Chair's foreword

The ramifications of this report are serious and implementation of the Committee’s recommendations will make a significant difference to how grants are assessed and awarded across the Commonwealth.

Tens of thousands of grants at a cost of tens of billions of dollars of taxpayer’s money are awarded by the Commonwealth via grants every year. The grants frameworks must ensure the best value possible to the nation of scare resources.

Unfortunately, clear evidence of serial non-compliance with the Commonwealth Grants Rules and Guidelines (CGRGs) and program guidelines was presented across multiple programs. 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.

Instead of transparently allocating public funds, the previous government pursued industrial scale rorting for blatantly partisan purposes. Rorting grants programs in this way not only wastes money, but also degraded public trust. The Committee was especially appalled to receive evidence that politicisation of regional grants programs corroded public trust to the point some councils stopped applying due to the belief they would never get a fair go.

Principles of fairness, a competitive process by default, transparency, and value for money were simply disregarded and records of critical decisions were not made or kept.

It's difficult to know what is more perplexing. That the previous government did what they did with billions of dollars of taxpayer dollars? Or that they still do not acknowledge that what they did was utterly wrong? If the first step to recovery is to admit there is a problem, then it is clear from their attitude to this inquiry that the Liberal and National Parties are still in denial.

It 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. Especially so when funding decisions repeatedly resulted in ridiculously partisan outcomes. Just because you can do something, doesn’t mean you should. Dismissing legitimate criticism of the Liberals’ industrial scale rorting of grant programs as “politically motivated” is peak irony.

Reports of the Auditor-General examined in this inquiry and evidence received revealed shockingly partisan outcomes across a number of significant grant funding programs including the Urban Congestion Fund (UCF), Regional Growth Fund, and the Safer Communities Program. In the now defunct Commuter Car Park program, established by the previous Government under the UCF, almost 75% of the funding awards went to Coalition seats with no competitive process.

The Committee clearly acknowledges that ministers rightly retain discretion and authority to accept or reject funding recommendations by officials and apply their own critical judgement. However the Committee supports the ANAO’s view that ministerial discretion around grant awards is not absolute. Ministers are not ‘gods’ and are subject to the law and the rules and must record properly and fully documented reasons. Agencies are obliged to support Ministers, including providing clear recommendations on funding awards and advice on ministerial responsibilities under the CGRGs and the PGPA Act.

Non-competitive grant processes will sometimes be necessary or preferable under the CGRGs, such as in cases of urgency or where there is only one suitable recipient for a policy purpose. Notably however, the Auditor-General has indicated that non-competitive processes have started to become the norm. There is a need to amend the CGRGs to strengthen the default presumption in favour of competitive programs.

Regarding election commitments, the Committee agrees with the Auditor-General’s view that grants that are formally approved by ministers before a caretaker period and announced during an election period are not election commitments. It is perfectly legitimate and appropriate for a government to establish dedicated programs to implement election commitments but as the Auditor-General advised the Committee they remain subject to the CGRGs and the PGPA Act. These programs must still demonstrate compliance with grant guidelines and show value for money.

Many payments fall outside of the scope of the grants rules framework. In particular, Corporate Commonwealth entities (CCEs) are currently not subject to the CGRGs but the Committee sees no reason why this should be the case given that these rules are not onerous.

Six recommendations are aimed at strengthening Commonwealth grants administration processes which include:

Implementation of an ‘eighth principle’ in the CGRGs, as recommended in a previous JCPAA report, that decision-makers must adhere to these guidelines;
Clarification of how an election commitment is defined in the Department of Finance guide on Government grants;
Amendments to the CGRGs to provide that

Competitive, merit-based processes should be the default
Program guidelines must disclose the roles of stakeholders, including Parliamentarians, and outline how this advocacy and input from will be considered
Decision-makers cannot choose from a pool of recommendations
Explicit reference is made to the Department of Finance’s guide on Government grants
Funding approvals against agency recommendations must be clearly recorded, reported promptly to the Minister for Finance, and published online within three months
'Other factors' by which grants will be assessed should be fully transparent and appropriately evaluated and scored;
These rules will apply to all CCEs unless exceptions are made;

Best practice templates and checklists be developed by the Department of Finance to facilitate consistent and comprehensive documentation throughout the grant process; and
A future ANAO audit of the process by which the Finance Minister is informed of grant approvals against the recommendation of the awarding agency.

Centralised Grants Hubs platforms were utilised to administer more than 80,000 Commonwealth grants worth $30.9 billion in the previous financial year. The Committee accepts the findings of the ANAO that these hubs have only been partly effective in delivering on the intended efficiencies and cost-savings. The Committee agrees with the ANAO’s audit recommendations for the hubs around more effective future planning and performance measures, and improved data quality.

I thank the Deputy Chair and other Committee members who participated in this important inquiry. It is disappointing that the bipartisan tradition of the JCPAA has been breached on this occasion as these recommendations and findings should receive bipartisan support as they are based on compelling evidence.

Hopefully the implementation of the Committee’s recommendations will make a material different to grants administration and contribute to rebuilding public trust.

I also thank the numerous contributors to the inquiry and the Committee Secretariat for their professionalism in supporting the work of the Committee.

Mr Julian Hill MP

Chair