During preparations for this year’s budget, the government found itself with a problem no one had dealt with since 2008. It was awash with cash.
Courtesy of commodities prices, extra tax revenue was rolling in: in the 2017 budget, revenue for 2017-18 was forecast to be $444 billion. In December, that was upgraded to nearly $449 billion. But in March, actual revenue was tracking $5 billion ahead of that forecast.
And because of strong jobs growth and Mathias Cormann’s discipline as Finance Minister, he and Scott Morrison had another bonus: spending was down. The 2017 budget forecast expenses at $464.3 billion. That increased a little in December but by March it was tracking $3 billion below estimates. Courtesy of good luck and good management, Cormann and Morrison had bundles of extra cash.
Much of that would be directed to the deficit. MYEFO had lowered the forecast 2017-18 deficit about $6 billion to $23.6 billion but they would cut it further to $18.2 billion, the lowest since the Howard years. That still left some money to play with. But there was a catch: it had to be spent before the end of the financial year, even if it wasn’t announced until budget night. Wouldn’t it be good if there was some high-profile, popular cause that the government could throw some money at — but preferably one run by solid, dependable people? Business people, perhaps?
Enter the hitherto-little known Great Barrier Reef Foundation, run by a board with no less than four people with connections to the Business Council, including the current chair and one of his predecessors.
The government has been very cagey about whose idea it was to sling a wad of cash at the GBRF. As part of the budget process, departments put forward spending proposals, and of course there are ongoing programs through which bodies come to the attention of bureaucrats and ministers’ offices. The GBRF had sought funding under a small reef management program in March, during which it had provided information about its activities and structure; this was later portrayed as the appropriate “due diligence” for handing over nearly half a billion dollars. But one way or another, someone, likely in Josh Frydenberg’s office, perhaps liaising with the Prime Minister’s Office, put them forward as a good target for funds.
But establishing a new grants program would take time. Criteria have to be developed; evaluation programs put in place, administration staff found, Requests For Tender called — and the money had to be disposed of by June 30. Luckily there was an existing vehicle through which the money could be channeled without the need for the rigmarole of a new program: the Reef Trust, set up by the Abbott government with the Queensland government to attract private investment to reef programs.
“The Reef Trust can receive and disburse funds from government and non-government sources, and broker partnerships and collaboration for the Reef,” says a blurb about the body — making it ideal for the government’s purposes, since it wanted to hand over the money without wasting time with RFTs. The GBRF would “partner” with the Trust to work with the private sector, instead of bureaucrats and scientists, using $440 million. Clearly such a large amount could not be spent quickly — it would take several years for such a sum to be spent, especially if the GBRF was going to seek private funding as well.
So the Prime Minister and Frydenberg met secretly with GBRF chair John Schubert on April 9 to tell him the GBRF would be receiving the money. But the money couldn’t be allocated over six years. It couldn’t even be allocated in 2018-19, despite being announced in the budget. It had to go out before June 30. That meant the partnership paperwork between the Reef Trust, in Frydenberg’s department, and the GBRF, had to be completed by late June at the latest. The GBRF only has a handful of full-time staff, so working though the agreement was going to take weeks. They managed it in the nick of time: the agreement was signed off on June 27. Phew. The entire sum was then paid to the GBRF within 24 hours. The books could be ruled off for the year.
“The Reef Trust operates with the highest levels of accountability and transparency,” the blurb from Frydenberg’s department tells us. Indeed.