Claire Chandler (Tasmania, Liberal Party) Share this | Hansard source

I rise today to make a comment on the Public Governance, Performance and Accountability Amendment (Improved Grants Reporting) Bill 2021. This bill has some reasonable intentions around transparency of government expenditure, but it seems to have not taken account of some of the processes, rules, procedures and policies that this government has already put in place to ensure that we have transparency over those decisions. In making my contribution here today, I intend to provide some background as to what those existing frameworks look like and also highlight some of the issue with this bill, particularly regarding how it duplicates existing processes, confuses information and has the potential to create inconsistency when it comes to the manner in which government reports its grants.

The government is committed to transparency on government grants and government expenditure. Senator Gallagher's bill would significantly increase the duplication in existing reporting arrangements, creating, in effect, a fifth set of reporting rules that duplicates reporting that already operates under four other sets of rules. I will go into some background regarding that now. Currently, grants that are awarded by a minister, either contrary to official advice that it be rejected or in the minister's own electorate, are already disclosed to the finance minister. For corporate Commonwealth entities, this is required under the Public Governance, Performance and Accountability Rule, and for non-Commonwealth entities this is required under the Commonwealth Grants Rules and Guidelines. Currently, grant information is also disclosable in parliament under Senate orders of continuing effect Nos 16 and 23E. Order 23E covers most grants reported to the finance minister and order 16 covers all grants.

Transparency is achieved not only through periodic reporting to the parliament but also, directly and faster, through online reporting to the wider public. Indeed, this has already been happening at a federal government level for a number of years. In 2017, the government mandated the requirement to report all grants on the GrantConnect website, which is located at www.grants.gov.au. This site provides whole-of-government consolidated data on grant opportunities and grants awarded. Grants are uploaded regularly throughout the year to this site after grant agreements are signed. That's an important point that I will come to later. The GrantConnect website captures information on grant recipients, their location and the value of grant decisions. The website includes the guidelines for each program, allowing people to look up who is a decision-maker for the program and, thereby, identify which grants are decided by which minister.

This website shows not only grants previously awarded but also grant rounds currently open and grant rounds that will be opening in the near future, which enables community organisations to plan future ideas for grant applications. People can search by key terms for any grant they might be interested in, and they can also explore large datasets to find programs or decisions of greatest interest. GrantConnect can notify registered users on grant opportunities as they become available. This website really is the public interface through which Australians can access whatever information they need about the awarding of government grants and about any potential grants that might soon be up for consideration.

The bill that we're debating here today deals with one subset of grants specifically: those that are awarded on the basis of ministerial decisions. I know Senator Gallagher said that she had heard these comments before, but I'm going to repeat them here today: governments of all colours have considered it appropriate to use some ministers as decision-makers for some grant programs. Ministers often have greater opportunities than officials to consult extensively with their local communities, non-government organisations, industries and other stakeholders. They travel extensively around the country and hear frequently from constituents, including people who are referred by parliamentary colleagues from around the country. Therefore, ministers are often uniquely positioned as grant decision-makers, because they have a very broad understanding of community needs. This is a fundamental tenet of our democracy, because, fundamentally, what would be the point of having ministers in the first place if the bureaucracy always decided these things? Certainly, we on this side of the chamber would never attest that the bureaucracy always, 100 per cent of the time, knows best. The Commonwealth Grants Rules and Guidelines state that where ministers decide grants they must consider official advice. But they are not rubber stamps. Ministers are obliged to use their own judgement, so they may take a different view to officials, .but they are always required in the first instance to receive and consider the official advice. That's where the control point is in this process—that ministers, first and foremost, must consider the advice from the bureaucracy and then determine whether or not they are going to overrule that advice. So that's the background, generally speaking, on the administration of grants and the awarding of grants at a federal level.

I will now outline for the chamber the five key issues that we see with this bill. The first is that the bill has an inconsistent manner of treating different agencies as it relates to their grants. The bill proposes to introduce a new term of 'reportable grant', which covers most grants that are currently reported to the finance minister by ministers in respect of 98 non-corporate Commonwealth entities. However, Senator Gallagher's bill doesn't cover any of the grants that are administered by the 71 corporate Commonwealth entities. This seems a slightly odd oversight. The bill is oblivious to the fact that there are separate requirements in the PGPA regulations that cover those 71 entities, several of which also administer grants. This bill would therefore create a divergence in the current approach, which is a line between the treatment of grants administered by corporate and non-corporate government agencies. That alignment was cemented in regulations on 17 July last year, regulations that Senator Gallagher might have missed in drafting this private senator's bill that we are discussing, because this bill would take these requirements to a position of inconsistency.

This bill also places in the PGPA Act detail covering practices that have until now been in delegated legislation. It would require agency officials to depart from following a consolidated set of rules and guidelines that provide a single point of reference today in the Commonwealth rules and guidelines and would expecting them to follow scattering rules that are separated between primary and delegated law. This will inevitably increase the risk of inadvertent rule breaches by officials and make for a confused structure of laws governing our grants processes. Procedural information more appropriately belongs in regulation, and key principles belong in primary law. This bill cuts against longstanding practice for procedural requirements around grants that have allowed officials to follow a unified rule book.

The second issue with the bill as I see it is duplication. This bill would require ministers who approve grants to provide reports to the finance minister within 30 days of their approval. This requirement relates to three types of grants: those the department recommended against, those within the minister's own electorate and those that did not meet any of the relevant selection criteria. However, that third category, at least to my mind, is overlapped completely by the first. It will mean that everything reported in category 3 will also have to be reported under category 1. If a grant doesn't meet any of the relevant selection criteria, it therefore follows that the department would be recommending against awarding that grant. That grant would therefore be reportable under category 1, just as it's reportable now under both the Commonwealth Grants Rules and Guidelines and under existing Senate orders. This bill will make that same grant reportable yet another time for no obvious purpose.

The bill is also unclear about the point in time at which an application is reportable if it didn't meet the criteria for a particular grant program. It's been acceptable under governments of all colours for opportunities to be afforded for applicants to improve their grant proposals in some circumstances—for instance, where there are few applicants in a given region or sector of the community—and this bill unfortunately deals with those situations quite poorly. This bill suggests that an application that is initially found not to meet criteria, but the proponent later agrees to changes that would bring it within the relevant program criteria before the minister approves, would have to be reported as if it were outside guidelines. That seems to be a somewhat misleading outcome, when all that has effectively happened is that there have been negotiations between the department and the proponent to ensure that the grant in question operates within the criteria or guidelines. The bill looks only at what is in a grantee's initial application, not what is in a final grant agreement after that negotiation between proponents and officials. The bill therefore may lead to reputational harm for proponents who have ultimately come into accord with program requirements.

The third issue we see in this bill is the duplication of existing reporting requirements of the Commonwealth Grant Rules and Guidelines 2017 relevant to Senate standing orders. It duplicates Senate order 16, which I previously mentioned requires ministers to table grants approved between estimate periods three times a year, at least seven days before each estimates round. Grant details are tabled to facilitate Senate scrutiny. This reporting covers many more grants that would be reported under the bill that we're discussing today. This bill also duplicates the requirements of Senate order of continuing effect 23E. This order requires tabling of reports from other ministers to the finance minister about grants awarded contrary to official advice, including those grants that I previously mentioned awarded in a minister's own electorate contrary to official advice.

The fourth issue I will briefly go into is inaccurate reporting. In the pursuit of rapid reporting, this bill would result in inaccurate reporting. Ministers would have to report to the finance minister within 30 days, and then the finance minister would be required to table the reports in the parliament within five sitting days of receiving them. And I think this bill confuses a decision by a minister with the award of a grant. A grant isn't payable until a grant agreement is struck, which occurs after a minister's decision. Variations can occur during the negotiation of an agreement between an agency and an applicant, as I previously mentioned, and this is why the existing regular reporting on that GrantConnect website that I mentioned earlier is based on grant agreements, based on actual legal undertakings, as opposed to ministerial decisions on allocations, which are closer in nature to policy decisions. In some cases grant applicants drop out—for instance, because the minister doesn't award as much funding as they were originally seeking or because the applicant might be unwilling to meet all of the conditions of funding that the Commonwealth requires. This bill would create several harms to the public interest by requiring public reporting of intended grants at a point prior to the finalisation of a grant agreement. First, this may hinder agreement negotiations with applicants and reduce value for money where officials are seeking better outcomes for taxpayer expenditure, and, second, in the event that an agreement is not signed, this would result in the publishing of misleading data that would contradict other more accurate public information reported on GrantConnect and reportable to the Senate. For instance, amounts reported under this bill may be different from what is actually and ultimately paid. Indeed, the bill may require publishing amounts that in fact may never be paid.

Fifthly and finally, I want to address the issue of the lowering of standards that may inadvertently result from this bill. The Commonwealth Grant Rules and Guidelines currently require ministers to report to the finance minister about grants that occur in their own electorates as soon as practicable. This bill, by contrast, would seek to contradict this in primary law by requiring that this occur within 30 days. This creates real issues of interpretation and attention in how we interpret these guidelines. The current obligation is focused on drawing forward the obligation to the earliest possible point. That's why it says 'as soon as practicable'. Because this bill would redefine what is a reportable grant in primary law, it could override and therefore push that reporting time line back to the 30 days. All these reporting cycles inevitably depend on our public servants tracking decisions on behalf of their ministers and gathering up documents for each reporting cycle. If a new, conflicting standard is introduced around how soon they have to report, it's easy to see that officials might try to fold processes together, which would mean that reporting would ultimately happen later than it currently does.

As I said in my introductory remarks, this bill evidently has some reasonable intentions around transparency, but it is not taking into account the processes this government has already put in place to ensure transparent reporting of government grants.