Audit Committee recommends major changes to Commonwealth grants rules

THE Joint Committee of Public Accounts and Audit (JCPAA) has tabled its report on the administration of Commonwealth grants. Four Auditor-General reports and three additional grant programs were considered in this inquiry which informed eight recommendations which, if adopted, will significantly strengthen the processes and transparency around Commonwealth grant awards.

Chair of the JCPAA, Julian Hill MP said, “Clear and concerning evidence of serial non-compliance with the Commonwealth Grants Rules and Guidelines (CGRGs) and program guidelines was presented. The requirements 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," Mr Hill said.

“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," he said.

“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."

Mr Hill said, “Ministers can and should apply their own critical judgement to and are perfectly entitled to accept or reject departmental advice. What the committee does not accept however is the lack of transparency under the previous government. Ministers are not ‘gods’ and are subject to the law and the rules and must record properly and fully documented reasons.”

The committee is recommending changes to the CGRGs to ensure that competitive processes are used by default and election commitments are clearly defined, that the roles of stakeholders are clarified, that ministerial funding approvals against agency recommendations are clearly recorded and reported promptly to the Minister for Finance, and that any ‘other factors’ by which grants will be assessed are fully transparent.

The committee’s inquiry focused in particular on instances of non-compliance with the CGRGs which are intended to achieve fairness, a competitive process by default, transparency of decision-making, and value for money.

The identified issues included an emerging trend towards non-competitive grant processes, a lack of a definition of election commitments, inadequate records of decisions taken by officials and ministers, and the use of unspecified ‘other factors’ in grants assessments. The committee also considered the future application of the CGRGs to non-corporate Commonwealth entities.

The committee’s report also examined the current use of centralised grants hubs to administer these programs and noted the Auditor-General’s findings that they have only been partly effective in delivering on the intended efficiencies and cost-savings. The committee concurred with the Auditor-General’s recommendations that more effective future planning and performance measures, and improved data quality, were needed for the hubs and has requested that the Department of Finance provide future updates on their implementation.

The committee’s report is available on the Committee website.

 

ends