Rules governing billions of dollars of federal grants should be tightened, with clearer reasons for departing from departmental recommendations and less ministerial discretion to choose from pools of eligible projects.
Those are some of the central recommendations of the audit committee’s review of the commonwealth grants rules, in a bid to crack down on politicised programs including car park rorts, the building better regions fund and safer communities program examined by the auditor general.
The joint committee of public accounts and audit tabled its report on Thursday, finding grants programs resulted in “unjustifiably partisan outcomes and were politicised with reasons for ministers’ decisions simply not recorded, inadequate or unavailable”.
The majority report said outcomes were “completely unacceptable”, citing 74% of the $4.8bn urban congestion fund being allocated to Coalition seats and 96% of the regional growth fund.
The Coalition members dissented on the basis it was a politically motivated inquiry into the former government’s programs.
In the chair’s forward the Labor MP Julian Hill said the Liberal and National parties are “still in denial” over what the previous government did with billions of taxpayer dollars.
“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 [and] systematically … perverted,” he said.
Hill said that while non-competitive grants “will sometimes be necessary or preferable” in cases of urgency or where only one recipient is suitable, the auditor-general had indicated they had now become the norm.
The majority report recommended grants rules be strengthened with a default presumption in favour of competitive grants.
It recommended that grant program guidelines specify how advocacy and input from MPs and other stakeholders will be considered when approving grants.
“Clear recommendations must be made for each individual grant and the pooling of ‘eligible’ recommendations for decision-makers to choose from does not meet this requirement,” it said.
The committee said that pooling was “highly problematic”, as it allowed agencies to submit “long lists of all ‘eligible’ projects with scores to ministers and [invite] them to choose which ones they wanted to fund”. This resulted in approval of “lower ranked projects” without alerting the finance minister or providing reasons, it said.
A decision-maker’s approval of a funding decision against the recommendations of agency must be clearly recorded and reported online “including the basis for that approval”, the committee recommended.
In June Guardian Australia revealed the health minister, Mark Butler, had called for a new grant category for “explicit decisions of government” which alarmed legal and transparency experts, who warned it could lower the bar for grants at “high risk” of corruption and pork barrelling.
Butler proposed developing a specific category of grant under the commonwealth rules to “support timely delivery of published and explicit decisions of government”.
The public law expert Prof Anne Twomey said the plan “appears to be an attempt to extend the perfunctory assessment of election promise grants to other publicly announced grants between election cycles that have not gone through appropriate merit assessment”.
The committee said it was “perfectly legitimate and appropriate for a government to establish programs to implement election commitments”, but noted that rules including the requirement to be satisfied a project gives “value for money” still apply.
The Coalition has consistently targeted the Albanese government over its mobile black spot program, attempting to refer it to the auditor general over allegations that 40 of the 54 projects funded were in Labor seats.
In April the auditor general, Grant Hehir, wrote to the shadow communications minister, David Coleman, agreeing “there is merit” in auditing round six of the program, indicating a final decision will be made by early July.
