- Adherence to the Commonwealth grants rules and guidelines
Overview
2.1The Commonwealth Grants Rules and Guidelines (CGRGs) were initially developed by the Australian Government in 2009 with the aim of establishing consistent and transparent standards for the administration of grants across Commonwealth entities. This framework contains key legislative and policy requirements, and is also intended to explain the better practice principles of grants administration.
2.2The most recent version of the CGRGs was released in 2017 and currently governs the way the Australian government provides grants. The stated intent is still to ensure transparency, fairness, and accountability in the grant-making process. This policy framework applies to all non-corporate Commonwealth entities (entities) that are subject to the Public Governance, Performance and Accountability Act 2013 (PGPA Act). This includes ministers, accountable authorities, officials and third parties who undertake grants administration on behalf of the Commonwealth.
2.3The CGRGs emphasise achieving value for money, meaning that grants should be cost-effective and deliver good outcomes. The CGRGs also specify that grants should be open and competitive, allowing a fair opportunity for all eligible applicants to apply.
2.4It is noteworthy also that public sector officials have a responsibility to advise their ministers of the requirements of the CGRGs.
2.5The CGRGs are issued by the Finance Minister under section 105C of the PGPA Act. The Department of Finance (Finance) is responsible for the stewardship and ongoing maintenance of the CGRGs and for regularly reviewing and updating these guidelines to ensure they remain relevant and effective. Finance also provides guidance and support to Commonwealth entities in implementing the CGRGs, including training and resources with the aim of promoting accountability, fairness, and value for money in the grant-making process while achieving the government's policy objectives.
2.6Other important aspects of this framework include that risk management and proportionate decision-making be used when assessing applications and that entities:
- should clearly communicate their grant programs, including eligibility criteria and assessment processes, to potential applicants
- should consider the potential risks associated with a grant, including financial risks and risks to achieving program objectives
- must appropriately document and report on grant processes, decisions, and outcomes to ensure transparency and accountability
- should consider the impact of grants on disadvantaged and underrepresented groups, promoting inclusivity and diversity.
- The guidelines also highlight the importance of continuous improvement in grant administration, learning from past experiences and implementing best practices. In addition, the CGRGs provide a framework for managing conflicts of interest and maintaining integrity throughout the grant process.
- Compliance with the CGRGs is regarded as essential for entities involved in providing grants, with the aim of ensuring accountability and public trust in the use of public resources. Grant recipients are also expected to meet their obligations, including reporting on the use of funds and achieving agreed-upon outcomes.
Competitive vs. non-competitive processes
2.9The CGRGs specify in paragraph 11.5 that open and competitive grants processes should be the adopted approach to awarding this funding unless other circumstances are applied with an explanation:
Competitive, merit-based selection processes can achieve better outcomes and value with relevant money. Competitive, merit-based selection processes should be used to allocate grants, unless specifically agreed otherwise by a minister, accountable authority or delegate. Where a method, other than a competitive merit-based selection process is planned to be used, officials should document why a different approach will be used.
2.10At the public hearing held on 3 March, the ANAO described a competitive grants process as:
…one where it is open to anyone to apply, where there are clear guidelines that applicants need to do their application against, and there’s a closing date and where applications are assessed after the closing date to see which ones are most meritorious against published criteria.
2.11As outlined above, it is not mandatory under the current framework for entities to use a competitive selection process. In its submission to this inquiry, the ANAO observed that despite it being the Australian Government’s stated preferred approach under the CGRGs, ‘competitive selection processes are chosen in the minority of cases’, with its analysis of GrantConnect data from 31 December 2017 to 30 June 2021 indicating that only ‘35 per cent of grants by number, or 39 per cent by value, were reported as having used a competitive selection process’.
2.12The Grattan Institute made a similar observation in its submission, noting that ‘federal government grants are rarely open and competitive’, and that only 13 per cent of the grants listed on GrantConnect in 2021 had been awarded in an open and competitive selection process.
2.13The ANAO’s submission further commented that ‘more is needed to encourage the uptake of competitive, merit-based processes, and that ‘this could be achieved by amending paragraph 11.5 of the CGRGs to strengthen the directives from “should” to “must”.’
2.14Of the four grant programs that have been the subject of this inquiry:
- three employed open and competitive selection processes (Building Better Regions Fund (BBRF), Regional Growth Fund (RGF), and Modern Manufacturing Initiative MMI); and
- one employed a mix of competitive and non-competitive processes in different rounds (Safer Communities Fund).
- The ANAO noted in its submission, however, that there have been instances ‘where programs announced as being competitive and merits-based have actually employed closed, non-competitive processes.’ It further commented that:
More recent audits suggest that there remains a risk that even when programs are reported as having used an open and competitive selection process, they still may not result in those applications assessed as the most meritorious against the criteria being funded.
2.16The Department of Infrastructure, Transport, Regional Development, Communications and the Arts (Infrastructure) provided a breakdown of the funding amounts and locations under the UCF and RGF programs in response to questions on notice from the Committee.
2.17In the audit of the BBRF, a program introduced by the former Morrison Government, for example, 65 per cent of applications approved under the infrastructure projects stream were not those assessed as being the most meritorious by the department. In particular, the audit report found that for round three of the program, ‘highly scored applications [were] approved at a rate of 13 per cent’, with 87 per cent of applications approved not recommended for funding by the department. The audit concluded:
The impact of the approach taken has been that the program is not being delivered as an open competitive grant opportunity where eligible applications are competing in terms of their assessed merit against the four published criteria.
2.18The CGRGs recognise that there may be legitimate reasons for entities to adopt closed, non-competitive processes. Paragraph 13.13 of these guidelines states that:
In some circumstances, it may be appropriate to use a non-competitive and/or a nonapplication based process. For example, it may be important to strike a balance between the desire to maximise access to a grant and the need for a timely and cost-effective decision making process. It may also be appropriate to target particular individuals, organisations, regions, or industry sectors, depending upon the government policy outcomes to be achieved.
2.19In its submission to the inquiry, Finance informed the Committee that, in preparing its advice to the minister on potential amendments to the CGRGs, it is examining issues relating to ‘grants selection processes, decision-making and the appropriate use of non-competitive processes’.
Election commitments
2.20The funding of election commitments through grant programs was discussed in the ANAO reports that were the subject of this inquiry. Funding for seven sites in the Commuter Car Park Projects within the Urban Congestion Fund, and all of the grants that were awarded in round one of the Safer Communities Fund, were highlighted in the respective ANAO performance audits as having been delivered as election commitments.
2.21Both Finance and the ANAO confirmed in public hearings for this inquiry that election commitments being delivered through grant programs are subject to the usual requirements of the CGRGs and the PGPA Act. At the 3 March public hearing, the ANAO commented that:
The framework in a sense is very clear. An election commitment is not special, Under the framework, it is a grant. Potentially, it needs to be assessed in the normal way under the guidelines, and then start with this proposition that unless otherwise agreed go for a competitive, merit based process.
2.22The ANAO advised that implementing election commitments through grants programs is not inherently a concern provided the proper processes are followed. The Auditor-General commented that funding of an election commitment as a grant should not preclude a department from undertaking a proper and transparent process in accordance with the rules and frameworks:
They have to satisfy a proper use test, under the PGPA, and they have to satisfy the requirements under the grants rules, which include requirements with respect to value for money. … If hypothetically a department assesses election commitments and says, ‘We don’t think they’re value for money’, they put the advice up to the minister. The minister then says, ‘I think it is value for money for these reasons.’ The minister’s only requirement is to document why they consider it to be value for money…
That’s a proper process. It’s transparent, which is one of the key principles of the Grants Rules and Guidelines. These processes don’t prohibit ministers from making decisions. Under the framework, which has been established by governments with a principle around transparency, it’s about making those decisions transparently. That’s the framework.
2.23At the 31 March hearing, Finance reaffirmed the applicability of the existing grants framework to election commitments:
At the highest level, election commitments still need to comply with the Commonwealth grants rules and guidelines, as well as the rest of finance law—so the PGPA Act, the PGPA Rule et cetera. We have our resource management guide that is publicly available that outlines this, and we would remind anyone who’s looking through that that election commitments go through the same process. … there still needs to be an assessment done that the government or the minister is satisfied that the grant program is an efficient, effective, economical and ethical use of relevant moneys, and so there need to be grant opportunity guidelines developed and there needs to be the assessment of value for money, and that advice needs to be provided and recorded.
2.24Neither the CGRGs nor Finance’s resource management guide includes a definition of an ‘election commitment’ in the context of grant programs. This was evident in the ANAO’s audit of the Commuter Car Parks program, in which the department identified 34 car park projects as election commitments, whereas the ANAO’s view was that only seven of these projects constituted election commitments. At the 3March hearing, Infrastructure explained its reasoning to the Committee:
The Department of the Prime Minister and Cabinet coordinates election commitments and identification of what the election commitments are and traces their implementation, and all of these projects were traced for implementation through that process.
2.25Infrastructure acknowledged however that the definition of what constitutes an election commitment is not clear:
I understand that there’s quite clearly room for a difference of opinion about whether or not something that is a government decision that is not announced until an election is an election commitment, or something that is only decided by a potential government in a prorogued parliament is an election commitment. I think that’s the point of difference here, where there is some debate.
2.26At the 3 March hearing, the ANAO identified a number of risks to fair and transparent administration that could arise as a result of a grant project being classified as an election commitment, which included:
- if a department decided that the level of scrutiny to be put on a project differed from election commitments to projects coming from another source. This could include not undertaking proper assessments of whether the project is value for money under the CGRGs, and proper use of money under the PGPA Act (whether it is efficient, effective, economical and ethical), because the project is an election commitment.
- to try and save money… the election commitments [are put] through an existing program which has criteria which aren’t necessarily fit for purpose or, worse still, that existing program is an open, competitive one. The latter results in applicants competing for a limited pool of money against election commitments.
- The ANAO’s audit of the Safer Communities Fund also found that for round one of this program, which was established to fund election commitment projects, ‘the majority of the projects, involving the majority of funding, was for electorates held by the Coalition, or Marginal electorates … not held by the Coalition’.
- Some witnesses at public hearings for this inquiry argued that promises to fund specific projects during an election should be restricted to commitments towards programs or policies that involve a merit-based process. Professor Anne Twomey expressed the view that:
… [politicians] shouldn’t be … making promises in relation to particular grants to particular communities when they haven’t set out the guidelines or the rules, they haven’t done any merit assessments … The policy promises should be there, but implementing it specifically should wait until after the election, and that’s when governments should follow through with the merit process.
Requirements for officials and decision-makers
Requirements
2.29Officials of Commonwealth entities that are delivering grants programs under the CGRG framework have responsibilities to provide accurate, timely, and impartial advice to the relevant minister on matters related to these programs. The framework provides that they should support that minister in understanding the guidelines, policies, and processes governing the administration and management of these grants.
2.30They should also provide comprehensive written advice and any other relevant information to that minister to assist them in making informed decisions regarding the awarding of grants. The responsible entity should therefore provide a detailed assessment of the applications received for the grant against the criteria for funding and rank them for suitability.
2.31These officials must ensure therefore that grant application and assessment processes are transparent and accountable. They should document and maintain records of the decision-making processes, including assessment scores, rationale, and any changes made during the evaluation. They should maintain accurate and complete records of all grant activities, including funding agreements, financial management, and reporting.
2.32Ministers are responsible under this framework for ensuring that grants are awarded transparently, fairly, and in accordance with government policies and objectives and should exercise their powers and make decisions in a way that promotes public confidence and avoids any actual or perceived conflicts of interest. Minsters should also ensure that grant programs are implemented and managed effectively.
2.33Importantly also under the rules, Minsters should document the rationale behind their decisions to award grant funding, including the selection criteria and assessment methods used. Ministers are not bound by the application assessments or advice from the grant awarding entity but are required to adequately record any decisions that are contrary to that advice.
2.34The evidence given to the Committee during the inquiry, and in the ANAO performance audits that are part of the subject of the inquiry, have highlighted areas of serious concern in relation to the adherence to these processes over recent years in the audits and program considered. As outlined below, these included instances of poor or deteriorating record-keeping, the practice of sometimes pooling merit assessments by the awarding entity, and the lack of any documented rationale or lack of clarity at times in the recorded decisions by ministers to exercise discretion and award a grant against agency advice.
2.35Although there were no findings from the ANAO, or in other evidence received by the Committee, of illegality by ministers or public officials in the awarding of funding under the grants rules and frameworks, the Committee considers that there are clear lessons to be drawn and improvement needed in relation to decision-making including assessment processes and recording decisions. These are explored further below.
Record-keeping
2.36The ANAO in its performance audit of the Safer Communities Fund, that was operated by the Department of Home Affairs at that time but is now managed by the Attorney General’s Department, made the following comments as part of its ‘Key messages from this audit for all Australian Government entities’:
It is important that entities assist ministers to meet the requirement that decision makers record the basis for their approval of grant funding. The Commonwealth Grants Rules and Guidelines require that the recorded basis address the grant opportunity guidelines (including the selection criteria) as well as the key principle of achieving value with relevant money.
2.37The ANAO further commented in these general key messages that:
While developing relevant templates helps, it is important that further assistance and advice is provided by entities to ministers in situations where the recorded basis does not make it clear how the assessment criteria were applied to select the successful applicants, how any other factors set out in the guidelines were applied to selecting the successful applicants ahead of other candidates, or why it was decided to award a funding amount different to the recommended grant amount and how the amount of funding was arrived at.
2.38The ANAO noted in its BBRF audit that there was a deterioration in record keeping practices over the various rounds of this funding scheme. ANAO reported:
Out of the 1293 projects approved across the five concluded [BBRF] rounds, there were 179 instances where the bases for the panel’s funding decisions were not recorded. These comprised:
- 164 instances where the panel decided not to approve applications that had been recommended by Infrastructure for funding (which had been assessed as having a high degree of merit against the four published criteria), without recording the reasons for not approving those applications. This contrasted with the approach taken for 40 other recommended applications where the panel’s reasons for not approving were recorded; and
- 15 instances (10 missing from the 76 that should have been recorded in the second round, and 5 from 173 in the fifth round) where projects not recommended by the department were funded.
- Recommendation no. 4 of the ANAO’s BBRF audit for the Infrastructure Department, which was agreed to, was to ‘improve record-keeping practices so that the basis for decisions is clear, including in circumstances where the decision-maker has not agreed with the assessment of candidates undertaken by officials’.
- At the public hearing on 3 March, Infrastructure agreed that there had been deficiencies in its record keeping practices for the BBRF, again noting that it had accepted the findings of the ANAO’s audit and had implemented ‘record management improvement activities across the department over a number of years’.
- Infrastructure further acknowledged at that hearing that improved arrangements should be made to improve the recording of decisions by ministerial panels:
The template that we have provided to ministers, we accept, was not always completed by the chair or secretariat of that panel. Therefore, we accept the recommendation that a secretariat be given to those ministerial panels in the future so that they can be done better.
2.42In its audit of the Commuter Car Park Projects, the ANAO also found deficiencies in record-keeping, stating that ‘The majority of the records of the design and delivery of the Fund were not being appropriately managed within a records management system’. ANAO further reported in this audit:
The detail in the governance arrangements was sufficient to provide a basis for the department to develop an implementation strategy or plan to put to the Minister. The departmental records did not contain such a strategy.
2.43The ANAO also described issues with the record-keeping of ministerial decisions in its audit of the Safer Communities Fund. The ANAO reported that:
For 54 per cent of approved applications involving 60 per cent of approved funding, the basis for the funding decision was either not clearly recorded or did not address the eligibility requirements and merit criteria published in the grant opportunity guidelines.
2.44The ANAO emphasises in its submission to this inquiry that apart from the impacts on assurance and failure to adhere to legislative requirements, a lack of transparency and poor record keeping hinders its ability to do its job:
The CGRGs highlight the importance of complete and accurate records for accountability, probity and transparency in grants administration. Transparency provides assurance that grants administration is appropriate, and that legislative obligations and policy commitments are being met. Nevertheless, poor record-keeping continues to limit transparency and impact upon the ANAO’s ability to conduct efficient and fulsome audits.
2.45The Auditor-General reemphasised the roles and responsibilities of public officials and ministers at the 3 March hearing regarding record-keeping:
Ministers are subject to the Archives Act. They're required to keep all documentation with respect to their decision-making processes… [there’s] an expectation that the departments provide documentation to the minister which provides them with the framework for recording their decisions… We see it as the responsibility of the department when putting up their advice that they not only are clear about what the minister needs to do when they make a decision not to accept their advice but also make it easy for the minister to comply with their responsibilities in that place.
2.46The CGRGs specify also that a minister approving grants that are not recommended by the relevant officials must:
Report annually to the Finance Minister on all instances where they have decided to approve a particular grant which the relevant official has recommended be rejected. The report must include a brief statement of reasons (i.e. the basis of the approval for each grant). The report must be provided to the Finance Minister by 31 March each year for the preceding calendar year.
2.47The Committee received evidence to the inquiry however that there have been inconsistencies in the compliance with this requirement. The ANAO commented in its submission on general issues it had observed through it auditing of various grants programs including:
…transparency and accountability over funding decisions not being achieved due to shortcomings in the advice provided to decision-makers, poor record-keeping and inconsistent approaches to reporting overturns to the Finance Minister.
2.48The Centre for Public Integrity also expressed the view to the Committee at the 17March hearing that reporting to the Finance Minster was often inadequate:
I've seen some of the reports to the finance minister giving the reasons for the departure from bureaucratic advice. Ninety per cent of them are one sentence, 'It was in the public interest to do so.' That's not enough. That's not reporting why you're departing.
2.49The ANAO noted at the 3 March hearing that they had not audited required notifications to the Finance Minister under the grants rules in over 10 years.
Pooling of applications in a merit assessment
2.50Also of interest to the Committee was the practice in some instances of ‘pooling’ grant applications by departmental officials. The ANAO reported in its BBRF audit that:
The wording and structure of the department’s [Infrastructure] funding recommendations have changed over the life of the program. A key feature in each round has been the categorising, or ‘pooling’, of applications based on the merit assessment results. Blanket advice and recommendations have then been attributed to all of the applications within each category in the written briefings for the panel.
2.51ANAO further commented at the 3 March hearing:
… there's an increasing disconnect between the assessment results and what's being approved for funding, and at the same time the actual approach to briefing is becoming less robust through both the pooling of applications and a funding recommendation which is much less precise.
2.52The issues around the pooling of applications in the merit assessments of BBRF grant applications was also raised by Professor Anne Twomey who expressed the view in her submission that:
Another avoidance mechanism used in the third and fifth rounds of the Building Better Regions Fund program, was for public servants to present ‘pools’ of applications to the ministerial decision-makers from which they could choose their preferred applicants. This meant that ministers could exercise wide discretion in allocating grants without having to declare that they had overturned merit recommendations, as long as they chose applicants from within a large pool.
2.53At the public hearing for the inquiry on 17 March, Professor Twomey was further asked for her views on this matter and replied that ‘pooling shouldn't be used as a way to avoid having to then give reasons for departing from merit recommendations’.
The use of unspecified ‘other factors’ in grants assessments
2.54The view was expressed to the Committee that the appearance of politicisation of grant programs can corrode public trust in grants administration. Regional Development Australia (RDA) NT submitted that ‘BBRF became increasingly known for being a funding program marred by political influence’. Section51 stated in its submission in relation to one council that:
… the sad side was that we didn’t even try for Australian Government funding as the town is in the wrong location in the wrong electorate. How sad that in Australia, over the last few years, the location politically determines if children can have facilities like this.
2.55Section51 further commented in the hearing held on 17 March:
We’ve had councils who have said ‘We’re not going to apply for Commonwealth funding full stop. We haven’t actually applied for three years because we’re in a Labor electorate.
2.56The ANAO notes in its performance audit of the BBRF that the award of funding by Infrastructure under the first five rounds of this scheme ‘was partly effective and partly consistent’ with the CGRGs commenting that:
… the decision-making panel may use at its discretion the consideration of a non-exhaustive list of ‘other factors’ to override the results of the merit assessment process, with applicants not asked to specifically address those other factors in their applications for grant funding.
2.57The ANAO makes the following further observation regarding merit assessments in the BBRF audit:
Processes were not in place for decision-makers to re-score applications where they disagreed with the departmental merit assessments. In a departure from previously observed better practice, Infrastructure advised the minister in the later stages of the first round that it was unnecessary to rescore applications because it was not required by the CGRGs. Accordingly, where the panel indicated disagreement with departmental scoring in the first two rounds, it did not revise scores. By the third round, the panel’s written basis for funding decisions made no reference to the merit assessment results, instead focusing on the ‘other factors’ mentioned in the guidelines for the program.
2.58The ANAO concluded that this inclusion of other factors ‘was not consistent with the key principles for grants administration set out in the CGRGs as it had the potential to undermine the award of grant funding on the basis of merit’. The ANAO further stated:
Up to and including round four [of the BBRF], the grant opportunity guidelines for each round set out how applications would be scored against the merit criteria and stated that the results would provide the basis for determining the most meritorious applications for funding under the program. The guidelines have not accurately reflected the significance of ministerial discretion (represented in the Award of Funding under the Building Better Regions Fund guidelines by the ‘other factors’ clause) as a basis for the panel’s funding decisions.
2.59Further to this, the ANAO also stated in its BBRF audit report that ‘reflecting the expectations established by the CGRGs, the Department of Finance’s grant opportunity guidelines template does not contemplate the inclusion of broad and non-specific criteria such as ‘[any] other factors’. ANAO further commented in relation to the BBRF criteria for funding that:
In a departure from Finance’s template guidance… the guidelines for each round of the BBRF have included additional criteria, or ‘other factors’, in a separate section of the guidelines. When considering draft guidelines for the program, Finance raised the inclusion of the other factors as an issue and asked whether they involved ‘another assessment process’ and, if so, whether applicants should be given an opportunity to provide information on them in their applications. No changes to the draft guidelines or application form were made in response to Finance’s questions.
2.60At the public hearing in Canberra on 3 March, the ANAO remarked to the Committee that the use of ‘other factors’ as part of the grants assessment considerations has been relatively recent and, although not universal, is becoming more frequent even though it has never been part of the CGRG framework:
It wasn't actually envisaged at the time the CGRGs were put together that you'd have these other factors come about. We didn't observe them in grant programs for probably the first five or six years the CGRG framework was about. They've really only come about in probably the last half dozen or so years and they're not in every program. But you can see that over time it's become more common, and we start looking for the template guidelines to see where they're starting to arise in those as well. So it's not something the framework actually contemplated happening, because the framework, if you step back to the policy documents that led to it, was very clear on the fact that there should be a clear set of criteria advised to people that would be the basis for decision making, not allowing for the fact there might be other things outside of that.
2.61Infrastructure confirmed at this same 3 March hearing that it was not certain of the decision-making process with regard to the inclusion of ‘other factors’ in the BBRF guidelines but that the policy settings for this program were determined by the minister:
I don't know who included 'other factors' in the NSRF [National Stronger Regions Fund]. What I can say is that the policy settings, and therefore the guidelines, were approved by our minister for NSRF and for BBRF. We took parts of the design of NSRF which we thought were positive and were working, as part of the audit that was done, and put them in BBRF.
2.62The ANAO recommended changes to the CGRGs in its BBRF audit (Recommendation no. 1 of the report) to provide that:
- applicants be afforded the opportunity to address those other factors as part of their application for funding; and
- records be made as part of the decision-making process as to how each competing applicant had been assessed to perform against each of those factors.
- Home Affairs noted in its submission to this inquiry in relation to this recommendation from the ANAO that:
The Department is of the view that if other factors are considered in funding decisions, there needs to be an appropriate and proportional level of transparency to applicants, and that applicants are able to address these factors in their application. For accountability purposes, records need to be made as to how each applicant had been assessed against any other factors.
The Department is also of the view that other factors that may be used in the assessment process need to be made available to applicants alongside the Grant Opportunity Guidelines, and that the grant application approach and processes are designed to be user friendly and target the relevant audience.
2.64The ANAO commented further at the 3 March hearing that the design of template used in the NSRF scheme enabled good clarity in terms of recording the reasons for particular funding decisions but that this template was not utilised in the BBRF:
There were overturns of [NSRF] funding recommendations from the department, but there was what we thought was quite a strong decision review template, where the decision-makers could record whether they disagreed with the assessment against the actual published criteria or whether it was the other factors which changed the decision that they made, compared to the recommendation. It was pretty clear for us to see how the other factors bore upon the decisions that were taken. For a reason which wasn't explained to us in the course of the audit of the BBRF, the department didn't persist with that decision of a new template approach for this new program. To us, it is pretty hard to consider the guidelines in isolation from the governance arrangements—how you'll actually implement those guidelines in the assessment and decision-making process.
Committee comment
2.65The Committee acknowledges that ministers rightly retain discretion and authority in relation to accepting or rejecting departmental recommendations when making grant funding decisions under the funding framework operated by the Commonwealth. However ministers are not ‘gods’ and are subject to legislative and policy requirements that define and set the limits of their authority to make grant funding decisions, including satisfying themselves as to why a grant represents value for money for the Commonwealth on behalf of taxpayers. Ministers may at times reject recommendations or elect to fund projects not-recommended however they are obliged to receive and consider written advice and to record proper reasons for their decisions.
2.66Ministers can rightly apply their critical judgement to advice received and may disagree with scorings, rankings or assessments and may reasonably apply other factors such as equity in outcomes between States and Territories or places or other matters that could not be known in advance. But the key in exercising ministerial discretion is transparency – reasons for decisions must be properly recorded.
2.67Agencies similarly are expected to support ministers by undertaking merit-based assessments of applications in competitive programs based on factors outlined in program guidelines, making clear recommendations and providing helpful paperwork to ministers, and educating and reminding them of their responsibilities.
2.68These requirements are not overly complex or onerous, yet far too often under the programs examined through this inquiry officials and ministers repeatedly failed to meet these core requirements in making funding recommendations and decisions.
2.69The Committee was disturbed that the Auditor-General identified serial non-compliance with the spirit and sometimes the requirements in the rules by officials and decision-makers. The Committee was especially appalled to receive evidence that the appearance of politicisation of regional grants program corroded public trust to the point that councils stopped applying for Commonwealth grants due to the belief that they would never get a fair go as projects or applicants were disliked by Coalition MPs or located in an Opposition electorate.
2.70The Committee endorses the Auditor-General’s description of the grants framework as being about making decisions transparently. As noted above, the Committee is especially concerned with evidence in the ANAO Audit Reports as well as from Departments and witnesses considered through this inquiry that grant programs in recent years resulted in unjustifiably partisan outcomes and were politicised with reasons for ministers’ decisions simply not recorded, inadequate or unavailable. This was the case in multiple regional grants programs, certain rounds of the Safer Communities Program and the $4.8 billion grant-like Urban Congestion Fund including the infamous Commuter Car Park program. Public confidence in public administration is paramount and the Committee is firmly of the view that changes are required to the CGRGs to improve public trust in the administration of Commonwealth grants.
2.71The Committee concludes that the allocation of funds in the $4.8 billion Urban Congestion Fund was completely unacceptable. Totalling all grants clearly attributed to an electorate (as held before the election) 136 Projects were awarded to Coalition seats totalling $2.7 billion (74.4%) yet only 26 Projects were allocated to Labor seats totalling $954 million (25.1%), with one $5,000,000 project to a Greens seat (0.1%) and one $13,500,000 to an Independent held seat (0.4%).
2.72The Committee also concludes that the allocation of funds for the Regional Growth Fund was also unacceptable and could only be the result of political partisan bias. Totalling all grants, 16 Projects were awarded to Coalition seats totalling $261,181,392 (96.0%), yet only 1 Project was awarded to a Labor seat totalling $11 million (4.0%) (and that was the seat of Lingiari which the Coalition were trying to win). Even allowing for a greater number of regional seats held by the Coalition, and even if you accept the claimed approach as to what is a regional seat (e.g. Casey received funding yet is a peri-urban seat) the RGF was completely rorted.
2.73It is simply not good enough for those trying to defend the egregious behaviour revealed through the inquiry to say ‘no illegality was identified’ when assessment processes were repeatedly, systematically and systemically perverted, reasons for decisions were not recorded and records were not kept or available. Especially so when the results of funding decisions repeatedly resulted in blatantly and ridiculously partisan outcomes.
2.74In light of the behaviours identified the Committee considers that this exchange between the Chair and the Auditor-General highlights the need for clearer guidance and changes to the CGRGs:
CHAIR: There have been serial non-compliances, some by departments and agencies, some by decision-makers. There's a series of recommendations that you're now making, with a degree of frustration—which we have explored in previous hearings—that to improve things there should be some changes to the guidelines because there seems to be an ongoing gap, along the lines of 'just because you can do something doesn't mean you should'.
Mr Hehir: That's correct. That's why we're arguing that some of the discretion, if that's the right word, should be removed and it should be very clear what is expected.
2.75In relation to the question of competition, the Committee acknowledges there are obviously very good reasons why non-competitive grant processes will sometimes be necessary or preferable under the CGRGs. For example in relation to cases of urgency or where there is only one suitable recipient for a policy purpose or election commitments. The Committee is cognisant, however, that the intent of the CGRGs is clearly to operate competitive processes for the most part.
2.76Given the evidence received, the Committee considers that changes to the guidelines are necessary to strengthen the default presumption in favour of competitive programs, and require program design guidelines or decision-makers to document appropriately detailed reasons when a non-competitive approach is utilised. If this is done then in the future the ANAO, the JCPAA and others should be able to properly scrutinise the reasons why certain grants were not awarded on a competitive basis and be satisfied reasons were recorded.
2.77The Committee accepts the evidence of the Auditor-General in relation to election commitments. Election commitments are made by a political party before or during caretaker period. They are then implemented by governments after an election. All government, opposition and crossbench parliamentarians may announce such commitments prior to elections. However, the Committee’s view is that grants that are formally approved by ministers before a caretaker period and announced during an election period are not election commitments, though the public service may track the implementation of such announcements along with election commitments made prior to an election.
2.78The Committee regards it as perfectly legitimate and appropriate for a government to establish programs to implement election commitments. However, ministers are still subject to the CGRGs and the PGPA Act in making decisions to award such grants. Election commitment programs are an established basis for a non-competitive funding process (indeed as the ANAO advised and Department of Finance states in Resource Management Guide 412 it is often preferable that dedicated election commitment programs are established) but ministers must still receive written advice when making decisions to approve grants, be satisfied regarding value for money and otherwise comply with the grant guidelines.
2.79The Committee accepts evidence from the Auditor-General that 27 of the 34 commuter carpark projects identified by the previous Prime Minister were not election commitments as they were authorised before the caretaker period and the funding decisions were included in the pre-election fiscal and economic outlook. In contrast, election commitments are commitments that are made prior to an election for which a funding decision has not been taken. Finance should provide greater clarity on what constitutes an election commitment in its resource guidelines and for the avoidance of doubt or ambiguity the CGRGs should explicitly provide that such commitments are subject to this framework.
2.80As stated above, the Committee considers that ministers must retain the right to reject a recommendation for funding from the awarding entity and make a different determination. However, the reasons for this decision must be adequately documented yet there were repeated and unacceptable failures to do so in the programs considered in this inquiry. In making a contrary decision, a minister is still obliged to document why and how the award will be an appropriate use of taxpayers’ money.
2.81The Committee supports the view of the ANAO that ministerial discretion around grant awards is not absolute and that ministers have a responsibility to provide explanations for their decisions that can be properly scrutinised if needed. The entities awarding these grants must also be able to fully document their processes and the chain of advice provided to the minister in relation to the grants rules and their own merit assessments of grant applications. Evidence to the inquiry that a minister failed/refused to record adequate reasons for their decisions to award grants in two separate grant rounds in the Building Better Regions Program even when reminded by their Department of their obligations to do so is completely unacceptable.
2.82Leaving aside recalcitrant behaviour, the Committee agrees that agencies have an obligation to support Ministers to meet their responsibilities by providing helpful paperwork. Effective templates designed to properly record this information seems to be an obvious and appropriate way to assist with this process for both the minister and the funding entity. Recommendation 4 of the Committee’s previous report on Commonwealth grants, [Report 484: The Administration of Government Grants: Inquiry into Auditor-General’s Reports 5, 12 and 23 (2019-20)], which was agreed to by the Government, provided that the CGRGs be amended so that probity issues are better addressed and all ministerial decisions regarding grants, particularly when departmental assessments are rejected, are properly recorded.
2.83The Committee considers that well-designed ‘good-practice’ templates and a checklist that agencies can use to assess their own templates and paperwork would assist grant awarding agencies and responsible ministers to record their processes and decisions on funding programs in a way that ensures probity, accountability, and transparency under the CGRGs.
2.84When Ministers approve projects against departmental recommendations, the CGRGs require that such approvals and the basis for them are required be reported to the Minister for Finance. The Committee contends that any refusal or unreasonable delay by decision-makers in recording such reasons should also be reported to the Minister for Finance at the earliest opportunity so that in the future there is greater transparency and potential sanction if a Minister again failed to do so after being reminded of their obligations by their agency.
2.85The Committee also considers that transparency and accountability around the awarding of grants will be enhanced if approvals of projects against the recommendations of officials are reported online, including the basis for this approval by decision-makers, in a reasonable timeframe. This should preferably be in a central location on GrantConnect or at least on the agency’s website. This information is periodically released pursuant to a Senate Order, however it would be preferable if it were recorded in a more convenient manner.
2.86The ‘pooling’ of applications in a merit assessment for consideration by a ministerial panel is highly problematic. This practice was increasingly adopted in recent years whereby agencies provided long lists of all ‘eligible’ projects with scores to ministers and invited them to choose which ones they wanted to fund. This resulted in ministers choosing numerous lower ranked projects, in effect rejecting higher ranked applications but without having to advise the Minister for Finance, and often without recording reasons for their decisions. This was one of the practices whereby projects located in Coalition electorates or target non-government seats were funded at the expense of more meritorious higher ranked projects.
2.87The Committee considers that this practice of ‘pooling’ recommendations is against the spirit and intent of the CGRGs. The CGRGs should be amended to require a clear recommendation to be made for each individual grant, and make explicit that the pooling of ‘eligible’ recommendations for decision-makers to choose from does not meet this requirement. In making this recommendation to change the CGRGs in this way, the Committee acknowledges there may be very limited and rare circumstances in which it may not be sensible to provide clear recommendations on every application. For example in programs where there are a small number of or highly diverse proposals which provide very different options and choices to be made hence require deliberation by decision-makers who must exercise an atypical measure of judgement and discretion. In such instances officials should provide full assessment against the criteria, explain the pros cons and options, and decision-makers must record detailed reasons for approvals made.
2.88The increasing frequency with which unspecified ‘other factors’ are being used by ministerial-led panels when considering the merit assessments of grant applications is of considerable concern to the Committee as the applicants will typically have had no prior opportunity to understand or respond to these criteria. The Committee notes with concern the ANAO’s evidence that the increasing usage of these ‘other factors’ is only a relatively new phenomena, having noticeably increased in the previous six years.
2.89An opportunity should be given to all grant applicants to address any and all additional criteria unless there are explainable mitigating circumstances not to do so. This would be consistent with the principles of the open and competitive processes envisaged by the CGRGs and has also been recommended by ANAO.
2.90The Committee’s view is that the principle of transparency with regard to the CGRGs and the awarding of a Commonwealth grant also warrants a full disclosure in the program guidelines of the role of any stakeholders or advocates in the decision-making process.
2.91It is also the Committee’s view is that it will be good practice going forward to nominate a preferred deadline to receive advocacy letters and input after which such input may not be considered to ensure opportunities for all stakeholders to provide input. This will not preclude later advocacy but does not guarantee it will be considered. Representations from community leaders, MPs or other stakeholders may be weighted and scored in their own right, or may be used to convey additional relevant information or emphasise key factors relevant to the published assessment criteria.
2.92The Committee also is strongly of the view that the Government should implement the Committee’s recommendation from the JCPAA’s previous grants inquiry (Report 484), Recommendation 5, that CGRGs be amended to: “include an eighth key principle for grants administration of ‘Adherence to published guidelines’. This would uphold the expectations of the Parliament and other stakeholders and provide transparency to applicants when published criteria is amended.” The Auditor-General advised that the former Government agreed to but did not implement this recommendation. While it should not be necessary to state what should be obvious – that officials and ministers should actually follow the guidelines – in light of the audit reports the Committee has considered over the previous two inquiries that it is unfortunately necessary to do so.
2.93The Committee recommends that the Australian Government implement the Recommendation from JCPAA Report 484 to add an eighth principle to the Commonwealth Grants Rules and Guidelines that decision makers should adhere to the guidelines, which the previous Government agreed to but failed to actually implement.
2.94The Committee recommends that the Department of Finance amends its Resource Management Guide No. 412 - Australian Government Grants – Briefing, Reporting, Evaluating and Election Commitments to clarify the definition of an election commitment for the purpose of delivering grants programs.
2.95The Committee recommends that the Australian Government amends the Commonwealth Grants Rules and Guidelines 2017 to provide that:
- Competitive, merit-based processes must be adopted by default with program design guidelines or decision makers required to document appropriately detailed reasons when a non-competitive approach is utilised, acknowledging there are legitimate circumstances where it is appropriate or preferable to do so including urgent situations such as disasters, or instances where there are only limited suitable grant recipients to give effect to election commitments or a policy.
- The role of all stakeholders must be disclosed in the published program guidelines for competitive merits-based grants programs, including any who assess or award grant funding and how advocacy and input from MPs and stakeholders is to be considered.
- A deadline for the receipt of advocacy letters and stakeholder input should be advised, after which time such input may not be able to be considered as part of the assessment process.
- Clear recommendations must be made for each individual grant and that the pooling of ‘eligible’ recommendations for decision-makers to choose from does not meet this requirement.
- Explicit reference be made to Resource Management Guide 412 so officials are fully aware and cognisant of this guidance.
- A decision-maker’s approval of funding against the recommendations of agency of officials must be:
- clearly recorded, with any refusal or unreasonable delay by decision-makers in doing so to be reported to the Minister for Finance at the earliest opportunity; and
- reported online, including the basis for that approval. This should preferably be in a central location on GrantConnect or at least on the agency’s website and be updated within three months of announcements being made.
- Any 'other factors' by which grants will be assessed must be:
- transparently listed and published in program design guidelines to enable applicants to address them, and
- formally included as part of the assessment criteria and appropriately assessed and scored.
2.96In keeping with the key principles of ‘Governance and Accountability’ and ‘Probity and Transparency’ in the administration of Commonwealth grants, the Committee recommends that the Department of Finance develops ‘good-practice’ examples of record-keeping templates with an accompanying checklist that give effect to the rules and principles of the CGRGs that all Commonwealth entities be strongly encouraged to use for any grants or ‘grants-like’ programs. These templates and checklists should prompt both public officials and ministers to clearly document all decisions and decision-making processes throughout the operation of a grants program. The following requirements are recommended:
- sample templates and accompanying checklists be developed no later than six months from the date of this report
- input on template design and accompanying checklists to be sought from the major Commonwealth entities that operate grants programs, Grants Hubs, and from the Australian National Audit Office
- all Departments of State and other significant grant-making entities be asked to advise the Committee within 6 months of the templates and checklists being finalised how they have now embedded the guidance in their agency’s practices.
2.97The Committee recommends that the Australian National Audit Office considers a future audit of the process by which the Finance Minister is informed of grant approvals against the recommendation of the awarding agency.
Funding not subject to the grants rules
Corporate Commonwealth entities
2.98As discussed at the beginning of this chapter, the CGRGs establish the overarching Commonwealth grants policy framework and articulate the expectations for all non-corporate Commonwealth entities in relation to grants administration. Corporate Commonwealth entities (CCEs) on the other hand are generally not subject to the CGRGs, although these rules would apply to them, and to any organisation, if they were acting as third parties undertaking grants administration on behalf of the Commonwealth.
2.99As indicated by Finance in a supplementary submission to the inquiry:
Corporate Commonwealth entities are established as legally separate to the Commonwealth and generally have enabling legislation that establishes the scope of their activities. The Public Governance, Performance and Accountability Act 2013 (PGPA Act) does not seek to alter the operational independence of entities as set out in their enabling legislation… The majority of grant activity by the Government is undertaken by non-corporate Commonwealth entities, which are subject to the Commonwealth Grants Rules and Guidelines.
2.100In its submission to the inquiry, the ANAO has argued for the benefits of adopting the CGRGs even when this framework does not apply:
There is a significant outlay of public funds awarded under grant-like arrangements, or by Corporate Commonwealth entities. Entities not subject to the CGRGs can benefit from basing their grants administration framework and practices on those rules and guidelines, given they reflect the Australian Government’s expectations and support accountable authorities to discharge their responsibility under the PGPA Act to promote the proper use and management of public resources.
2.101Finance notes also in its submission that although the CGRGs do not apply to a corporate Commonwealth entity when it is awarding a grant itself, the PGPA rule can still apply and impose similar requirements. Finance stated:
… Division 6A of the Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) applies to corporate Commonwealth entities when a minister is involved in making a corporate Commonwealth entity grant and prescribes similar advising, decision making and reporting requirements for ministers and corporate Commonwealth entities.
2.102Finance further notes in its submission that is has ‘produced specific guidance material for corporate Commonwealth entities and ministers’ and that this ‘includes fact sheets, updates to the Finance website grants information, tools and templates, as well as engaging with corporate Commonwealth entities on the new requirements for grants administration’.
2.103At the public hearing on 3 March, the Auditor-General commented further on the application of the CGRGs to grants administered by CCEs:
I think with respect to corporate Commonwealth entities, the position would be similar to the procurement rules. If they're doing grant type stuff, the rules aren't that onerous, so why wouldn't you apply them across the board or do something which started with them applying and do exemptions if it was unnecessary.
2.104The Auditor-General reiterated this view at the hearing on 31 March stating:
The rules are principles based and high-level, with some prescription in them. It's unclear to us why the rules wouldn't apply to a corporate Commonwealth entity, particularly those that operate with public funds—not GBE [Government Business Enterprise] type things, which are unlikely to do grants anyway. The activities for a public purpose under those entities, given where their funding comes from—the rationale, once you move away from the GBE type of framework, is not clear to us.
2.105Finance concludes its submission to the inquiry by stating:
In addition to amendments to the legislative framework, Finance will consider options to consolidate guidance on grants administration for all non-corporate and corporate Commonwealth entities with a focus on better practice models and key principles. To improve assurance around adherence to grant guidelines and quality of assessments, Finance will also work with entities to enhance the ongoing support and training provided to officials and decision-makers throughout the grants lifecycle.
‘Grants-like’ programs
2.106The administration of Commonwealth funding schemes that are ‘grants-like’ in their operation but not subject to the CGRGs was of interest to the Committee during the inquiry.
2.107The Treasury noted in the background to its submission that:
The Commonwealth is estimated to provide the states with $179.9 billion in total payments… in 2023-24. These payments are divided into general revenue assistance and specific purpose payments to the states… General revenue assistance is untied funding that states can freely use for their own priorities… Untied funding does not involve program- or project-based funding agreements. The Commonwealth and the states also work together in partnership to deliver a wide variety of programs under tied funding arrangements.
2.108Treasury further explained in relation to Commonwealth payment agreements with the states that:
Most of these agreements are National Agreements, which are designed to fund ongoing service delivery based on the parameters in the agreement. Outside these agreements, there is a very broad range of funding arrangements covering a wide variety of programs and projects. These arrangements are delivered through agreements known as Federation Funding Agreement schedules (FFA schedules).
2.109Treasury noted also that FFA schedules are governed by eight key principles which include strong economic, social and fiscal outcomes, ensuring value for money, and accountability and transparency (including the publishing of agreements, their funding levels and their payment milestones).
2.110Treasury emphasised in relation to the CGRG framework that ‘key differences between a grant under the CGRGs and a state payment is that in a grant arrangement, there may be a wide pool of applicants for funding. However, under a state payment, there is generally only one possible recipient of funds’. Treasury further submitted:
Under a grant, it is possible that multiple potential recipients of funds could deliver a service, perhaps at differing levels of expertise and cost. Under a state payment arrangement, states’ sovereignty over their territory and the Constitutional division of responsibilities mean that the only party that the Commonwealth can usually fund to deliver a project in a particular state, is that state itself.
2.111During discussions on this issue at the 17 March public hearing, Infrastructure remarked that:
… the government certainly has some programs in this portfolio that are administered through the Commonwealth-state payments arrangements—the National Partnership Agreement—in a more grants-like fashion. The Black Spot Program is one, as well as the Heavy Vehicle Safety and Productivity Program.
2.112Infrastructure further commented in relation to defining such schemes that there are some programs that can be identified from available evidence in the marketplace as possibly being suitable for evaluation by a panel and a recommendations process, i.e., in a manner consistent with the grants guidelines. Infrastructure further stated:
So there are examples that you can draw on—I think the audit report identifies a few in the portfolio—to refer to as a better-practice or alternative-practice model. There will be, I think, a challenge in determining what 'grants-like' means. I think that's the scoping challenge for that particular piece.
2.113The Committee further queried the Infrastructure officials as to whether these types of programs could be brought under the grants framework in a regulatory or case-by-case manner. The department responded that:
It would be a matter for the government to make a choice on. I think, in the context of that, ultimately, the governance architectures for how we spend money will be through either the Finance portfolio or the Treasury portfolio, or a combination thereof, on the basis that the Commonwealth-state payments are a Treasury portfolio oversight… Ultimately, it comes down to the governing frameworks that administer expenditures.
2.114Infrastructure provided further information to the Committee on notice on elements of the CGRGs that it draws on even when in an informed-investor or closed market approaches are being used for a particular project. Infrastructure stated in this advice that it had ‘improved its processes and practices following the [ANAO] audit, by applying principles of the [CGRGs] more closely to infrastructure program design’.
2.115Infrastructure further commented in this same response that:
A range of new and detailed guidance material has been developed by the department to support staff when designing programs and to apply assessment procedures for projects, prior to making recommendations to the minister. This includes practice directions, fact sheets and explanatory memoranda for the different processes… The department has since refined the Heavy Vehicle Safety and Productivity Program (HVSPP),the Heavy Vehicle Rest Area Program Initiative (HVRA) and Bridges Renewal Program (BRP) having further regard to these principles.
2.116Treasury submitted that ‘it is difficult to discern a clear subset of activities or a set of common characteristics, that make Commonwealth-state payment arrangements ‘grant-like’’, commenting:
While some payments under the FFR framework may have similar activities and/or characteristics to grants that are subject to the Commonwealth Grants Rules and Guidelines, many have additional requirements or restrictions… To the extent that the Commonwealth is involved in promoting the delivery of very targeted projects, which could be a ‘grant-like’ characteristic, there can be many reasons why specific targeting is desirable.
2.117Treasury further commented in its submission that:
In a technical sense, it would be difficult to apply the CGRGs in a targeted way. It would not simply be a matter of removing the existing exemption or applying them to a particular payment group – instead, the Commonwealth would need to precisely identify the grant characteristics. It is inevitable that a general rule would include unintended agreements and consequences. To make it practicable, it is likely that any arrangement would need to have a discretionary element to deal with that outcome.
2.118Treasury further submitted that instead of attempting to broadly apply the CGRGs across certain Commonwealth-State funding arrangements ‘it could be appropriate to evaluate specific risks more closely on a program-by-program basis and incorporate more specific mechanisms in individual agreements to manage those risks’.
2.119In the concluding remarks in its submission, Treasury expressed the view that:
… strengthening governance and risk management approaches for particular agreements or programs would be a better targeted solution than applying the CGRGs as a second framework over a diverse set of funding arrangements. These funding arrangements are already subject to the IGA FFR and the state payment governance arrangements set out in this submission.
Committee comment
2.120The Committee’s acknowledges the spectrum of payments made by the Commonwealth that fall outside of the scope of the grants rules framework including grants awarded by CCEs and also payments to States and Territories under various pieces of legislation such as the Federal Financial Relations Act 2009.
2.121The Committee considers that the onus in relation to CCEs should be reversed so that the CGRGs will apply to CCEs by default unless exceptions are made via legislative instrument issued by the Minister for Finance.
2.122There is no sensible justification for CCEs such as the NDIA to remain outside the CGRGs. As the Auditor-General noted the CGRGs are not unreasonable or onerous.
2.123Reversing the onus so that CCEs are included unless exempted is preferable to a ‘point-in-time’ review of current arrangements. This is because it:
- requires Finance to make a conscious judgment in advising the Minister for Finance in implementing this change to re-baseline in effect the current application of the CGRGs agency by agency, and then
- draws a line so that if new CCEs are created in the future the CGRGs will automatically apply unless exempted.
- The integrity of the regime cannot unconsciously be eroded over time when new CCEs are created as is currently the case.
- In relation to the application of the CGRGs to Commonwealth-State payments, the Committee considers that while the grant rules may not have strictly applied to the $4.8 billion Urban Congestion Fund, the allocation of funding was an outrageous, unjustified and unjustifiable abuse of ministerial discretion. The then Government did not accept Treasury’s advice that a competitive process be adopted, instead operating a giant slush fund in effect with no guidelines, inadequate value for money assessment and secretive decision-making.
- Nevertheless, the Committee accepts the evidence that the percentage of Commonwealth-State payments that could be considered ‘grant-like’ is very small. The Committee acknowledges Treasury’s advice contained in an excellent and thoughtful supplementary submission and concludes that rather than apply the CGRGs as ‘a rule of general application’ and ‘second framework over a diverse set of funding arrangements’, it is preferable to utilise the existing mechanisms on a program-by-program basis.
- Existing funding arrangements are already subject to the Intergovernmental Agreement on Federal Financial Relations and the state payment governance arrangements as set out in Treasury’s submission. For ‘grant-like’ programs similar to the Urban Congestion Fund where additional governance arrangements may be warranted, this can be managed through the relevant funding agreements. Agencies should consider specific risks more closely and incorporate more specific mechanisms in individual agreements to manage those risks.
2.128The Committee recommends that the Australian Government amends the Commonwealth Grants Rules and Guidelines 2017 and makes any consequential amendments to other legislation to provide that:
- The Commonwealth Grants Rules and Guidelines will apply to corporate Commonwealth entities by default unless exceptions are made via legislative instrument issued by the Minister for Finance.