 projects as reported in the CANSW Annual Reports (Table 3a and b). According to the 2015-16 and 2016-17 Annual Reports, 76 percent, and 78 percent of projects respectively reported outputs that mostly met, met, or exceeded the planned outputs. There was underperformance reported in 10 percent of projects for 2015-16 and eight percent for 2016-17. In 2015-16, half of the projects that reported underperformance were in the Western region, where there was a series of very large area-based outputs targets (in the tens of thousands of hectares) that were not met. In these cases, actual achievement of these projects was commensurate with projects in other regions. A proportion of projects were also either substantially re-worked, cancelled or had key outputs that were not reported on.

Table 3a: Achievement of expected outputs for 2015-16 projects

Region

Met or exceeded all

planned outputs

Mostly met all planned

outputs

Under-performance

on some outputs

Adjustment of project funding

Some key outputs not reported on

Central Tablelands

6 1

Central West 3

Northern Tablelands

8

Hunter 3 3

Western 5

North Coast 9 7 2 3 2

North West 6 1

Greater Sydney 3

Riverina 7 3 1 3

South East 9 4 3 3

Murray 6 1

Overall (%) 59 17 11 10 4

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Table 3b: Achievement of expected outputs for 2016-17 projects

Region

Met or exceeded all

planned outputs

Mostly met all planned

outputs

Under-performance

on some outputs

Adjustment of project funding

Some key outputs not reported on

Central Tablelands

1 4 2

Central West 2 1 1 2

Northern Tablelands

14

Hunter 3 2

Western 1 1 3

North Coast 6 5 1 2

North West 8

Greater Sydney 4 1

Riverina 1 8 1 2 2

South East 5 2 2 1

Murray 2 4 2 1

Overall (%) 47 29 8 2 13

3.3.3 Project outcomes

Data on project outcomes are limited and inconsistent. Reporting of project outcomes was largely in the form of qualitative statements of achievement, with little evidence provided, making it difficult to efficiently and accurately aggregate data to determine state-wide achievement. Ability to demonstrate both short and long-term outcomes is further limited by the broad nature of strategic priorities, a lack of project logic and a lack of monitoring over appropriate timescales (due to the 12 month funding timeframes). Recommendations for how the monitoring, evaluation and reporting of the program can be improved are provided in Chapter 8.

Although it is difficult to quantify, the projects funded under the program are considered to have contributed to a broad range of benefits. Examples of these benefits include:

high levels of community engagement and volunteerism in many projects

improved knowledge and awareness of people engaged in projects

increased understanding by participants of how to identify and protect ACH (including non-Aboriginal land managers)

development of collaborations and partnerships

engagement with and capacity building amongst Aboriginal groups, particularly with respect to land management skills and facilitating connection to Country

trialling methods for long-term monitoring to examine return on investment

improved land management planning to achieve NRM outcomes

research publications on a range of NRM issues.

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4. Probity and accountability

Key Findings

Improvements in LLS financial reporting to OEH: The mid-term review found that LLS had not complied with the 2014-15 Annual Business Plan requirements to provide an itemised budget and description of how multiple funding sources were being used. This evaluation found that LLS took steps to address these requirements in 2015-16 and 2016-17.

Remaining financial reporting concerns: Despite improvements in financial reporting there continues to remain:

- a variable ability to match outcomes to funding stream

- a lack of transparency in regards to program and project expenditure, particularly for large projects with several programs within them.

Improvements in clarity of, and adherence to, spending limits: OEH provided improved clarity relating to spending limits in 2016-17, resulting in LLS staff administration and overhead costs reducing from 55 percent in 2015-16 to 43 percent in 2016-17. Minimal guidance or requirements were provided from OEH regarding what was considered appropriate for funds allocated to administration and overhead.

Percent of funding spent on staff, overhead and administration: Site visits identified a particular lack of transparency in relation to staff expenditure on some projects.

Funding of support staff: Some administration and support staff positions were paid for in full using CANSW funding in the 2015-16 financial year, despite spending only a portion of their time on CANSW.

Ability to demonstrate probity: Most LLS regions had organisational-level documentation relating to issues of probity, including conflict of interest procedures and policies, risk management policies and risk registers.

4.1 Transparency of financial reporting

Under Section 5 of the Funding Agreement, LLS are required to provide itemised budget expenditure, including funding sources, against each of the projects and outcomes in the Annual Business Plan. The Commission’s mid-term review identified LLS had not complied with the 2014-15 Annual Business Plan requirements to provide an itemised budget and description of how multiple funding sources were being used. By March 2016, LLS had 34 outstanding compliance requirements from the Funding Agreement. While the majority of these were in relation to outstanding items on the 2014-15 report, OEH did express specific concerns in relation to budget detail, project detail and reporting not being at the level agreed in the 2015-16 Plan. LLS noted that addressing all of the remaining compliance requirements was set to have resource implications on LLS. LLS and OEH worked together to find a practical way to address these items. This end-of-program evaluation found that LLS has largely addressed these compliance requirements in the 2016-17 Business Plan. It is noted that considerations by OEH on appointing a probity auditor for each LLS region were deemed no longer necessary given the significant improvement in the 2016-17 Business Plan.

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Despite improvements in reporting to OEH, there remains a lack of transparency in regards to program expenditure. Key issues identified include:

Varied regional ability to easily and transparently report how project funds were allocated.

In the final year of the program many regions consolidated several projects into larger projects (‘Level 1’ projects) for the purpose of applying for funding and reporting to OEH. Reporting in this manner meant that it took a significant amount of effort to breakdown some of these Level 1 projects into their component parts to evaluate how funds were allocated to the component projects.

It was mutually agreed that financial reporting requirements would be high level unless there was a compliance issue. It was agreed that LLS had capacity to, and would, maintain detailed financial accounts for project spending to allow for audits. The Commission found that while LLS generally had detailed data, it was handled differently in each region, and was onerous to access and analyse in most cases, making auditing difficult.

OEH’s financial reporting requirements for LLS were tied to the themes, which further reduced clarity of reporting, as this is additional to normal financial reporting within LLS.

In order to improve transparency, OEH should consider refining the financial reporting requirements to ensure sufficient clarity in regards to how project funds are allocated. This should be done in conjunction with the program delivery agency to ensure that reporting requirements are efficient given available systems. LLS should leverage their common systems to implement consistent expenditure tracking to allow for easy and transparent reporting of aggregated data, and improve accountability. Further, LLS should implement a state-level quality assurance process to ensure that regions are complying with reporting requirements.

4.2 Funding spent on staff, overhead and administration

Section 3 of the Funding Agreement outlines that LLS can apply an administrative overhead charge equivalent to not-for-profit best practice, but not exceeding 10 percent of the funds provided under the agreement. In practice, a 10 percent administrative cap was applied. LLS were also given the option to voluntarily allocate up to 35 percent of funding to staff costs, bringing the total staff and administrative overhead to 45 percent of CANSW funding. Staff and administrative overhead costs averaged 49 percent of CANSW funds in the past two years. LLS staff administration and overhead costs represented 55 percent of total CANSW spending by LLS in 2015-16 and 43 percent in 2016-17. This reduction is likely driven by more clearly defined spending limits for 2016-17. While the aggregation of LLS expenditure overall aligns with the newly agreed 2016-17 caps (of 35 percent for staff and 10 percent for administration), adherence to the limits varied by region, and concerns regarding funding of staff and administration remain. Site visits and document review identified a particular lack of transparency in relation to staff expenditure on some projects. It is not evident that LLS and OEH were in agreement in regards to the extent to which capacity building and knowledge sharing by staff were key outcomes to be targeted with the funds. Interview evidence indicates that LLS agreed to a “voluntary cap” of 35 percent to be spent on staff in the final year of the program, but it is not clear what outcomes were expected from this spending. Further, it is not evident how this 35 percent was meant to be distinguished from the 10 percent allotted for ‘administration’. Rules for administration spending simply indicated that the funds had to be for “real administrative costs”. In the final year OEH clarified that costs for the Annual Business Plan and Annual Report, and certain monitoring evaluation and reporting (MER) activities were eligible for administrative funds, but did not provide further guidance.

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The appropriateness the 35% cap on salaried expenditure on top of the 10% allowed for administration should be re-considered. The diversity of projects, planned outcomes and staff requirements across the CANSW program vary significantly. The Commission found that projects did not typically budget for, or specify, staff resourcing in line with the planned or anticipated outcomes. The Commission notes that Government programs have typically capped funding for administrative overheads at approximately 10 to 15 percent. Funding of foundational activities10 should be funded to a level appropriate to the scope of activities and expected outcomes. Ensuring funding is justified, rather than merely applying a cap would better manage the risks associated with foundational activities receiving a disproportionate amount of funding.

4.3 Funding of support staff

A review of CANSW budgeted and funded positions for the 2015-16 financial year across a sample of five LLS regions revealed that core LLS regional positions not necessarily associated with the delivery of the CANSW program on a full-time basis had been funded through the CANSW program. Questionable staff funding was identified for every region in the sample. Examples of this are provided in Table 4. The Commission recognises that these functions play a supporting role in delivery of CANSW outcomes, despite not being directly involved in on-ground delivery. However, it is highly likely that these positions supported a range of LLS programs in addition to CANSW. There was significant reduction in support staff charges in the final year, which was likely due to the clarifications made by OEH and OEH’s efforts to enforce the Funding Agreement via the Compliance Memorandum of Understanding. OEH should require more transparent reporting of funds used for staffing, including an indication of what staff will be funded through the program, rationale for the staff needs, and outcomes expected from provision of staff funds.

10 As defined and agreed to in the Commission’s mid-term review to include MER activities, Landcare support and funding of community and Aboriginal community advisory boards.

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Table 4: CANSW budgeted and funded positions for 2015-16

Region Position Total FTE Salary + on-costs

Region A

Regional Coordinator Partnership / Investment 1.0 $134,851

Business and Finance Officer 0.5 $55,281

Education Coordinator 0.5 $53,676

Region B 3 Administration Officers 1.1 Not available

Communications and Media Role 1.0 Not available

Region C

3 Administration Officers 2.0 $141,419

GIS Officer 1.0 $38,583

Business and Finance Officer 1.0 $96,708

3 Strategic Services Officer roles 2.6 $284,034

Region D 3 Administration Officers 2.6 $218,065

Region E

3 Administration / Contract Officers 1.2 $102,967

Communications Officer 1.0 $107,137

Investment Planning Officer 1.0 $117,975

Strategy Development Officer 1.0 $134,582

4.4 Ability to match outcomes to funding

Under Section 6 of the Funding Agreement, LLS regions are required to report a summary of milestones, project outputs and outcomes funded explicitly under the Funding Agreement for the preceding year. Meeting this requirement required projects funded and co-funded under the CANSW program to detail outcomes and outputs achieved by both CANSW and external funding sources. Actual amounts of external funds leveraged on CANSW samples projects are shown in Figure 6a and b in Section 3.2.2. While the majority of CANSW sample projects funded in 2015-16 and 2016-17 (78 percent) had some form of co-funding, there was variation in the ability of regions to report what outputs and outcomes were attributed to each funding source. Figure 811 shows the number of sample projects that are co-funded within different regions and the proportion that recorded activities, outputs and outcomes clearly against the different funding sources. Note that Greater Sydney LLS did not have any co-funded projects in the sample projects reviewed.

11 North West LLS reported budgeted co-funding for two projects, but reported no co-funding in actual expenditure. The Commission is investigating whether this was an error, or if co-funds were never spent on the projects.

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In 2015-16, only 50 percent of sample projects provided some evidence of the activities within the project that were funded by CANSW, and the activities that were funded by other sources (Figure 7). Evidence was typically provided within project plans.

Figure 7: Proportion of co-funded projects within each region for which project activities are recorded based on funding source (2015-16)7

Figure 8: Proportion of co-funded projects within each LLS for which project outputs and outcomes are recorded based on funding source (2016-17)7

In 2016-17, just under a third (31 percent) provided some indication of the outputs and outcomes attributed to CANSW versus those attributed to other funding sources (Figure 8). The extent to which regions could demonstrate outputs and outcomes from CANSW funds specifically varied significantly, from direct accounting against activities, to allocating a percentage to total outputs and outcomes based on CANSW percent of total funding. Cases where LLS may have allocated outputs and outcomes simply based on a proportion of funding were not counted in the above data as they were not reported in project documentation.

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All LLS regions, as per the 2016-17 Annual Report, have provided a breakdown of co-funding co-contributors, expenditure and total project budget. While this reporting approach can identify the proportional contribution of each co-funding party, it does not allow the explicit identification of the project activities, outputs and outcomes achieved by each funding source. LLS should evaluate how regions can consistently and accurately report against various funding streams, in line with investor expectations, to ensure transparency. LLS should develop standards using existing reporting systems. Standards should include clear guidance on how to match outcomes to funding sources to avoid complications in relation to double counting outputs. For example, a review of one Level 2 project report planned for:

CANSW to fund “142 hectares protected under voluntary conservation agreement, with terrestrial native vegetation enhanced/rehabilitated.”

National Landcare Program to fund “21 hectare increase and maintenance of condition of regionally significant species habitat or communities.”

The above example provides a breakdown of how specific funding has contributed to a specific output, but there is no clear indication that the outputs do not overlap. For instance, there is no GIS or site-level data to show that the 21 hectares protected by National Landcare Programme is not simply a subset of the 142 hectares protected by CANSW. LLS regions currently report on program and project outputs and outcomes through the IRIS reporting system. IRIS has the ability to accurately report and aggregate project and program achievements against funding sources. However, the system was developed to allow for a large degree of flexibility and autonomy between regions, and has no centralised standards or leadership to ensure minimum levels of operation and reporting ability. As a result, regions adopted inconsistent approaches to reporting, likely driven by different agency cultures and legacy reporting systems. This greatly inhibited accurate reporting and data aggregation across LLS. The Commission understands that LLS is currently developing an ICT Roadmap, which will likely result in the adoption of a new system to replace IRIS. This presents an opportunity to implement a more standardised approach and minimum operational standards to support state-wide reporting across LLS. However, it is unlikely that a new system will be operational within the next two years of CANSW funding. It will require significant leadership and resourcing to ensure regions have the skills and capacity to operate the new system. LLS should consider a strategy for the interim period before new systems are implemented. The strategy should allocate centralised responsibility to support change and ensure IRIS is used to a minimum standard before it is phased out.

4.5 Ability to demonstrate probity

Most LLS regions had organisational-level documentation relating to issues of probity, including conflict of interest procedures and policies, risk management policies and risk registers as outlined in Table 5. Some regions refer to state-level policies, whereas others have developed their own. Establishing the extent to which these policies and procedures have been applied in delivering the CANSW program was beyond the scope of this review.

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Table 5 : LLS’ supplied organisational-level documentation on issues of probity

Region

Conflict of interest policies

Risk manage-ment policies

Risk Registers

Compliance and enforcement policies

Staff codes of conduct

Gifts and benefits policies

Records manage-ment

North West Y Y Y Y Y Y Y

Central Tablelands

Y* Y* Y Y* Y* Y* Y*

Greater Sydney

Y Y Y Y Y Y Y

Western Y* Y* Y Y* Y* Y Y*

Northern Tablelands

Y Y* Y Y Y Y Y*

Riverina Y* Y Y Y Y* Y* Y*

Hunter Y* Y* Y Y Y Y* Y*

North Coast Y Y Y Y Y Y Y

Central West

Y Y Y Y Y Y Y

South East Y Y Y Y Y Y Y

* Interviews with LLS regions have identified that these regions have adopted state-level policies.

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Recommendations

R1. OEH should provide detailed guidance to delivery agencies in regards to key financial reporting expectations:

a. This should include clarity around key expenditure categories, expenditure limits and definition of direct project costs.

b. Eligible and ineligible expenditure, and categorisation of expenditure should be clearly understood by both parties.

c. OEH should engage with delivery agencies to identify efficient ways to report on financial data.

d. OEH should define what constitutes a ‘project’, to ensure project management requirements are appropriate for the scale of funding.

R2. LLS should use consistent internal systems to improve their ability to track and report CANSW funded project and program costs in clear categories, such as grants paid, motor vehicle costs, contractor costs and staff costs.

R3. OEH should require transparency around the type of support staff proposed to be funded, and seek to improve efficiency, including requiring the delivery agency to:

a. provide detail on the percentage of the salary that will be funded and how their staff funded will contribute to the project or program

b. clarify which staff are funded through the allowed ‘administrative’ funding versus other project funds

c. consistently implement a cap of 10 percent on administrative functions.

R4. OEH should consider an appropriate cap for staff spending to ensure funds remain targeted on on-ground outcomes. Regardless of the cap set, OEH should require that the amount of funding allocated to staff is clearly justified and that projects include expected outcomes related to staff funding (i.e. that projects do not just automatically take the maximum cap).

R5. LLS should implement state-level quality assurance processes for review of regional reports to ensure that aggregated reporting includes consistent and accurate data and meets the investor’s expectations.

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5. Program Coordination and Communication

Key Findings

OEH liaison added value: The appointment of the OEH liaison officer greatly improved communication and engagement between LLS and OEH and facilitated clearer guidance on investor preferences and priorities.

Limited collaboration between OEH and LLS: Projects funded under the 2015-16 Business Plan showed limited alignment with themes and investor preferences. While strategic priorities were defined in for the 2016-17 Business Plan, there was minimal collaboration between OEH and LLS during this process.

Lack of coordination across LLS: LLS did not develop governance processes to facilitate a consistent approach to meeting and communicating OEH expectations. For instance, there was no consistent equivalent to the OEH liaison officer within LLS.

Timeliness improved over time: The Business Plans and Annual Reports from LLS were considerably late in the 2015-16 reporting year. There was a significant improvement in the timeliness of reporting in 2016-17. There is room to improve timeliness of communications from OEH in regards to guidance on funding.

5.1 Communication

The Funding Agreement outlines the requirement for both OEH and LLS to nominate a representative to act as the contact point for all communications under the agreement and on behalf of their respective parties.12 While both nominated a liaison, OEH implemented the liaison effectively, whereas LLS did not. Interviews indicate that appointment of the OEH liaison officer was highly successful. Six of the eleven regions interviewed exp