6.1
The administration of the Urban Congestion Fund (UCF), and in particular the Commuter Car Park Fund (CCPF), has highlighted weaknesses in the administrative and legislative framework for grants funding.
6.2
It has also highlighted the absence of effective enforcement, both within the existing mechanisms available, such as the Statement of Ministerial Standards, and through other avenues, to hold the executive to account and ensure that any actions taken, or decisions made, are made in the best interests of the Australian public.
6.3
This chapter considers some of the evidence received by the committee regarding oversight mechanisms, considers the important role played by the Australian National Audit Office (ANAO), and the need for improved oversight through a federal integrity body and Parliamentary oversight.
Allocating funding through grants programs
6.4
The misuse of the CCPF is but one recent example of the misappropriation of federal funds for political purposes. The CCPF is not a grant program and therefore not subject to the Commonwealth Grant Rules and Guidelines (CGRGs).
6.5
Because of this, a number of submissions put to the committee that there was an urgent need for more effective mechanisms for enforcing and strengthening the current regulatory framework, and for the establishment of a federal integrity commission.
The use of grants programs
6.6
The Centre for Public Integrity (CPI) observed that the spending of public funds through Commonwealth grants programs was becoming ‘increasingly contentious, in light of successive reports of misuse of funds for political gain—a form of corruption known as ‘pork-barrelling’’.
6.7
The CPI pointed out that neither the PGPA Act nor the CGRGs impose any penalties for breach of their provisions, and that:
… while there may be consequences for breach by officials via the Australian Public Service Code of Conduct, the Statement of Ministerial Standards is not independently enforceable and the political reality that a Prime Minister has a strong incentive to minimise any ministerial wrongdoing militates against current enforcement arrangements being effective.
Enforcement of the constitutionality of Commonwealth expenditure of public funds, as well as the requirements that it have legislative authority and comply with the specific framework created by the PGPA Act, PGPA Rule and CGRGs, is effectively left to whoever has the motivation, standing and resources to pursue such matters.
6.8
The CPI called for consequences to exist for Ministers and officials who breach the legislative requirements applicable to them.
6.9
The CPI also examined audits conducted by the ANAO since 2019, ‘in respect of the administration of grants programs allocating more than $5.5 billion in public funds’ (and potentially more than this figure) and found that 100 per cent of the audits identified both minor areas for improvement, through to serious deficiencies. The CPI made the compelling point that with a significant portion of the Commonwealth being allocated through grants programs, ‘the need for adequate scrutiny and accountability mechanisms in relation to grants administration is self-evident’.
6.10
The CPI made several recommendations for ‘addressing the current, flawed system of Commonwealth grant expenditure’, including:
improved parliamentary oversight of Commonwealth spending, for all grant programs worth more than $100 million (including the periodic tabling of information in the parliament and the establishment of a joint committee to oversee grant administration);
a strengthened legislative framework, through the extension of the CGRGs beyond non-corporate Commonwealth entities to a broader range of entities;
an independently enforced Code of Conduct for parliamentarians and political staffers; and
a fit-for-purpose National Integrity Commission, where ‘consequences must exist for Ministers and officials who breach the requirements of the existing legislative framework’ and therefore a Commission with the ‘requisite powers and resources to investigate and report on cases which may involve broadly-defined corrupt conduct’.
Statement of Ministerial Standards
6.11
Transparency International Australia (TIA) drew attention to the fact that the Statement of Ministerial Standards—which provides that a government should act with integrity and in the best interests of the people they serve. The TIA suggested the Standards are ‘rarely enforced, have no independent oversight mechanisms, and no consequences for breach of the Standards’. The TIA made the point that:
Currently, instances of integrity failings, misconduct, and misuse of public funds are subject only to the scrutiny of the ANAO and often progress no further than receiving bad press coverage.
…
It is a widely accepted principle that a government has an obligation to govern for the whole country, not only those that voted for it. Public interest must always prevail over political interests. Despite frequent assertions from politicians that exercising discretion in funding decisions is entirely legal, many experts dispute this.
6.12
TIA further suggested that the Commonwealth Grants Rules be broadened to include situations where the Federal Government distributes grants through an independent statutory corporation or through the states.
6.13
The CPI also discussed the Statement of Ministerial Standards, and in particular its provisions that require ministers to, among other things, observe fairness in decision‑making and accept accountability; further, to act with integrity, which includes ‘the lawful and disinterested exercise of the statutory and other powers available to their office’. It was the view of the CPI that the sharing of a ‘marginal electorate spreadsheet’:
… raises doubts about – amongst other things – whether the exercise of powers in this case was disinterested, or reasonable, or took proper account of the merits of the matter.
The potential involvement of the Prime Minister in such conduct also reveals the futility of having a Statement that is enforceable by the Prime Minister alone: if circumstances required it, would he enforce it against himself?
Role of the ANAO
6.14
The ANAO plays a vital role in examining the administration of taxpayer’s money, and in informing the public and the Parliament of ineffective and deficient administration by government departments and agencies. The point was made during the inquiry that the ANAO must be properly funded and resourced to undertake audits and therefore help to hold the government to account.
6.15
For example, the TIA noted that it was ‘promising’ to see the increase in the 2021 budget for the ANAO, but continued that:
Since 2013 its funding has been cut by $6.3 million or nearly 22 per cent, meaning it has had to slash the number of performance audits from the historical average of 48 down to 36. All agencies with major integrity functions need to be adequately resourced and have broad scope and mandate to operate as part of a coherent national approach. They need to work together as a unified and effective “system” – from auditors-general and ombudsmen to information commissioners and the courts.
6.16
The TIA also saw the need for the ‘legal enforcement of the Commonwealth Grants Rules’, as doing so could ‘lead to more effective legal challenges of partisan grant decisions in the courts’. To achieve this, the TIA recommended the establishment of a legal branch in the ANAO which could enabling them to ‘play a role in assessing how constitutional acts are’.
Ongoing allocations to UCF projects
6.17
In considering the audit functions of the ANAO, the committee turned its mind to the future allocation of UCF funds.
6.18
The Department informed the committee that of the $4.8 billion total funding to the UCF, $4 billion has been committed. The committee asked the Department whether there were any other components of the UCF whereby the projects or sites would be selected by the same canvassing process which was used for the commuter car parks.
6.19
In response, Mr Phil Smith, First Assistant Secretary of the Department, referred the committee to the ANAO’s audit report and noted that ‘the audit report outlines the broad process for that as well’. However, when questioned further, the Department was unable to guarantee to the committee that a similar canvassing process would not be used in future, as highlighted by the following exchange:
CHAIR: But the answer's no, isn't it? There won't be a similar canvassing process for other elements of this, will there?
Mr Smith: Are you talking about the unallocated money?
CHAIR: Yes.
Mr Smith: It's a matter for government how it selects projects.
Senator RICE: How much is unallocated?
Mr Smith: $890 million.
CHAIR: So, there is $890 million unallocated at this stage, nearly a billion dollars, with no guarantee … that the same partisan process won't be engaged in to select sites.
Mr Smith: As I said, it's up to the government how it selects projects.
Establishment of a national ICAC
6.20
The misuse of the CCPF program by the current government, which has followed closely the serious issues with the administration of the Community Sport Infrastructure Grants Program, resulted in evidence to the committee calling for the establishment of a federal integrity commission.
6.21
For example, Mr Tony Harris noted that there were options available to the Commonwealth to reduce the misuse of public monies, but the current government ‘has shown no appetite’ for the establishment of an effective anti-corruption agency, nor for improving the tenure of heard of departments so they can better advise ministers. Mr Harris concluded that without such measures ‘we shall see an unrelenting growth in corruption’.
6.22
In appearing before the committee, Mr Harris reinforced this view, saying that while a federal integrity commission may not stop bad decision-making, it would ‘ensure decision-makers bear full responsibility for their decisions’.
6.23
TIA argued that the biggest impediment to national integrity in Australia was a decline in public trust in government. TIA continued that:
Australians expect that our government is open, transparent, free from corruption and makes decisions that are in the national interest and not unduly influenced by a political agenda, including ‘vote buying’.
6.24
TIA expressed concern that nationally, ‘many core integrity agencies remain unsupported and lack the legal and financial independence they need to guarantee their roles’. The TIA advocated for the establishment of a national integrity commission ‘with teeth’, that was ‘fit for purpose, with investigative powers and enforcement mechanisms to ensure the government is held to account to act in the public interest’. The TIA suggested that an effective national integrity commission should:
… be an independent, well-resourced statutory agency, with a broad jurisdiction, strong investigative powers with scope to cover all types of corruption, a broad referral process including from the public, the ability to hold public hearings, and a corruption prevention mandate.
6.25
Parking Australia, however, took the view that claims that the allocation of CCPF funding was ‘corrupt’ had no basis, that the program would not fall under the responsibility of an ICAC, and that there was ‘no evidence to support that corruption had taken place at the federal level’. Despite this, Parking Australia welcomed greater scrutiny over the way the CCPF funding had been allocated by ‘program partners delivering the projects’.
Committee views
6.26
It is clear that executive government and decision makers are not being held to account in any effective way for corrupt and otherwise questionable behaviour. The evidence before the committee, while damming, still leaves questions unanswered and no one held to account or accepting responsibility for the misallocation of significant amounts of public money for political purposes.
6.27
There must be an improved integrity framework implemented as soon as possible. Between the administration of the CCPF, the UCF more broadly and the Community Sport Infrastructure Grants program before it, it has become abundantly clear that a federal integrity commission is urgently needed, possessing the standing powers of a royal commission.
6.28
The committee recommends that the Australian Government establish, as a matter of urgency, a national integrity commission with the standing powers of a Royal Commission.
External and parliamentary oversight
6.29
In line with great transparency and accountability, and given the shortcomings of the Department in its administration of the CCPF and the disregard shown for proper process by the executive in selecting sites for commuter car parks.
6.30
The importance of ongoing oversight is emphasised by the lack of any assurance that a non-meritorious and politically partisan process could be used in future to allocate the remaining UCF funds—totalling nearly $1 billion. The committee holds concerns that there is capacity for these funds to be misappropriated and not provided to projects which meet the aims of the UCF.
6.31
The committee therefore considers it of utmost importance that the ANAO undertake an urgent audit of the UCF and all its subsidiary programs. The committee further recommends that the ANAO is provided with sufficient resources and funding to complete not only an audit of the UCF as part of its 2022-23 Audit Program, but to maintain—if not improve—its capacity to complete a substantial audit program over the forward estimates.
6.32
In addition, the committee sees benefit in ongoing and real time oversight of the Department and the executive’s administration of the UCF. The committee therefore recommends that, at the beginning of the next Parliament, the Senate refer the ongoing administration of the UCF to the relevant Senate committee.
6.33
The committee recommends that, as part of its 2022-23 Audit Program, the Australian National Audit Office complete an audit of the Urban Congestion Fund and all its associated projects and programs.
6.34
The committee recommends that the Australian Government ensures the necessary funding and resources are allocated to the Australian National Audit Office for it to:
complete the audit of the Urban Congestion Fund as part of its 2022-23 Audit Program, and
properly scrutinise government expenditure and activities.
6.35
The committee recommends that, within the first 18 months of the 47th Parliament, the Senate refer the ongoing administration of the Urban Congestion Fund to the appropriate Senate committee for further inquiry and report.