It’s a basic principle of democracy that elected officials, not bureaucrats, make important decisions — including how to spend taxpayer money. They’re the ones accountable to the electorate, not public servants.
But politicians themselves admit they can’t be trusted with certain decisions.
They acknowledge various forms of regulation must be independent of politics — corporate and prudential regulation, media regulation, competition regulation. In the 1990s, we decided the conduct of monetary policy was too important to be left to politicians, so the RBA was made independent.
Indeed, the politicisation of Treasury now means we rely on the Reserve Bank, the Productivity Commission and the Parliamentary Budget Office for economic and fiscal guidance.
With politicians admitting they can’t be trusted with important decisions, it’s natural to wonder what else should not be left in their hands. For generations, both sides of politics have made infrastructure decisions based on pork-barrelling, deals with friendly state governments, or the need for election announceables.
As infrastructure minister, Anthony Albanese at least established Infrastructure Australia to inject rigour into the process of project assessment. But politicians still control the purse strings.
And grants programs have long been an area of abuse, particularly by Nationals. Some of them oppose a national integrity body purely on the grounds that it would be an impediment to their rorting of programs.
After the Nationals’ last major rort, the regional rorts scandal that erupted during the 2007 federal election, grants administration was overhauled by Labor.
Commonwealth Grant Guidelines were established that identified requirements for the way public service departments handled grants programs overall and assessed grant applications.
They also imposed requirements on ministers, who had to comply with the Public Governance, Performance and Accountability Act 2013 on “proper” use of money, could not approve grants without being given an assessment of them, and had to write to the Finance Minister once a year to report instances where they approved a grant in their own electorate or if they approved a grant application rejected by public servants.
The ANAO also developed a far longer guide for grant administration, Implementing better practice grants administration, but that was withdrawn in 2017 after the Department of Finance complained that the guide both duplicated the CGGs and set too high a standard for departments by “suggesting better practice beyond the scope of the current grants framework”.
There was a “risk”, Finance claimed, “in entities adopting additional processes as a de facto standard.” Apparently when it comes to spending taxpayer money, you can be too careful.
The CGGs have been updated a couple of times since then and remain in place — though not for bodies like the Sports Commission, which is probably why Morrison, McKenzie and co chose the commission to deliver the rorted grants.
Is the solution simply to extend the CGGs to all bodies handling grants? Remember the CGGs still allow ministers to fund grant applications that should be rejected — they only have to write to the Finance Minister in March the following year about it.
And problems still go on in programs covered by the CGGs. The half-billion dollars handed to the government’s mates at the Great Barrier Reef Foundation was almost fully compliant with the CGGs.
A ministerial panel doling out money under the Regional Jobs and Investment Packages program repeatedly rejected departmental assessments, with no notes taken and no public servants present to record them.
Although not a grant, an audit found that the Department of Infrastructure had explicitly warned the Abbott government not to hand $1.5 billion to the then-Victorian Liberal government for the East West Link project, but it did it anyway.
Even the bipartisan Stronger Communities Program was politicised by Scott Morrison’s office.
Sports rorts is thus only the latest scandal to demonstrate that if there is any possible way around the rules, politicians — especially Nationals — will find it in order to serve their own interests.
Extending the CGGs won’t insulate grants programs from rorting. Only removing ministers and their offices entirely from the approval process will remove the risk of rorting. That requires a swapping of roles.
At the moment, bureaucrats establish the guidelines for how grants programs will be run, and then ministers usually approve grants based on those guidelines.
Instead, ministers and their offices should be doing the guidelines for grants programs, and bureaucrats should be approving grants based on an in-house assessment — though with a separation between assessor and approver.
Ministerial staff might be tempted to write some bias into the guidelines for programs, but as the sports rorts show, staffers hate being exposed — the Auditor-General had to use his compulsion powers to force McKenzie’s staff to admit to how they misallocated the grants. Communication between ministers’ offices and either assessors or approvers of grants should also be prevented, in case staffers seek to direct bureaucrats about whom to give grants to.
Bureaucrats don’t administer grants perfectly. ANAO reports are replete with instances of bureaucrats failing to properly assess grants, breaking rules, failing to advise ministers properly and failing to keep proper records. Departments with little experience of administering grants, unsurprisingly, are more likely to stuff them up.
But that doesn’t reflect a deliberate intention to misuse taxpayer funds. And restoring the ANAO’s Implementing better practice grants administration as an aspirational standard would help there.
Against this, politicians insist that they bring something to the grants process that Canberra bureaucrats can’t, because they’re more in touch with communities.
That’s true. But their reluctance to actually record their reasons for deviating from departmental recommendations prevents a clear-headed assessment of the value they add.
And there’s another way of seeing local knowledge and community connections when it comes to grants: it’s called conflict of interest.
Most ministers — even the occasional Nat — administer grants properly and take seriously the obligations of both legislation and the CGGs.
But the persistent rorting that keeps on being exposed in government after government suggests that, as with monetary policy and industry regulation, politicians can’t be trusted on grants.
Time to delete them from the grants approval process altogether.
I’ve got a question. In the (excellent) explanation above, it says:
“they only have to write to the Finance Minister in March the following year about it”
– what happens if the relevant Minister changes between directing a grant and March the following year? In particular, what if there is an election between directing the grant and March the following year, and there is a change of government? Is the new minister from the new government expected to notify the new Finance Minister?
What you are advocating is the situation in Sweden, where ministries set policy (which would include guidelines for grant programs) and agencies implement. A Swedish Government website has this statement:
A Cabinet Minister is explicitly prohibited from interfering with the day-to-day operation in an agency or the outcome in individual cases. The cardinal rule is that Ministers are not allowed to issue orders to agencies in their portfolio personally (with only a few exceptions) as the government agencies are subject to decisions made by the government, although the government cannot even directly overrule an agency in the handling of an individual case.
Jag gillar Sverige.
People (like me) don’t pay taxes so that those in Government can use that money to buy votes. Period. We pay taxes to support society, to get the services a rich, educated country like this demands. If you want to buy votes, use the donations from your very rich friends. Use your own money, but do not use tax payers. Because when you do you rob us of elective surgeries, of firies, ambos, coppers and teachers (to name but a few). When you do use taxes to buy votes you are no better than the crook who robs the bank. And when you are caught you need to be properly punished, not the SmoCo wet bus ticket slap, but you need to be publicly shamed out of politics because you’ve lost our trust. Bridget, do you have a conscience? Do you feel shamed? You should, you absolutely should.
As you note, the principle that ministers should set the policy and approve the rules and the bureaucracy apply the rules to individual cases is reflected in countless examples in Commonwealth legislation where a body is established to perform functions at arm’s length from ministerial control.
What is remarkable in this case is that Sport Australia is just such a body, but chose instead to let the Minister decide how it was to spend the money under its control. It is not clear from the ANAO report how the Sport Australia board was persuaded to agree to this.
The ANAO Report notes that in early 2018 “…Sport Australia recorded that adherence to the ASC Act required that it, not the Minister, approve the award of CSIG funding” (para 2.17). No-one was able to provide the ANAO with any legal advice that supported the contrary view, but later that year Sports Australia went ahead and approved the Guidelines.
The initial view recorded by Sports Australia is consistent with its Act. The ASC Act only provides for delegation of powers to its members, committees and staff (s54). Note also that a statutory Minister’s direction (were it given under s11) might not necessarily be effective to authorise the Minister to make the individual grant decisions: it is only a direction as to the “policies and practices” that the Sport Australia is to follow in performing its functions and exercising its powers. Arguably this might empower the Minister to set the guidelines for how the Sport Australia was to administer the grant program, but couldn’t require it, in effect, to delegate specific powers or functions to the Minister.
“… more in touch with communities.”?
Seriously, who takes politicians seriously? Who’d employ most of them on similar wages for similar work, in Reality World?