Better rules surrounding tens of billions of dollars in Commonwealth grants are needed to prevent repeats of the Morrison government’s “industrial scale rorting”, Parliament’s audit committee has recommended.
After examining multiple independent audits, several controversial programs, grant hubs and the existing framework, the Joint Committee of Public Accounts and Audit determined “the letter and the spirit of rules were routinely disregarded by ministers and officials”.
On Thursday, it called for a new approach that binds grant decision makers to Commonwealth Grants Rules and Guidelines (CGRGs). The rules should also be amended to be clearer and make a competitive merit based process the default.
The proposed changes would also stop ministers and officials from choosing from a pool of “eligible” recommendations and force them to disclose and publish when going against an agency’s recommendations.
The Committee examined the administration of several Morrison government funding programs and subsequent audits before making the recommendations.
These programs included the Urban Congestion Fund, which allocated 83 per cent of its projects – worth nearly $3 billion – to Liberal-held seats; the Regional Growth Fund, which allocated 96 per cent — worth $272m — of its funding to Coalition-held electorates; and the $184 million Safer Communities Program, which an audit found allocated half its grants without “clear basis for the decision”.
“Unfortunately, clear evidence of serial non-compliance with the Commonwealth Grants Rules and Guidelines and program guidelines was presented across multiple programs,” Committee chair Julian Hill said.
“The requirements under the CGRGs are not overly complex or onerous yet both the letter and the spirit of rules were routinely disregarded by ministers and officials.”
The committee acknowledged ministers should retain discretion and authority to accept or reject recommendations but “ministerial discretion about grant awards is not absolute”, Mr Hill said.
“Ministers are not ‘gods’ and are subject to the law and the rules and must record properly and fully documented reasons.”
The Committees report said it was “disturbed” by the Auditor General’s evidence of “serial non-compliance” with the spirit and at times the rules that guide tens of billions of government grants every year.
It also heard evidence that the appearance of politicisation of grants had “corroded public trust” to a point where prospective applicants did not bother to apply for grants.
This was due to a belief they “would never get a fair go as projects or applicants were disliked by Coalition MPs or located in an opposition electorate”.
The committees report also recommends reversing the current onus so that corporate Commonwealth entities like the National Disability Insurance Agency are subject to the CGRGs when awarding grants unless an exemption is given.
The committee’s inquiry also examined the grant ‘hubs’ established 2015 as part of the government’s Digital Transformation Agenda. The move consolidated administration to two hubs operated by the Industry department and the Department of Social Services, which together administered more than 80,000 grants worth $30.9 billion last year.
The hubs cost $158 million to establish but were supposed to create savings of $400 million.
However, the Audit Office found little evidence of the promised savings and recommended a netter approach to capturing performance and data, as a new operation plan is developed.
The committee endorsed the recommendations and have asked that the Finance department be required to report back on its progress towards them within a year. Another report on the Australian government grants reporting should also be conducted in this time, it said.
Coalition senators on the audit committee agreed with its recommendations but criticised chair Julian Hill, a Labor MP, for using “politically charged rhetoric” in the final report and selectively quoting evidence.
Coalition senators on the committee, led by deputy chair Linda Reynolds, used their dissenting report to argue the federal watchdog had made “no findings of illegality” and that there was evidence ministers had been “let down” by officials on advice for grants.
The Coalition Senators also said the pooling of eligible grant recommendations should remain with “appropriate transparency”.
