Taxpayer money is for public benefit not for buying votes

This week’s critically important investigation by The Age and The Sydney Morning Herald into the distribution of $2.8 billion of public money over the past three years, found that this distribution has “grossly favoured Coalition seats” and the “system under which billions of dollars of grants are handed out to communities across Australia is irretrievably broken”.

Yet again, we see a government far more interested in spending money for its own electoral purposes, than after a genuine test of whether a grant is necessary or in the public interest. Yet again this government has been exposed in a much larger exercise of political misconduct amounting to nearly $3 billion.

Coalition seats have been grossly favoured in the allocation of government grants.Credit: Jessica Shapiro

The question, then, is how we fix this serious problem.

Various constraints exist upon the exercise of ministerial discretion relating to grant expenditure: these include the specific constraints set out in the grant administration framework established by the Public Governance, Performance and Accountability Act 2013 (Cth) (PGPA Act) and related legislation, as well as the Statement of Ministerial Standards and the requirements of administrative law.

They also include the public service, via the provision of “frank and fearless” advice, the Parliament, via its scrutiny function, and the work of oversight agencies such as the Australian National Audit Office. Yet, the data revealed by The Age and the Herald suggest that these constraints are not functioning as they are intended and reform is urgently required.

One significant deficiency of the existing framework is the fact that the Commonwealth Grant Rules and Guidelines do not apply to a sufficiently broad range of financial arrangements into which the Commonwealth may enter (they did not, for example, apply in the case of the “sports rorts” grants).

Nationals Senator Bridget McKenzie was embroiled in the much criticised sports rorts affair.Credit: Alex Ellinghausen

Neither the PGPA Act or associated instruments impose any penalties for breach of their provisions. The Statement of Ministerial Standards is enforceable by the prime minister alone, and the political reality that a prime minister has a strong incentive not to find ministerial wrongdoing militates against current enforcement arrangements relating to the statement being effective.

While it is true that ministerial decision-making that fails to comply with the requirements of this framework or administrative law more broadly can be challenged via judicial review, this is a private remedy whose pursuit lies with those who have the requisite standing, resources and motivation.

This is shown by the challenges currently before the Federal Court, brought by the Beechworth Lawn Tennis Club about the administration of the “sports rorts” grants, and the NT Environment Centre about the Beetaloo Basin fracking program. The latter challenge, which involves the first judicial test of the PGPA Act’s requirement that Ministers must be satisfied, after making reasonable inquiries, that a proposed use of public funds is “efficient, effective, economical, and ethical” before they approve it, relates to the making of a $21 million grant to Imperial Oil & Gas Pty Limited.

The funding contract was signed by Resources Minister Keith Pitt on 9 September 2021 – regardless of the fact that his decision in the matter was before the court and only six days after the government had given an assurance that no contract would be signed for two to three weeks.

Beyond these specific constraints, the Parliament, the public service and oversight agencies can all perform a vital role in ensuring that the exercise of ministerial discretion is proper. The public service needs to be empowered to do so via the adoption of the Thodey review recommendations, and the Parliament must be given access to the information it needs to perform its scrutiny function effectively.

Then there is matter of oversight agencies like the Australian National Audit Office. While they are critically important in promoting accountability of the executive, their ability to fulfil their mandate is constrained by resourcing.

The decimation of the ANAO’s resourcing since 2013-14 (not fully remedied by a minor boost in this year’s budget), which has coincided with both an increase in the complexity of audit work and additional enterprises to audit, is a case study in why the resourcing of accountability institutions needs to be jealously guarded.

Finally, the evidence that the investigation has unearthed demonstrates yet again a National Integrity Commission with appropriate jurisdiction and powers to deal with serious or systemic misuse of public funds is essential.

It also confirms, yet again, why the Government’s proposed Commonwealth Integrity Commission is entirely unfit for purpose.

Behind the data reported by The Age and the Herald there are stories. Stories of local organisations in genuine need, who missed out because they happened not to be located in the right seat. Because the concept of actual merit was conflated with merit in the form of a project’s prospects of aiding a politician’s personal chances, or their party’s chances, of election.

Public funds are scarce. They belong to the public. They must be used for proper, public purposes, and improving a person or party’s chances of election are a resoundingly improper purpose.

Stephen Charles QC is a former Court of Appeal judge. He is a board member of the Accountable Round Table and the Centre for Public Integrity. Dr Catherine Williams is research director of the Centre for Public Integrity