In a damning report, the Northern Territory auditor-general has called for a full investigation of a Country Liberals Party-era (CLP) Indigenous employment scheme and for anymore cases of suspected fraud to be referred to NT Police.
The program known as the Indigenous Employment Provisional Sum (IEPS) was introduced under the former CLP government in 2014 and sold as a plan to increase employment opportunities for Indigenous Territorians.
But the auditor-general's report, tabled in the NT Legislative Assembly, said while at least $40 million was paid to construction companies through the scheme, poor management systems meant it was impossible to tell if the program was achieving its aims.
Six construction companies suspected of perpetrating fraud against the scheme have already been referred to NT Police and the auditor-general's report calls for further investigations.
"I strongly recommend that the IEPS initiative be subject to independent audit in its entirety with further instances of suspected fraud referred to the NT Police in accordance with the Treasurer's directions," the report stated.
NT Minister for Infrastructure Nicole Manison said the Government accepted that recommendation.
"Discussions have been had with the auditor-general in respect to an independent audit of the IEPS," Ms Manison said.
Poor planning and monitoring left scheme at risk of fraud
The auditor-general's report said inadequate planning, implementation, monitoring and reviews by the Department of Infrastructure left the scheme at risk of fraud and the NT Government at risk of "material financial loss".
It said in some cases contractors were charging the Government for Indigenous employees working more than 24 hours a day or for workers from interstate rather than Indigenous Territorians.
"The absence of effective preventative controls from the implementation of the IEPS initiative exposed the agency to significant financial risk and there is evidence to suggest that some contractors have deliberately claimed payments under the IEPS to which they were not entitled," the report said.
In August this year, Ms Manison announced the employment scheme would be suspended because the department had received advice of "potential widespread fraud of the IEPS".
The Government said at the time it had referred six cases of suspected fraud to the Northern Territory Police.
The Northern Territory Labor Government, which was elected last August on a platform of restoring integrity to government, said it had already improved the department's monitoring systems.
"More stringent processes were put in place and the department was provided a million dollars extra for compliance," Ms Manison said.
'Risk of fraud and error remains': report
While the Government had suspended the IEPS, it also allowed current contracts under the scheme to continue.
"Consequently there remains a risk of fraud and error," the auditor-general's report said.
The auditor-general's report said many of the recommendations remained relevant, particularly for any replacement of the IEPS.
In Parliament, Ms Manison said the Government was implementing all of the report's recommendations but did not go into detail.
Ms Manison said the recommendations would be taken into account as the Government developed a new Indigenous employment scheme.
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