Government watchdog cuts scrutiny as dire funding shortage puts office under strain

The agency in charge of scrutinising the Federal Government has warned it’s underfunded despite Labor promising to make sure the watchdog had enough money to do its job properly.

Anthony Albanese campaigned heavily in opposition on transparency and integrity, with his colleagues blasting the Morrison Government for shying away from scrutiny after cutting the Auditor-General’s budget.

Labor accused the Coalition in 2020 of “financially crippling” the agency as revenge for it having exposed the sports rorts and other scandals.

“This is payback for the Auditor General doing his job,” Mr Albanese said at the time, after the number of audits had dropped to 38 in a year.

But new Auditor-General Caralee McLeish has warned the now-Prime Minister that her agency continues to be in a perilous financial state and will again have to cut the number of examinations of programs it does each year.

Parliament asked the Australian National Audit Office to do at least 48 performance audits a year. These are the close examination of government programs that have in the past uncovered mismanagement of grants, outrageous travel claims and blowouts in Defence projects.

It only managed to do 44 over the past financial year and Dr McLeish said this number would have to fall even further to somewhere between 38 and 42.

“Sustainable funding is also central to audit independence,” Dr McLeish said in the ANAO’s annual report.

“Achieving a sustainable funding model that supports the Parliament in exercising its accountability functions is a priority for the ANAO in 2025-26.”

The ANAO, while an independent agency, comes under Mr Albanese’s portfolio as Prime Minister.

The office ran a loss of $5.3 million in 2024-25, and has posted losses at a similar level for the past five years.

Dr McLeish said these losses had been supported out of the agency’s accumulated reserves but that situation was no longer tenable because the money was needed to fund employee liabilities.

The ANAO was allocated a total budget of $98.4 million for 2025-26 and employs the equivalent of 423 full-time staff.

It now has to audit climate disclosures plus its usual work examining financial statements of all government entities.

In 2020-21, it was given $67.9 million, employed 321 people and completed 42 performance audits along with the regular examinations of financial statements.

A government spokesperson said the Government supported the ANAO’s important scrutinising role.

“Upon coming to government, the Albanese Government provided the ANAO with an additional $14.4 million over four years — and $3.9m per year ongoing — to support this important work and, in particular, to ensure the ANAO could deliver additional performance audits in the coming years,” they said.