Grants watch: Major audits, investigations and reviews

Posted on 02 Nov 2022

By Matthew Schulz, journalist, Our Community

Microscope i Stock 923038872

Recent developments related to grants investigations and findings, regularly updated.

UPDATE: Thursday, May 4, 2023

Hearings wrap up in Commonwealth grants probe

A federal inquiry into Coalition-era grants has hosted the last of three hearings, after accepting 22 submissions from interested parties.

The Joint Committee of Public Accounts and Audit, a parliamentary committee, is reviewing seven Commonwealth grants programs:

  • Building Better Regions Fund
  • Operation of Grant Hubs
  • Safer Communities Fund
  • Commuter Car Parks
  • Urban Congestion Fund
  • Regional Growth Fund
  • Modern Manufacturing Initiative.

The inquiry has received submissions from past critics of poor grants governance, including the Grattan Institute, constitutional law expert Professor Anne Twomey, the Centre for Public Integrity, the Law Society of NSW and several government agencies, including the key regulator, the Australian National Audit Office (ANAO).

The ANAO, understandably, drew attention to its past criticisms of several of the grant programs, as well as the recommendations it had made to the appropriate departments.

It acknowledged that the framework governing the administration of Commonwealth grants under existing laws and guidelines “had not achieved its original objective”.

Grant Hehir
Commonwealth Auditor-General Grant Hehir

It nominated financial management, policy principles and better “concepts and definitions” as crucial areas for the inquiry to address. And the ANAO believed renewed attention to its already published “Better Practice Guides” was warranted.

It proposed a series of changes to Commonwealth grant rules and guidelines, such as boosting merit-based selections, ensuring more government entities comply with those guidelines, adopting online reporting, and implementing more recommendations from audits in recent years.

The ANAO presented its findings to the final March 31 public hearing with a five-member delegation, headed by Auditor-General Grant Hehir.

In its opening statement to the committee, it detailed the following key issues for consideration:

  • the low use of open and competitive grant selection processes compared with other less competitive mechanisms
  • grant opportunity guidelines not accurately conveying the application and assessment processes adopted
  • the application of processes not set out in the published grant opportunity guidelines
  • the building of high levels of flexibility into guidelines such that the use of documented specific criteria can be made less relevant through clauses allowing broad discretion
  • the omission of important information from the guidelines, such as identification of all stakeholders, including parliamentarians and their staff, who will play a role in the assessment and award of grant funding
  • shortcomings in the advice provided to decision-makers, poor record-keeping, and inconsistent approaches to reporting “overturns” to the Finance Minister.

The Grattan Institute had previously alerted the committee to its fulsome examination of grants rorts, first made public at the 2022 SmartyGrants Grantmaking Intelligence Conference, in which Institute CEO Danielle Wood argued that:

  • grant programs should be open, competitive, and merit-based
  • ministers, while able to establish grant programs and define selection criteria, should not be involved in choosing grant recipients
  • a standing multi-party parliamentary committee should oversee compliance
  • funding for auditors-general should be increased to allow more frequent auditing.

You can read a summary of the report here.

Prof Twomey said in her submission that “there remain some significant problems that need to be resolved to ensure that public spending is lawful as well as being fairly and effectively allocated”.

And the Centre for Public Integrity said in its submission that good grantmaking must have clear criteria, robust reporting and “augmented accountability”.

Its submission echoed the views of the Grattan Institute, and called for an “independently enforceable code of conduct”, for the requirement for ministers to report on decisions that deviated from departmental advice, and for tougher guidelines for any programs worth over $100 million.

In summary, it argued that the implementation of many past recommendations for improvements to grants administration was well overdue.

“There is a manifest and urgent need to create a grants administration framework that facilitates transparency and accountability: public funds are not infinite, and more must be done in order to guarantee that grant expenditure is for proper, public purposes, and achieves value for money … If the public is to be able to regain trust in the expenditure of public funds by the Commonwealth, reform of the nature we have set out above is indispensable.”

Chair Julian Hill MP said the committee’s scrutiny would ensure future grants programs met Commonwealth guidelines and community expectations.

Learn more about the inquiry here.

Research grants review handed down

A review of the Australian Research Council Act has sought to rein in ministerial intervention and rebuild trust in the sector.

The 80-page report, published on April 20, is titled Trusting Australia’s Ability, and finds that trust in the Australian Research Council (ARC) had been “dramatically eroded” following several ministerial interventions since 2001.

The review suggested more “checks and balances” were needed and that the minister should only intervene in funding decisions in the event of “a potential threat to national security”.

Instead, recommendations and approvals “should be made by those best placed to judge the intrinsic merit of the proposals”.

Margaret Sheil
Professor Margaret Sheil

These were among 10 recommendations aimed at rebuilding trust and restructuring the grantmaking decision framework of the ARC. The review also proposed clear separations between ARC grants programs and other funding that meets strategic government research objectives.

The review was led by the former CEO of the ARC, Professor Margaret Sheil, now Vice Chancellor and President of the Queensland University of Technology.

The ARC administers more than $800 million worth of grants each year.

The former federal government used its veto powers on Christmas Eve in 2021 to cancel $1.4 million in funding awarded by the ARC for six humanities projects, triggering a petition by academics and intellectuals.

Federal Education Minister Jason Clare ordered the review in August 2022 amid sustained criticism of the way the ARC had handled grants.

In April, Mr Clare said the government would respond to the report “in due course”, but last year had said delays and political interference should end and the review would help ensure that “the Australian Research Council has competent leadership and is functioning well, that its objectives are clear and that its processes are rigorous and transparent”.

A March 2022 Senate review of the ARC Act found it “prescriptive, inflexible, and outdated”, weighed down by “a high level of old-fashioned administrative and legislative burden”.

Alongside perceptions of political meddling, the research community has long been concerned about the ARC’s independence, long delays in assessing applications, difficult application processes, grant review methods, lack of focus on “basic research”, funding levels, success rates and flagging international partnerships.

Among the 223 submissions were statements from Australia’s top eight universities, supporting major changes to the ARC’s governance, role and focus.

Read the final report.

NSW bushfire grants program feels the heat

A NSW grants program designed to help bushfire-affected areas recover from the 2019–20 blazes has been referred to the state’s corruption watchdog.

The former Perrottet government provided the auditor-general’s report to the Independent Commission Against Corruption (ICAC) in early February.

Days earlier, the Audit Office of NSW found that the fast-track stream of the $542 million Bushfire Local Economic Recovery (BLER) program, worth $108 million, had not been effectively administered by the Department of Regional NSW.

Instead, it found that the process “lacked integrity, given it did not have sufficiently detailed guidelines and the assessment process for projects lacked transparency and consistency”.

The audit also noted that then Deputy Premier John Barilaro’s office applied a $1 million threshold and projects below that "were not approved for funding”.

That threshold meant “a number of shortlisted projects in areas highly impacted by the bushfires [were] excluded, including all shortlisted projects located in Labor Party-held electorates”.

It also found that “conflicts of interest were not effectively managed” in another “sector development grants” stream, worth $73 million, while the remaining open round, worth $283 million, also demonstrated “weaknesses” in the approach to conflicts.

Read the full auditor-general’s report: Bushfire Recovery Grants.

Service NSW has grants homework to do

Another NSW auditor-general’s report from December 2022 has uncovered improvements needed in grants administration in that state, particularly in the light of the rapid increase in the size and scope of programs.

The audit examined the operation of 26 government agencies as part of a customer service study and found that a key issue was the growth in the size and number of Service NSW-administered grant programs in response to emergency events.

According to the report, Service NSW’s grant programs grew from $263 million across five programs in 2020–21 to $11.6 billion across 17 programs in 2021–22.

While the office noted the significance of the work, and the speed at which many of those programs were implemented, it said a series of problems remained:

  • late assessment of revenue, resulting in misstatements
  • withdrawal of funds without approval from NSW Treasury
  • late request for approval to recover 2021–22 grant administration costs
  • inability to quantify administration costs for each grant program
  • system errors resulting in overpayments.

The audit found: “Improvements are required to address gaps in Service NSW's policies, systems and processes in administering and financial reporting of grant programs.”

It suggested that Service NSW needed “improvements … in the timeliness and quality of grant administration revenue assessment and controls over the recovery of grant administration costs”.

Read the full auditor-general’s report: Customer Service 2022

UPDATE: Wednesday, November 2, 2022

Budget ditches problematic Coalition grants

The Albanese government has dumped two former Coalition government grant schemes, which were heavily criticised amid claims of political favouritism, and instead committed $1 billion over three years to two new regional programs.

The two new programs will be:

  • the Growing Regions Program, aimed at regional councils and not-for-profits
  • the Precincts and Partnerships Program, aimed at larger scale projects in regional cities and rural areas.

The programs to be ditched are:

  • the Building Better Regions Fund
  • the Community Development Grants program.
Catherine King

The Infrastructure, Transport, Regional Development and Local Government Minister, Catherine King, said in a statement that the new programs would be “transparent, fairer and more sustainable”.

Unlike the closed Community Development Grants process, Ms King said, the Growing Regions Program would feature an open and competitive process and guidelines “to ensure best-practice transparency and consistency” and “fairer distribution of funds”.

According to a report in The Age, the $3.2 billion Community Development Grants scheme was among 11 programs that heavily favoured Coalition-held or marginal seats.

A 2018 report by the Australian National Audit Office (ANAO) found that the Community Development Grants scheme had shortcomings including inadequate outcomes assessments and a failure to brief the minister about whether approval criteria had been met.

A July 2022 report by the ANAO found the Building Better Regions Fund program was only “partly effective and partly consistent” with Commonwealth grant rules and guidelines.

According to the ABC, 815 organisations that applied under the Building Better Regions Fund program (round six) would need to reapply under the new Growing Regions Program, after their applications were rejected ahead of the federal budget.

But Ms King defended the decision, saying Coalition MPs were “cynically attempting to claim election promises as funded projects”.

“Anything that's an election commitment, clearly, if it wasn't an election commitment of ours, it won't be in the Budget,” she told Newcastle radio station 2HD.

Ms King said the government would fund Community Development Grants that were “properly accounted for”, including 82 projects dating back to 2016.

National auditor keeps an eye on grants, ethics in latest report

Grants administration continues to be a close focus of the nation’s auditor general.

The Australian National Audit Office’s (ANAO’s) annual report to Parliament found that grants administration “regularly falls short of expectations”, as does the management of cybersecurity and procurement.

“Performance audits of grants administration indicate that there has not been consistent compliance with the intent of the Commonwealth Grants Rules and Guidelines (CGRGs),” Auditor General Grant Hehir wrote in his report.

“The ANAO’s audit work has shown that advice to government has not always been robust — including insufficient attention to the authority of decision-makers and poor record-keeping in decision-making without assessment, or rationale for decisions being documented.”

In a related matter, the report flagged “the importance of ethics in the use of resources” related to grants, noting that the ANAO was finalising a framework to test ethical compliance.

The ANAO drew attention to its October 2021 report Australian Government Grants Reporting, which spelt out the amount of money distributed using the GrantConnect system. Grants Management Intelligence summarised the key findings of that report here.

The ANAO work program for 2022–2023 will include "grants assessment, decision-making and management" as one of nine focus areas.

The investigations will ensure compliance with Commonwealth guidelines, the effectiveness of grant hubs and testing that grant programs are value for money.

Potential upcoming audits include funding under the $1.3 billion Modern Manufacturing Initiative, which aimed to spark business investment. Tap here for more ANAO assessments of grants administration.

New inquiry to strengthen grants

A federal inquiry will conduct a new investigation into Coalition era grants.

The Joint Committee of Public Accounts and Audit, which is a Parliamentary committee, said in a September 2022 statement that its Inquiry into Commonwealth grants administration was “seeking to understand and learn lessons from the administration of previous grants programs and strengthen how Commonwealth grants are delivered”.

The committee will re-examine four previous ANAO reports into grants:

The committee will also examine the Urban Congestion Fund, the Regional Growth Fund and the Modern Manufacturing Initiative and revisit recommendations from its 2020 report The Administration of Government Grants.

Committee chair Julian Hill MP said that parliamentary scrutiny was needed to ensure future grants programs met Commonwealth guidelines and community expectations.

"The committee will amplify the auditor-general’s work, and also examine additional programs of interest administered by the previous government to learn lessons and to try to improve grants administration in the future,” Mr Hill said.

The terms of reference are being finalised, before public hearings are announced.

It’s time for pork barrelling to end: Grattan Institute

Danielle Wood
Danielle Wood presents the findings of the study at the 2022 Grants Management Intelligence Conference.

An independent think tank has called for an end to pork barrelling.

The Grattan Institute report New politics: Preventing pork-barrelling catalogues the worst examples of federal and state funding being funnelled to marginal seats in an attempt to buy votes at a time when the country has seen a huge increase in perceptions of corruption.

Institute CEO Danielle Wood said the grants more likely to involve pork barrelling shared common design features, such as being discretionary, and were far more likely to be awarded in marginal seats, especially at election time.

The study found that of 19,000 grants in 11 programs from 2017 to 2021 under the former federal Coalition government, $1.9 billion went to Coalition seats and $530 million to Labor-held seats.

It also showed that across the nation’s three largest states, government seats won an average of $1 million each in grants, compared to about $300,000 for opposition seats.

Grants prone to pork barrelling tended to be politicised, poorly selected, poorly administered and characterised by inefficiency, the study found. Read our full report here.

UPDATE: Thursday, July 14

NSW Govt responds to grants review

The NSW Premier Dominic Perrottet says his government (mostly) supports the 19 recommendations of an internal review into the handling of its grants programs.

The Grants Administration Review was spearheaded by the Department of Premier and Cabinet, with the assistance of Productivity Commissioner Peter Achterstraat. Among reforms to be adopted include:

  • replacing an existing guide with the new Grants Administration Guide
  • establishing a cross-agency “community of practice” comprising grants administration experts to create resources and encourage collaboration.

“Grants need to be delivered fairly and deliver value for the NSW taxpayer and I am committed to seeing positive changes put in place as swiftly as possible," Mr Perrottet said.

The government chose not to fully adopt a recommendation to make pork barelling an offence. Instead, the government supported the recommedation "in principle", and will explore options around legal compliance.

The government's response (and here in full) follows an earlier report by the NSW Auditor-General that found the NSW communities grants scheme "lacked integrity" and in which 96% of funds were given to coalition-held state seats.

Law expert calls for pork barrel ban

Professor Anne Twomey
Professor Anne Twomey

Constitutional law expert Professor Anne Twomey, in a report commissioned by the NSW Independent Commission Against Corruption (ICAC) has called for the practice of pork barrelling to be made illegal.

Prof Twomey argues in the 45-page report that grants should instead be made entirely on merit, and that doing otherwise might constitute an "improper purpose" by public officials.

Prof Twomey presented the argument in a forum hosted by the ICAC, which featured other prominent legal figures and Our Community board member and ethicist Dr Simon Longstaff, discussing the legal and ethical aspects of pork barrelling. ICAC is expected to soon release a report on the practice, including its opinion as to whether it constitutes corrupt conduct under the provisions of the ICAC Act.

Tasmanian review urges action on grants

Tasmania's Integrity Commission has raised serious questions about tens of millions of dollars handed out ahead of the 2018 election in its Grant commitments in election campaigns report.

Chief Commissioner Greg Melick said the paper followed an earlier one examining pork barreling and the difficulties in regulating the conduct. The latest report pushes for reforms.

"The public needs to have confidence that funding commitments made during elections are accountable and backed by policies. Without due process and policy, such grant promises may be – or perceived to be – for political outcomes only i.e. pork barrelling’."

It recommended changes to restore trust in the democratic process, including adopting systems based on the suite of guidelines and legislation employed by the Commonwealth, and to fully implement 2011 recommendations related to the Premier's Sundry Grants Program.

"When made, election campaign promises should be supported by policy, and must be publicised to all of the electorate – not just the intended recipients. Tasmania should also have mandatory legislation or regulations requiring promises of this kind to be subject to an assessment process after the election – in addition to the checks currently performed by the State Service," Mr Melick said.

Victorian councils must lift grants game

The Victorian Auditor Generals Office has released a report showing local councils are failing to properly protect themselves against grant fraud.

VAGO's report, Fraud Control Over Local Government Grants, examined six metropolitan and regional councils over a five-year period including: Hume City Council, Knox City Council, Loddon Shire Council, Southern Grampians Shire Council, Warrnambool City Council and West Wimmera Shire Council.

According to the investigation: "None of the audited councils have consistently applied fraud controls across all their grant programs. We found that these inconsistencies have unnecessarily exposed councils to a higher risk of fraud."

VAGO made nine recommendations to all Victorian councils urging them to strengthen fraud controls and improve guidance and training around grant-related fraud.

Research grants face a reset

Education Minister Jason Clare
Education Minister Jason Clare

New federal Education Minister Jason Clare has announced a review into the operations of the Australian Research Council, which has come under sustained criticism for the way grants have been handled in recent years.

Academics protested after the former federal government used its veto power on Christmas Eve last year to cancel $1.4 million in funding for several projects, prompting senate hearings and recommendations to scrap that power.

Now, Mr Clare in a keynote address to university leaders early this month, has declared that "the delays and the political interference in the way competitive grants operate need to end."

"As the Senate Committee recommended in March ... I will initiate an independent review of the role and function of the ARC as set out in its enabling legislation, with a particular focus on the governance framework and reporting mechanisms."

He said it was a priority for the Albanese government that "all future grants rounds are delivered on time, to a pre-determined timeframe", and that the review would help ensure that "the Australian Research Council has competent leadership and is functioning well, that its objectives are clear and that its processes are rigorous and transparent".

National auditor keeps a close eye on grants

The Australian National Audit Office (ANAO) has released its latest work program for 2022-2023, which unsurprisingly includes grants management among its targets.

"Grants assessment, decision-making and management" are one of nine "key focus areas" of the annual audit work program. The agency revealed that its examinations of grants administration would include:

  • compliance with the letter and intent of the Commonwealth grants rules and guidelines
  • effectiveness and efficiency of grant program management through grants hubs and other third parties
  • assurance arrangements to demonstrate that grant program objectives are being met with value for public funding.


UPDATE: Thursday, March 31

Grants hubs fail to deliver, auditor-general finds

A long-awaited report into the federal government’s grants hubs program has dropped on the final sitting day of parliament before an election is called.

According to the Australian National Audit Office (ANAO), the Streamlining Government Grants Administration (SGGA) Program was introduced in 2015 “to deliver simpler, more consistent and efficient grants administration across government”.

But the audit found that despite spending $107 million on rolling out the plan, which was to save $400 million, the program did not achieve its objectives.

Key conclusions included:

"There is insufficient evidence to demonstrate the SGGA Program improved the effective and efficient delivery of grants administration. Core deliverables were not achieved, and shortcomings in the design and operation of the hubs impacted on the realisation of the intended SGGA Program benefits (better outcomes for grant applicants and recipients, reduction in red tape, and efficiencies for government).

"The design and governance of the SGGA Program was not effective. The design of the SGGA Program was not supported by a sound evidence base. Governance arrangements were established, but did not support achievement of program outcomes, benefits and deliverables. Planning was not seen through to completion, impacting the achievement of deliverables. There was a benefits realisation framework, but it was not applied. The SGGA Program could not demonstrate the achievement of intended outcomes due to a lack of measurable indicators, baselines and targets. In relation to core deliverables, DSS and Industry built two grants hubs, but did not deliver a single whole-of-government grants administration process with six different workflows, a data warehouse or market testing.

“The build and operation of the grants hubs were partly effective. While consistency and effectiveness in grants administration is somewhat improved, there are deficiencies in relation to usage of the hubs for the full grants lifecycle, collaboration between the hubs and client entities, and data management. The hubs have not developed an appropriate performance framework to measure the benefits. There is limited evidence that the forecast benefits of the SGGA Program have been achieved.”


UPDATE: Monday, March 21

No let-up on grants scrutiny as poll looms

The spotlight remains firmly fixed on grants management in the lead-up to the 2022 federal poll as politicians aim to shore up votes with election promises.

This month, Coalition finance spokesman Simon Birmingham took aim at the Labor Party for alleged pork barrelling, after Nine Newspapers reported that up to $750 million in grants promised by Labor would target marginal seats. Labor transport spokeswoman Catherine King defended the allocations by saying the Department of Infrastructure would be tasked with reviewing the spending.

Community safety grants criticised

The Coalition’s claims come on the heels of criticism of yet another federal grants program. A February audit by the Australian National Audit Office (ANAO) found the $184 million Safer Communities Fund was only “partly effective and partly consistent” with Commonwealth grant rules and guidelines.

The audit found applications “were not assessed fully in accordance with the guidelines”. It also found that “funding decisions were not appropriately informed by departmental briefings and, for the majority of decisions, the basis for the decisions was not clearly recorded”.

Projects in Coalition-held marginal electorates won a higher proportion of grants, the audit found, while ALP-held seats won fewer grants.

Similar findings have been made in relation to a series of other federal grants programs, and the fallout continues.

The ABC reported that a regional soccer club which was furious to have missed out on a $460,000 grant through a Sports Australia grants program, despite being ranked among the top 20 applicants, has now won funding from the Victorian government to fix its muddy pitch.

Grants Hubs report is overdue

Grants watchers will be keenly interested in the results of the ANAO audit into the operation of the federal government’s Grants Hubs program, with the report repeatedly delayed.

Originally due to be handed down in August 2021, and then delayed until November, the audit is now expected this March, with the investigation assessing the “design and implementation” of the Streamlining Government Grants Administration (SGGA) Program, which is aimed at improving the effectiveness and efficiency of grants administration.

The hubs are operated by the Department of Social Services and the Department of Industry, Science, Energy and Resources.

Defence grants ‘inadequate’

An ABC investigation using freedom of information laws has highlighted failings in grants administration in the Defence Department.

The June 2020 Grants Management in Defence report by the department’s audit branch covered grants worth nearly $200 million between 2017 and 2019.

While the previously confidential report just released to the ABC found no serious wrongdoing, the internal investigation did find that grant managers did not adequately understand expected standards, and there was a “perceived absence of any accountability for their actions”.

The audit revealed that a new grant management framework had been rolled out in the department to ensure grant rules were followed.

Australian research grants face inquiry

A federal parliamentary inquiry into the handling of Australian Research Council (ARC) grants is due to report later in March.

This follows a move by Greens senator Mehreen Faruqi to change the Australian Research Council Act 2001 to remove ministerial discretion in the approval of ARC grants.

There have been 85 submissions to the Senate committee, which held a public hearing on March 9. Several of the country’s top universities told the committee they believed the veto power should be scrapped or curtailed.

On Christmas Eve 2021, then acting Education Minister Stuart Robert sparked controversy when he vetoed six projects that had been earmarked for funding.

Professor Gabrielle Appleby of the UNSW Law School, writing for the academic news site The Conversation, has examined the current state of affairs and proposed new statutory reporting requirements and oversight of funding arrangements.

UPDATE: Monday, February 14

Safer Communities Fund gets mixed report card

The Australian National Audit Office (ANAO) has completed an audit of the Safer Communities Fund to examine “whether the award of funding under the Safer Communities Fund was effective and consistent with the Commonwealth Grant Rules and Guidelines”.

The ANAO launched the investigation following a request by Shadow Home Affairs Minister Kristina Keneally to the Auditor-General to examine claims that Home Affairs Minister Peter Dutton personally handpicked grants under the Safer Communities program.

The ANAO probe examined whether the program had appropriate guides, that applications were assessed in accordance with those guidelines and that funding decisions were appropriately informed and documented.

According to the audit report, key findings included:

  • The award of funding was partly effective and partly consistent the Commonwealth Grant Rules and Guidelines.
  • Largely appropriate grant opportunity guidelines were in place.
  • Applications were not assessed fully in accordance with the guidelines.
  • Funding decisions were not appropriately informed by departmental briefings and, for the majority of decisions, the basis for the decisions was not clearly recorded.

The Auditor-General made five recommendations, with four for the Department of Home Affairs and one for to Department of Industry, Science, Energy and Resources.

The recommendations addressed program design, the assessment of applications and advice to decision makers. All five recommendations were agreed to.

Read the ANAO’s full report: Award of Funding under the Safer Communities Fund | Australian National Audit Office

UPDATE: 8 February, 2022

NSW communities grants scheme 'lacked integrity': Auditor General

The NSW Auditor General has issued a scathing report into the handling of a grants scheme in which 96% of funds were given to coalition-held state seats.

The study revealed:

  • $252 million was allocated to 24 councils
  • 96% was allocated to council projects in coalition-held state seats
  • 36% of the funding ($90 million) was allocated to a single council
  • $8 million was granted for projects identified before the program guidelines were finalised.

The report issued this month found: “The assessment and approval process for Round 2 of the Stronger Communities Fund lacked integrity. The government decided to prioritise funds for councils that had worked constructively with the government through the 2016 merger process.

“However, this information was not included in the program guidelines. The program guidelines were not published and did not contain details of selection and assessment processes.

"Councils and projects were instead identified by the former Premier, Deputy Premier and Minister for Local Government and communicated to OLG [the former Office of Local Government] with little or no information about the basis for the council or project selection. There was no merit assessment of identified projects. This process resulted in 96 per cent of funds allocated to coalition state seats.”

The investigation also looked into the $100 million Regional Cultural Fund administered by Create NSW, which found the arts minister hadn't followed the recommendations of an independent panel in a fifth of the applications. The reasons why were not documented by Create NSW.

The Auditor-General made the following recommendations:

"The Department of Premier and Cabinet should develop a model for grant administration that must be used for all grant programs administered in NSW that:

  • is based on ethical principles such as impartiality, equity and transparency
  • ensures assessments and decisions can be made against clear eligibility criteria
  • ensures accountability for decisions and actions of all those who are involved in the program
  • includes minimum mandatory administration and documentation standards
  • requires any ministerial override of recommendations to be documented."

It also suggested that “the Department of Planning and Environment should ensure that guidelines prepared for all grant programs are published and include a governance framework that includes accountabilities and key assessment steps”.

A response from the NSW Department of Premier and Cabinet noted that Premier Dominic Perrottet had commissioned a separate review of all state grants programs. That report is due in April and is expected to result in updates to the state's Good Practice Guide to Grants Administration.

Access the full NSW Auditor-General's report

UPDATE: 15 December 2021

Funds flow to Coalition seats, study reveals

Analysis by The Age and The Sydney Morning Herald of more than 19,000 federal grants worth $2.8 billion has raised questions about the equity of grants distributions.

The data investigation tracked how grants were allocated by electorate using data from a larger report by the Australian National Audit Office (ANAO). That study tracked more than $60 billion worth of grants since 2017 published via GrantConnect.

The Nine Publishing report covered about 20% of the grants, and tracked money given to each electorate to be allocated by MPs, and where government ministers were able to decide on the allocations.

The study claimed that Coalition-held seats received more than $1.9 billion over three years while Labor electorates got just under $530 million.

Read more of the Nine Publishing coverage and commentary here.

Meanwhile, the Australia Institute produced a similar analysis of grants spending by electorate, drawing on data from 2013 and examining the figures program by program.

Somewhat different programs were covered by the research, but that study also found that "funding has clearly favoured marginal seats at the expense of safe Labor seats and, in some cases, safe Coalition seats".

Its analysis found that marginal Coalition seats received national grants worth $184 per person, while safe Labor seats received just $39 per person.

Read the Grants with Minsterial Discretion study here.

13 December 2021

Inquiry prompts community grants review

The Victorian Government is conducting an internal review of two grants programs that were subject to investigations by the Independent Broad-based Anti-corruption Commission (IBAC).

The Age and The Australian reported an independent audit had been commissioned into the Victorian Responsible Grambling Foundation grants program.

It is understood KPMG will conduct that investigation, while PwC Australia is set to separately examine grants to the Somali Australian Council of Victoria.

Government officials said the investigations were commissioned in November, soon after IBAC launched an investigation into allegations of "serious corrupt conduct involving MPs and others" in relation to claims of political interference in the use of public monies, including grants.

The investigation primarily focused on the alleged illegal payment of electoral officers for party-political work, but also examined claims that grant funds intended for community associations were improperly used.

UPDATE: 17 November 2021

NSW to review grants practices in the wake of corruption probe

NSW Premier Dominic Perrottet has announced a review into that state’s grants programs, following his predecessor Gladys Berejiklian’s appearance before a corruption inquiry.

Ms Berejiklian resigned ahead of her being questioned about a $5.5 million grant to a shooting club in Wagga Wagga, which allegedly benefited her then secret partner, MP Daryl Maguire.

NSW Premier Dominic Perrottet

Mr Perrottet said the review will examine grants procedures and systems across the state, with a report due in April 2022.

“I am committed to making sure grant programs are fair, robust, and follow best practices when those dollars are put to work in the community,” he said in a statement this month.

“From sports facilities to welfare services, COVID support packages, and small business assistance, grants are critical to so many people and play a vital role in enhancing quality of life and our economy.”

The review will be led by the Department of Premier and Cabinet, alongside the state’s productivity commissioner, and will examine whether grants programs:

  • achieve value for money
  • are robust in planning and design
  • following principles of transparency, accountability and probity.

According to the Premier, the review will consider other jurisdictions, past recommendations from NSW authorities, best-practice risk assessments and frameworks, and the existing regulatory environment.

The review will also update the state’s Good Practice Guide to Grants Administration.

In the meantime, a cross-party parliamentary committee chaired by Greens MLC David Shoebridge continues its own investigation into the “integrity, efficacy and value for money of NSW Government grant programs”.

Mr Shoebridge’s Public Accountability Committee lodged its first report in March 2021 and is expected to table its final report by February 2022.

Review of grants administration in NSW (terms of reference)

Public accountability committee inquiry into NSW grants

14 October 2021

NSW premier falls to grants probe

Grants continue to take the centre stage in national controversies, with former NSW premier Gladys Berejiklian resigning amid an investigation by the state's anti-corruption body into her involvement in a $5.5 million grant to a clay target shooting club in Wagga Wagga.

In a recent commentary published by the Centre for Public Integrity, board member Geoffrey Watson SC said the Independent Commission Against Corruption (ICAC) was justified in going public with an investigation into the "questionable allocation of public money through grants". He said ICAC's call would have been "free of any political considerations".

"Sports rorts, car park rorts – it is becoming a sadly familiar theme. What is under investigation is whether public money was taken from where it should have been allocated and reallocated as a favour to a politician. If that happened it is a disgrace. We have seen too much of this going on, and [it] needs to be exposed for what it is."

Days later, Victorian watchdog, the Independent Broad-based Anti-corruption Commission (IBAC), launched its own investigation into allegations of "serious corrupt conduct involving MPs and others" in relation to political interference in the use of public monies, including grants.

While this investigation focuses on the alleged illegal payment of electoral officers for party-political work, it will also examine claims that grant funds intended for community associations were improperly used.

The handling of grants looks certain to remain on the front pages for some time to come, with Grants Management Intelligence reporting last month that Australia’s top federal grants watchdog will keep a keen nose out for unethical behaviour in future investigations, in the wake of a spate of grants controversies.

29 September 2021

National auditor flags focus on ethics

Australia’s top federal grants watchdog will keep a keen nose out for unethical behaviour in future investigations, in the wake of a spate of grants controversies.

Grantmakers in all jurisdictions would be wise to heed the warning shot from the nation’s leading auditor.

Federal Auditor General Grant Hehir, of the Australian National Audit Office (ANAO), said that over the next four years his office would “design and implement an appropriate audit framework against which to test ethics”.

This follows a series of high-profile critiques of grants funding in the past two years, including ANAO investigations into:

  • the Safer Communities program, providing crime prevention funds
  • the Commuter Car Parks program within the Urban Congestion Fund
  • the Community Sport Infrastructure program
  • the Regional Jobs and Investment Packages
  • the Australian Research Council’s National Competitive Grants program
  • the $443 million grant to the Great Barrier Reef Foundation.

Writing in the ANAO’s latest annual report, the Auditor-General said, “The importance of ethics in the use of resources has been highlighted in several audits, particularly relating to procurement and grants administration.

“I believe that greater scrutiny in this area will help ensure that the public sector continues to look beyond technical compliance and focuses on operating in line with community expectations of integrity and honesty.”

August 19, 2021

Think tank seeks changes to system

The Australian grants system needs major reform, according to the Centre for Public Integrity.

Its call for systemic change is based on research showing that every grant program audited by the Australian National Audit Office (ANAO) since 2019 has been flawed, with problems ranging from minor errors to "serious maladministration", in programs that have distributed $5.5 billion in public funds.

The centre says grants oversight changes should start with these reforms:

  • Grant approval criteria, including merit selection criteria and program guidelines, should be set out in primary legislation
  • Departments should be required to lodge documents to Parliament relating to tenders, selection and delivery
  • A joint standing committee should be established to oversee grant administration and report to the Parliament.

Read the Centre for Public Integrity's briefing paper

July 15, 2021

Auditors lash administration of commuter parking grants

The Australian National Audit Office (ANAO) has made a scathing assessment of the Federal Department of Infrastructure's handling of grants designed to build more commuter car parks.

The findings drew widespread media coverage (ABC, SMH, Guardian) about how funds in the $660 million program were handled, with the report criticising the transparency of the program, political bias, poor assessment, a failure to show the projects would be value for money, and poor delivery.

The ANAO concluded that "the department’s approach to identifying and selecting commuter car park projects for funding commitment was not appropriate".

"It was not designed to be open or transparent. The department did not engage with state governments and councils, which increased the risk that selected projects would not deliver the desired outcomes at the expected cost to the Australian Government.

"Departmental advice did not contain an assessment against the investment principles or policy objectives and it was not demonstrated that projects were selected on merit.

"The distribution of projects selected reflected the geographic and political profile of those given the opportunity by the government to identify candidates for funding consideration."

The Auditor-General made six recommendations around program design, record keeping, assessment of proposals, and milestones, which the department has accepted.

The ANAO also delivered key messages for all government instrumentalities as a result of the audit, affecting both program design (especially consultation) and record keeping. This includes consulting with project partners, including other levels of government, before making decisions (and public announcements) on project selection or funding. And, the ANAO highlighted the importance of record keeping in creating better transparency, accountability and informed decision-making.

Read the full ANAO report

May 10, 2021

National auditor tests programs

The Australian National Audit Office (ANAO) will review the Safer Communities Fund to examine "whether the award of funding under the Safer Communities Fund was effective and consistent with the Commonwealth Grant Rules and Guidelines".

The ANAO confirmed mid-last month that it had launched the investigation following a request by Shadow Home Affairs Minister Kristina Keneally to the Auditor-General to examine claims that Home Affairs Minister Peter Dutton personally handpicked grants under the Safer Communities program. Ms Keneally welcomed the decision to proceed with a probe.

The ANAO probe will examine whether the program had appropriate guides, that applications were assessed in accordance with those guidelines and that funding decisions were appropriately informed and documented.

The office is expected to seek submissions to the audit until November and to report in February next year.

Huge reef grant gets mixed report in audit

The Great Barrier Reef Foundation has a long way to go to reach its target of raising $357 million - including $157 million in cash - to protect the threatened natural treasure, the ANAO has found in a report released this month.

The auditor was called in to examine a controversial non-competitive $443.3 million grant to the foundation in 2018 by the then Turnbull Government

So far, the foundation has raised $53.6 million towards the target, including $684,000 in cash.

The audit found the foundation's work had been "partially effective" and made seven recommendations addressing bank deeds, fundraising, subcontracting the delivery of reef protection projects and administration costs.

Government grant systems under the microscope

In other work by the ANAO:

  • The office will lodge a report in August about the performance of the Australian Grants Information System, GrantsHub, including the design and implementation of the Streamlining Government Grants Administration (SGGA) Program
  • The audit office expects to report in September about the operation of the GrantConnect system administered by the Department of Finance

The ANAO has also flagged potential investigations into:

  • The Community Health and Hospitals Program
  • The Drought Communities Program
  • The Indigenous Advancement Strategy
  • The 20 Million Tree Program
  • The Building Better Regions Fund

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