$252 million fund designed to win seats and punish councils, inquiry finds

A $252 million grants fund handled by the Berejiklian government was deliberately devised to accommodate pork-barrelling, punish councils who objected to forced amalgamations, and win seats ahead of the 2019 state election, an inquiry has found.

Findings of a NSW upper house inquiry described the government’s administration of the tied grants round of the Stronger Communities Fund as “a clear abuse of the grants process” in which 95 per cent of funds went to councils in Coalition-held or marginal seats, including a $90 million payment to Hornsby Shire Council.

An inquiry found NSW Premier Gladys Berejiklian was one of the ultimate approvers of funds dispersed under a $252 million pork-barrelling scheme.Credit: James Brickwood

Greens MLC David Shoebridge, who chaired the committee overseeing the inquiry, described the fund as an “alarming example of the lack of transparency and accountability” in the state government’s grant programs.

“The fund was originally established to assist councils created from the NSW government’s failed council amalgamations, but morphed into a brazen pork-barrel scheme,” he said in a report published on the committee’s website on Tuesday.

“Ultimately the Coalition designed a scheme with so few checks and balances that $252 million of public money was handed out on a purely political basis to sort out the Coalition’s political problems, to gain an advantage in the 2019 state election and to punish any council that had objected to being forcibly merged.”

NSW Deputy Premier John Barilaro described the distribution of the funds as an “investment”.Credit: Rhett Wyman

The offices of Premier Gladys Berejiklian and Deputy Premier John Barilaro were contacted for comment, with the Premier’s office declining to do so, but Liberal MLC and committee member Natalie Ward described the report as “a biased, partisan sham and a waste of taxpayers’ money.”

“There is no attempt at bona fides here on the part of the non-government members, it’s just a cheap, political attack by people with no ideas and no vision for NSW,” Ms Ward said in a statement.

As well as Mr Shoebridge and Ms Ward, the committee consists of Nationals MLC Trevor Khan, Liberal MLC Matthew Mason-Cox, John Graham and Courtney Houssos of Labor, and Robert Borsak from the Shooters, Fishers and Farmers Party.

In a dissenting statement, the three Coalition members said the fund fulfilled its intention of improving community facilities across the state.

“This has included upgrades to parklands, surf clubs, water infrastructure in drought-affected areas, road works, sporting and recreation facilities, tourism, environmental projects and youth facilities,” they said.

Greens MLC David Shoebridge chaired the inquiry.Credit: Rhett Wyman

“The report fails to acknowledge the evidence received that these are projects that Members of Parliament of all political persuasions have enjoyed.”

The fund was set up by the Baird government to help merged councils but the guidelines were changed in June 2018, about the same time $90 million was approved for councils which had not merged, as well as a number of other non-amalgamated councils in Coalition seats.

The inquiry found that payment, organised within 72 hours of Office of Local Government head Tim Hurst contacting the council, “was made without any due process or merit assessment, and was a misuse of public money”. It also found working advice notes were used as formal funding briefs - with no signed paperwork originating from the Premier’s of Deputy Premier’s offices.

There was no application or assessment process for the scheme, and the eligible councils were the ones who were identified by the government as being so.

The inquiry also found Ms Berejiklian and Mr Barilaro were the ultimate approvers of the payments to each council, an assertion both of their offices last year denied despite emails obtained under parliamentary powers suggesting otherwise, and Mr Hurst telling the inquiry they were among those to approve the grants.

In the face of mounting public scrutiny, Ms Berejiklian admitted the scheme amounted to pork barrelling in November, though defended the practice by saying that it was “not illegal”.

“Unfortunately it does happen from time to time by every government. I don’t know any political party that at some stage hasn’t made commitments to the electorate,” she said.

Mr Barilaro told the inquiry while appearing before it earlier this year the government’s distribution of the funds was “investment”.

“When you think about it, every single election that every party goes to, we make commitments. You want to call that pork barrelling, you want to call that buying votes, it’s what the elections are for,” he said in February.

One of the most sensational revelations of the public proceedings was the shredding of documents relating to Ms Berejiklian’s approval of the funds by the Premier’s office, an action the State Archives and Records Authority found to be unlawful, though stopped short of pursuing legal action.

As part of its recommendations, the committee urged the board of the authority to reconsider its decision not to take further action.

Several ministerial staffers and bureaucrats gave evidence during the inquiry, as did former NSW Auditor-General Tony Harris, who labelled the administration of the scheme as “brazen and audacious” and described it as “purely politically administered”.

The committee also recommended the Legislative Council refer the “maladministration” of the Stronger Communities Fund to the Independent Commission Against Corruption, and the government overhaul its handling of grant programs to provide transparency and mandatory criteria by which it must abide.

The inquiry will continue to hold hearings into the goverment’s allegedly improper allocation of $177 million in bushfire relief grants.