Moving the goalposts: New subsidy rules aim to avoid another sports fraud scandal

The rules for granting government subsidies are to change – federal ministers will be required to provide explanations if subsidies are awarded against the recommendations of their ministries.

Finance Minister Katy Gallagher, who is also Minister for the Public Service, on Thursday (4 July) unveiled new Commonwealth Grants Rules and Regulations (CGRPs), saying they would strengthen the integrity of the grants system.

Under the new rules, ministers will have to report to her details of grants they have awarded to recipients in their constituencies – and any grants they have approved that officials have recommended be rejected. This is to be done “as soon as practicable”, with the information to be tabled in federal parliament every quarter.

The new CGRP requirements will become effective on 1 October 2024 and will replace the current annual reporting requirements.

The minister said the changes represented significant improvements in transparency and accountability following a series of scandals over the use of own resources by the previous coalition government.

She said the federal Labor government was committed to restoring public confidence in the procedures for awarding government grants.

“Grants provide significant benefits to the Australian community and we want to ensure the grant process is open and transparent,” Senator Gallagher said.

“After the previous coalition government’s sports scandals, the Building Better Regions campaign and the commuter parking scandals, governments are expected to operate to the highest standards when it comes to administering grants and taxpayers’ money.”

The so-called ‘sports fraud scandal’ began in the run-up to the 2019 federal election when then-Sports Minister Bridget McKenzie ignored Sports Australia’s official recommendations regarding the subsidy program and instead used her ministerial powers to favour marginal or select electorates when awarding subsidies.

Similarly, the coalition was accused of using the Fund for Building Better Regions to channel 96 percent of the awarded grants to strengthen seats in coalition districts.

The commuter parking scam involved a series of grants that the then government gave to build car parks near train stations, revealing that these projects were almost exclusively in Liberal-held constituencies and on the fringes of constituencies.

The new regulations impose strict reporting requirements on ministers and public administration representatives regarding subsidies.

Transparency will be increased by removing the exemption from the obligation to publish one-off guidance for ad hoc grants and by requiring that information on awarded grants be linked to the relevant published grant guidance on GrantConnect.

The requirements for reporting on the award or non-award of a subsidy will be tightened.

These changes will implement key recommendations made by the Auditor General and the Joint Public Accounts and Audit Committee arising from the administration of previous grant programmes.

Senator Gallagher said the new legislation was part of the Government’s commitment to the Open Government Partnership in Australia’s Third National Action Plan 2024–25.

“They will increase accountability and provide greater confidence to the Australian public that grants are being awarded in the best interests of the community,” she added.

Before submitting an application for CGRP, Australian Public Service officials will need to determine and document whether their proposed activity is eligible for the grant.

Responsible entities and officials involved in the administration of grants must comply with government policies and laws relating to the administration of grants.

According to the principles set out in the CGRP document, officials must:

• Developing grant opportunity guidelines for all new grant opportunities and revised guidelines in the event of significant changes to grant opportunities;
• There are nine key principles of grant administration that should be considered;
• Ensure that grant eligibility guidelines and related internal guidelines are aligned with the CGRP;
• To advise the relevant Minister on the relevant requirements of the legislation and rules governing the award of grants where the Minister is considering a proposed expenditure of relevant grant funds.

“Where the Responsible Authority or Official approves the proposed commitment of appropriate funds in relation to a grant, the Responsible Authority or Official approving it must record in writing the basis for the approval in relation to the Grant Eligibility Guidelines and the key principle of achieving value with appropriate funds,” the regulations state.

“Officials must provide written advice to ministers, with ministers acting as approvers.”

This Commonwealth Grants Rules and Regulations 2024 will replace Commonwealth Grants Rules and Guidelines 2017.

Original article published by Chris Johnson on Riotact.