The Albanese government is reviewing stalled projects in the $2bn community health and hospital program, including seeking to revive at least one $5m grant the auditor general found was funded despite a warning it likely lacked lawful authority.
The Australian National Audit Office found that before the 2019 election the federal health department deliberately breached commonwealth grant guidelines in respect of the program.
It found the then Morrison government decided to fund 11 projects despite the Australian Government Solicitor warning there “would likely be no lawful authority for the expenditure”.
One such project was a $5m grant for an “upgraded community hub” by Lord Somers Camp and Power House, which provides rowing and other sporting facilities for community sporting clubs in Albert Park, Victoria.
The project is located in Labor MP Josh Burns’ electorate of Macnamara, proposed by an organisation that runs camps on the Mornington Peninsula in former health minister, Greg Hunt’s, electorate of Flinders.
The ANAO report found that Hunt approved four projects in his electorate with combined spending of $14.4m, and that he had fulfilled the requirement to inform the finance minister when approving grants in his electorate.
According to the ANAO report, the department assessed the Lord Somer Camp grant proposal as suitable and representing value for money, but a quality assurer “disagreed and amended the assessment to ‘not suitable’ on the basis that the proposal was not consistent” with the program’s objective.
“On 19 June 2019 the AGS completed its advice for Lord Somers Camp, assessing the proposal as likely to be without lawful authority.
“Health advised the [health] minister [Greg Hunt] of this outcome on 25 June 2019. Health again recommended that the minister approve the grant.”
After executing an agreement for the first $500,000, the department completed a risk assessment in September 2019 finding the organisation “was a ‘high’ risk, due to its viability”.
After the Albanese government’s election in May 2022, the health department recommended in September that the new health minister, Mark Butler, terminate the agreement.
Instead, Butler approved “an alternative approach proposed by Health to provide the grantee a further six months (to 31 March 2023) to secure required funding co-contributions”.
Although the ANAO noted further information had not been provided by 8 May, Guardian Australia understands the organisation has since provided additional information, which the department is currently assessing.
The Lord Somers Camp chief executive, Tim Ryan, told Guardian Australia it had “followed all the processes we’ve been asked to do”.
“We have had strong and positive ongoing discussions with the commonwealth and other parties including the state department and Parks Victoria,” he said.
“As far as we’re concerned, the positive relationship remains.”
Butler told Guardian Australia “the Morrison government announced billions of dollars of taxpayers money for health projects around the time of the 2019 election, with no regard to proper process or good governance”.
“The captain’s picks came so thick and fast, that the health department was forced to monitor the media to know which projects had been selected.”
He noted the department had accepted all ANAO recommendations and is strengthening its procedures.
“This taxpayer money was so poorly allocated from the Morrison government that years later just half of the $2bn has actually been spent,” Butler said.
“I have directed my department to run the ruler over the remaining stalled projects to ensure that Australians get value for money.”
