Only one in six government business grants awarded competitively

Deakin University research into $3bn worth of Commonwealth business grants found that only one in six were awarded competitively.

Deakin University researchers say that only one in six Commonwealth government business grants were awarded competitively. Photo: David Geraghty

Deakin University researchers have raised the alarm after discovering that only one in six Commonwealth government business grants – worth $3 billion over a five year period – were awarded competitively.

Academics in the IPA-Deakin SME Research Centre found that 84 per cent of business grants from 2018 to 2022 were awarded on an ad hoc basis with no strings attached and without carrying out any assessment of their merit compared to the unsuccessful grant applicants.

Their research, published in a white paper, also compared the small business grants awarded by ministerial discretion in a closed, non-competitive process to those made under an open, competitive process under the Commonwealth Grant Rules and Guidelines. The former had a higher average value ($1.7m) than the latter ($1.5m).

Ministers were found to have made discretionary grants 313 times for a total value of $540m but with negligible oversight.

The research also found that, while a competitive selection process was rare in all types of business grants, it was particularly rare for business development grants, small business grants, and industry innovation grants. It also said there was a “broad and systemic lack of transparency across most Commonwealth grants programs – both open and closed”.

The findings came from analysis of the Australian government’s GrantConnect website.

IPA-Deakin SME Research Centre director George Tanewski said the findings were concerning because billions of dollars were handed to companies with no reciprocal obligation to taxpayers.

“Integrity, transparency, and accountability are three of the largest pillars that support public trust in government,” he said.

“Tracking how Australian taxpayer money is actually spent is more important than ever because every dollar counts right now.”

Professor Tanewski said that problems with business grants had previously been noted in a 2021 Australian National Audit Office review.

The IPA-Deakin SME Research Centre white paper recommended that the names of all applicants for competitive grants, both successful and unsuccessful, should be published.

It also said there should be full public disclosure when ministers overruled advice given to them on grants from the public service or expert committees and there should be more transparency requirements around ad hoc grants awarded by ministers at their discretion.

Government agencies should be made to publish more information about grants they provide and the intended outcomes of the grants, the paper said.

Institute of Public Accountants CEO Andrew Conway said the public trust in institutions was decreasing and the system needed to change for the better.

‘These issues raise questions about the integrity of a system that has already been tarnished by high-profile political controversies – including the so-called ‘sports rorts’ affair, Safer Communities Fund and the Commuter Car Park Project – and leaves the system potentially open to further abuse of public money,” Professor Conway said.