A watchdog without resources is not a watchdog
ANAO received only $99.8m in new funding—below inflation—while staff levels drop from 435 to 421 and audit targets cut from 48 to 38-42 reports annually. The auditor general has operated in deficit for eight years, accumulating $5.3m losses in 2024-25, forcing reliance on depleting cash reserves to cover liabilities.
- ANAO received $99.8m in new funding—below inflation—while staff drops from 435 to 421
- Auditor general has operated in deficit for eight years, with $5.3m loss in 2024-25
- Audit targets cut from 48 annual reports to 38-42 due to budget constraints
- Major Projects Report tracking defence spending has been discontinued
Labor faces criticism for inadequate funding of the Australian National Audit Office in the budget, with the auditor general warning of unsustainable deficits and reduced audit capacity despite expanding government oversight needs.
The Australian National Audit Office is running on fumes. In October, auditor general Caralee McLiesh told Senate estimates that her agency had been operating in the red for eight straight years—a position she called unsustainable. By the end of the 2024-25 financial year, the ANAO had burned through $5.3 million in losses, eating into cash reserves that were supposed to cover staff liabilities. Now, with this week's budget, the situation has only tightened.
The government allocated $99.8 million in new annual funding to the ANAO, a figure that barely keeps pace with inflation from the previous year's $98.2 million appropriation. At the same time, the agency's headcount is shrinking. The budget papers project staffing will drop from 435 people in 2025-26 to 421 the following year. The math is simple: less money, fewer hands, and a mandate that keeps expanding.
The ANAO's job is to audit government departments and major spending programs, reporting independently to Parliament on whether public money is being spent wisely. It is, in theory, one of the central safeguards against waste and mismanagement. But the institution is already struggling to meet its own targets. Last year, the audit office cut its annual reporting goal from 48 reports down to 38 to 42—and even that lower number may not be achievable given the budget constraints. The agency is trying to compensate through automation and streamlined processes, but there are limits to what efficiency can do when the underlying resources are inadequate.
Parliament's Joint Committee of Public Accounts and Audit has already flagged the problem. The committee warned the Albanese government that the auditor general's financial position is unsustainable and a matter of "serious concern." This warning came even as the number of government agencies and functions requiring oversight has grown significantly. The ANAO is being asked to do more with less, year after year.
Critics are now speaking out. Catherine Williams, executive director of the Centre for Public Integrity, called the budget allocation "badly inadequate." She argued that key oversight agencies like the ANAO should have separate parliamentary appropriations and be advised by an independent funding panel insulated from political pressure. "A watchdog without resources is not a watchdog," Williams said. "It is a warning sign that government does not take accountability seriously."
Independent ACT senator David Pocock echoed the concern, pointing to concrete examples of what the ANAO has uncovered: grants fraud, defence procurement failures, cost blowouts on major projects. The office has tracked defence acquisitions notorious for running over budget and schedule—work that has now been discontinued. "This is shortsighted in every way," Pocock said. "A well-funded ANAO pays for itself many times over by finding the waste no one else will."
The irony is sharp. The ANAO has exposed serious failures by both Coalition and Labor governments. Yet the current government's budget response suggests it is not willing to adequately resource the institution that holds it accountable. The auditor general's office is being forced to scale back performance audits and discontinue flagship reports. Meanwhile, the accumulated deficit continues to mount, drawing down reserves that cannot be replenished at the current funding level. The watchdog is being starved at the moment when independent scrutiny of government spending and procurement may matter most.
Notable Quotes
A watchdog without resources is not a watchdog. It is a warning sign that government does not take accountability seriously.— Catherine Williams, Centre for Public Integrity executive director
A well-funded ANAO pays for itself many times over by finding the waste no one else will.— David Pocock, independent ACT senator
The Hearth Conversation Another angle on the story
Why does the funding gap matter so much? The ANAO is still getting money—just not as much as it wants.
Because the gap isn't theoretical. The auditor general has been running in deficit for eight years. That means the office is spending more than it receives, and it's covering the shortfall by burning through cash reserves. Those reserves are finite. Once they're gone, the ANAO can't function.
But couldn't they just ask for more money next budget?
They have been asking. The Joint Committee of Public Accounts and Audit has already warned the government the situation is unsustainable. The government knows. This budget allocation—barely above inflation—is the answer they chose to give.
What's the practical consequence? What audits don't happen?
The ANAO cut its annual audit target from 48 reports to 38 to 42. That's real work that doesn't get done. And they've discontinued the Major Projects Report, which tracks defence spending. Those are the audits that catch the big waste.
Who benefits from a weaker ANAO?
That's the question, isn't it. Not the public. Not Parliament. The people who benefit are those who prefer less scrutiny of how government money is spent.
Is this unique to Labor?
No. The ANAO has exposed failures by both Coalition and Labor governments. But that's precisely why adequate funding matters—it's supposed to be independent of whoever is in power.