Governance shortcomings caused Intelligent Island stagnation: ANAO

It was supposed to turn the island state of Tasmania into a beacon of Australia's ICT industry, but six years later an audit report has blamed poor management and monitoring of the government-backed BITS Intelligent Island program for repeated delays that have made the program something of a lame duck.

The AU$153 million Building on Information Technology Strengths (BITS) program was one of a number of ICT and telecommunications infrastructure initiatives funded through an AU$830 million drawdown from proceeds of the first two Telstra share offers.

The stated goal of the five-year, AU$40 million BITS Intelligent Island initiative, administered by Tasmanian state government and Australian Department of Communications, Information Technology and the Arts (DCITA), was "to further develop an internationally competitive (information technology and telecommunications) sector in Tasmania".

Years later, however, most of the original funding - originally earmarked for the fiscal years ending in 2000 through 2004 - was still unused. It was only last December, 18 months after the funding was originally intended to have been depleted, that the government dipped into the fund to commit AU$15 million to support development of a CSIRO ICT Centre in the state.

This May, up to AU18 million was finally made available through the Tasmanian government-driven Market Access and Partnership Program (MAPP), which will provide between AU$200,000 and AU$2 million to local startups that submitted their cases before the June 21 deadline.

To judge DCITA's competence in managing the various programs, ANAO looked at seven projects including the BITS incubator, BITS Advanced Networks Program, and BITS Intelligent Island Program; the National Communications Fund and Towns over 500 programs; the ICT incubators program; and the Advanced Networks Program 2.

Although generally positive about DCITA's handling of the programs' funding and goals measurement, ANAO singled out the Intelligent Island program for "significant delays" that had prevented it from even getting on track to achieve its objectives.

The main source of these delays, ANAO found, were systematic failures to comply with best practice in the management of the government grants. Issues identified with Intelligent Island included a lack of formal risk management methods for program management; use of performance indicators linked with project objectives; use of those indicators to measure program performance against key performance indicators; and timely disbursement of grant funds.

"Although the performance monitoring regime for the Intelligent Island Program was well established, DCITA has not monitored the achievement of the program's objectives using the agreed performance measures," the report found. "This does not represent sound grant management practice. The ANAO also considers that DCITA could have taken earlier action to progress the Intelligent Island Program, which has experienced significant delays throughout its life."

A common problem with the programs was the setting of inconsistent and non-taxing standards for funding applications, which had seen many aspiring incubator participants falling far short of the detail and performance measures that would have been expected under best practice.

"DCITA set low standardised performance targets that did not present a challenge to most ICT incubators," the report concluded. "The risk with setting performance targets too low is that, once achieved, grantees will not make every effort to maximise their performance."

DCITA accepted the two ANAO recommendations stemming from the report, which suggested the department develop guidelines to improve the quality of submissions, and document its evaluation of the relative merit of those submissions.

ANAO also highlighted the need for independently audited financial reports for Intelligent Island participants, and suggested that DCITA force grant recipients running "complex or high risk operations" to develop and enforce formal risk management plans at the start of the grant and throughout its process, and to report regularly to DCITA on the identification of risks throughout the project's lifespan.

DCITA was contacted to comment about the ANAO report but had not responded to ZDNet Australia enquiries by press time.