Vic scolded for business grant 'mistakes'

State Ombudsman Deborah Glass has found thousands of applications for the government's $10,000 Business Support Fund were denied because they remained in draft awaiting further information.

Others weren't processed because forms contained typographical or numerical errors, involving email addresses or other information.

The investigation also highlighted a restaurateur being rejected from the fund after incorrectly entering his business name as CurryHut instead of Curry Hut Group.

"The department made mistakes. People made mistakes," Ms Glass wrote in her report tabled in state parliament on Tuesday.

"Mistakes were, in the fraught circumstances of the pandemic, completely understandable. But the consequences of people's mistakes could be devastating."

The Department of Jobs, Precincts and Regions was not equipped to handle the demand, with only five people initially staffing its call centre.

That number eventually grew to 500, although outsourced workers were unable to help business owners struggling with their applications as they were not granted access to their cases files.

While the aim of the funding regime was laudable, Ms Glass said it was undermined by inflexible administration that caused "people to be forgotten in the process".

"The COVID-19 lockdowns fell like a hammer blow on small businesses," she said.

"There was desperation in people's voices, they were counting on a grant to pay bills, rent, wages - to survive.

"Despite the stress and anxiety caused by COVID-19, in an environment where their businesses were being destroyed, people were being penalised for their honest mistakes.

"Good intentions got lost in translation."

Ms Glass noted the system was set up in just nine days and lacked a robust complaints or internal review process.

"A good internal review and complaints process should be a priority for any system of public administration, even more so when it is set up in haste," she wrote in the report.

"Complaints will quickly identify the pressure points, the things that must be fixed."

There was no information on the Business Victoria website about how to challenge a decision or lodge a complaint when the fund opened, she added.

This meant complaints were effectively "outsourced" to the Ombudsman.

Ms Glass recommended 479 business applications be reassessed during her investigation, of which 297 have already been approved.

As for the rest, the department has committed to inviting eligible businesses owners who were denied the $10,000 grant to reapply.

"Sometimes, it takes the nudge of the ombudsman's elbow to encourage public servants to do the right thing," Ms Glass said.

While welcoming the commitment, the Victorian Chamber of Commerce and Industry said it was disappointed system flaws had caused further pain to reeling businesses.

"It's been a stressful and challenging 13 months for Victorian businesses and the situation was no doubt exacerbated for those who unfairly had their business support fund applications rejected," Chief Executive Paul Guerra said.

Opposition Leader Michael O'Brien said small businesses were on their knees and they were let down during a time of need.

"When the government gets it wrong, real people suffer," he told reporters on Tuesday.

"People lose their jobs. People's businesses are closed. People's lives are thrown into turmoil."

Acting Premier James Merlino said the 12,000 businesses would be contacted over the "next few days".

"To those businesses, I know this has been an inconvenience, you will be contacted by the department and rest assured, your applications are being reassessed right now," he told reporters.

He said the Business Support Fund has supported 134,000 businesses, totalling $2.6 billion.

Australian Associated Press