Report 11: 2020-21

COVID-19 Relief Fund

Introduction, background and conclusion

Introduction

The objective of this audit was to assess whether the Lotteries Commission (Lotterywest) and the Department of Local Government, Sports and Cultural Industries (DLGSC) implemented effective governance and assessment arrangements for Phase 1 of the COVID-19 Relief Fund (the Fund). Phase 1 ran from 30 March to 30 June 2020. Subsequent phases of the Fund are not within the scope of this audit, but may be subject to future audit scrutiny.

The Fund was announced by the State Government on 30 March 2020 to offer financial assistance to Western Australian (WA) sports, arts and community organisations affected by the COVID-19 pandemic. The Government was concerned that these organisations would be unable to operate during the pandemic and may not remain viable to assist in a subsequent recovery. It was also concerned that community organisations providing relief services would see a significant increase in demand.

To address these concerns, the Government and the Lotterywest Board of Commissioners (Board) agreed to make available funding of up to $159 million through Lotterywest grants, $59 million of which was to be immediately available for distribution in Phase 1 of the Fund.

The initial $59 million was made available by re-allocating $55 million from Lotterywest and $4 million from DLGSC. Funding for later phases (up to $100 million) will come from Lotterywest’s anticipated profits from lottery sales in 2020-21.

Lotterywest was responsible for the overall design and implementation of the Fund and is managing grants to arts and community organisations. DLGSC contributed to the design of Phase 1, was involved in grant assessments for sports and arts organisations and is managing grants to sports organisations.

Background

The Lotteries Commission Act 1990 (the Act) gives Lotterywest the power to provide direct grants to support the Western Australian community. Grant decisions are approved by the Premier (as the responsible Minister), on recommendation from the Board. In 2018-19 Lotterywest reported that it assessed 823 grant applications and awarded 682 applications totalling $102 million.

Prior to the Fund’s creation, Lotterywest could only award direct grants for charitable or benevolent purposes to local government entities and not-for-profit organisations. Parliament passed amendments to the Act in April 2020, which allowed Lotterywest to also award funds to public authorities, such as DLGSC, to then distribute agreed grants. As a result, applications which did not have a charitable or benevolent purpose were able to be considered for funding. Sports organisations were awarded grants through the Fund in this way.

These powers were in place for an emergency period from 16 March to 15 September 2020. On 15 September 2020[1], the Premier, as the Minister responsible for Lotterywest, subsequently extended this emergency period to March 2021.

Phase 1 funding was available across 3 programs:

Conclusion

The governance arrangements established by Lotterywest and DLGSC for Phase 1 of the Fund were largely effective. The design of the Fund reflected the State Government’s stated intent to make funding available to a range of sports, arts and community organisations affected by the COVID-19 pandemic. Despite the Fund being implemented quickly, there was a strong focus on establishing sound governance and risk management arrangements. However, more attention could have been given by Lotterywest to defining the Phase 1 expected outcomes. For future phases of the Fund, Lotterywest could also improve how it manages conflicts of interest and both entities should ensure that all key decisions are recorded appropriately.

The application assessment, approval and payment arrangements were sound, and were followed by Lotterywest and DLGSC. Of the $59 million available for Phase 1, $37.5 million was awarded to over 50% of applicants. Many unsuccessful applicants were unable to demonstrate eligibility, including the financial impact of the COVID-19 restrictions, or did not provide up to date or complete information.   

Lotterywest paid almost all Phase 1 grants (345 of 367 totalling $25.3 million) to community and arts organisations by its target of 30 June 2020. It also paid DLGSC 2 grants totalling $6.8 million on 22 June 2020. Most of the grants to sports organisations (89 of 107 totalling $3.5 million) were paid by DLGSC by the end of July 2020.

It will be important for entities to maintain sound assessment, approval and payment arrangements for the remaining phases of the Fund, so that funds are targeted to areas of highest community need, performance reporting is improved and the Fund’s effectiveness overall as a response measure can be assessed.

[1] Legislative Assembly Hansard, 15 September 2020

 
Page last updated: December 21, 2020

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