Queensland Covid grants were approved improperly and $96m may not be repaid, report says

Queensland Audit Office finds concessional loan scheme beset by administrative problems

A centrepiece of the Queensland government’s pandemic response – a $1bn concessional loan scheme for businesses – was beset by administrative problems, such as grants being approved improperly and claims of nepotism during the rapid recruitment of temporary staff, the state auditor general has found.

A report by the Queensland Audit Office found that the quick ramp-up of staff required to administer the Covid support program had resulted in cases where close relatives of public servants were hired, and where conflicts of interests were not declared among members of hiring panels.

“This increases the risk of inappropriate contracts being entered into and value for money not being obtained,” the report, tabled in parliament this week, found.

Grants were approved by staff for amounts above what they were allowed to approve, and one contract was approved in a way that did not align with government policies.

The audit found that about 8% of the loans paid out from the scheme – a total of about $96m – were not likely to be repaid. About 5% of loans were approved to businesses that were rated as high to severe risk.

Other issues raised included that approvals were processed manually, supplier information was not restricted and that payment files were not encrypted.

In order to assess, process and pay the increased volume of loans and grants related to government Covid support schemes, the responsible agency, the Queensland Rural and Industry Development Authority, almost doubled its full-time staff.

Temporary employees were recruited, taking full-time staff numbers from 118 to 201.

“While [the authority] provided training to employees during this period of rapid expansion, it did not adhere to some policies and procedures,” the audit report said.

“In addition, the systems and processes [internal controls] it had in place, which were appropriate for a smaller entity, were not adapted as the size, complexity, and risk of the entity increased.

“As the government wants to respond quickly to the challenges faced by the community and support businesses in the pandemic, administrators and program owners must ensure that controls can adapt to changes in the nature and volume of services they deliver.”

Other issues raised by the auditor general in his annual report on state entities included concerns that government information systems contain weaknesses and need to be better protected from hackers.

The report also found that government systems were in some cases susceptible to fraudsters, who would email departments requesting changes to bank account details for suppliers.

“We observed that some entities relied on [a] shared service provider to confirm the change using an independent source,” the report said. “However, when the shared service provider was not able to do this within the agreed time frame, the change was referred back to the entities, who approved it without independent verification. This significantly increases the risk of fraud.”

The report said that of 10 deficiencies identified related to the rollout of the Covid loan program, eight had already been addressed.

The Queensland agricultural industry development minister, Mark Furner, said the department was continuing to work to address the remaining deficiencies.

“[The] report provides important lessons on striving for greater transparency within government and protecting public value during times of organisational change,” Furner said.

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