The stink from the Morrison government goes higher than the plumes of smoke it chooses to ignore.
The rorting of public funds engaged in by then-minister for sports (now Minister for Agriculture) Bridget McKenzie is breathtaking in its brazenness. The political fraud has been raked over already, but there’s also a nugget of legal kryptonite in the Australian National Audit Office’s (ANAO) report that exposed the scandal.
The money tree was the Community Sport Infrastructure Grant Program (CSIG), set up in late 2018 to support public access to sporting facilities and encourage participation in sport. Over 2,000 applications were received.
Three rounds of grants were made between December 2018 and April 2019, handing out $100 million to 684 recipients ranging from the Sydney Swans to the Yankalilla Bowling Club.
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The CSIG was to be administered by Sport Australia (technically the Australian Sports Commission). Crucially, Sport Australia is a corporation, established under its own legislation. It is an independent legal entity, not a government department or agency. Although it is owned and ultimately controlled by the federal government, its powers are exercised by its board and executive just like a regular company. Their duties are owed to Sport Australia, not to its political masters.
What this means is that, legally, the decisions about who should get the CSIG funding were in the hands of, and required to be made by, Sport Australia. It was Sport Australia’s money to give out. Sport Australia knew this, as it formally recorded the fact in June 2018.
However, even before the CSIG had been established, the sports minister had made it clear that she intended to be the decision maker, personally.
The Department of Health had advised that legal advice would be needed to clarify whether this was possible. That advice was never sought or obtained.
In August 2018 the CSIG guidelines were made public, and they stated that the minister would be making the decisions “informed by recommendations” from Sport Australia’s assessment panel (in fact, she ignored the recommendations).
As ANAO noted, “throughout the granting process all parties acted as if the minister was able to be the approver”.
So here’s the problem, which ANAO identified clearly in its report: the minister, Senator McKenzie, is not Sport Australia. Under the ASC Act, she has a power to give written directions to Sport Australia, including with respect to the exercise of its powers, and Sport Australia must then comply.
Arguably (and this is what the Health Department was saying needed legal advice), a direction could have been made to the effect that the minister would be making the final decisions under the CSIG program.
No direction was made. The ANAO report sums up what this means: “There was no legal authority evident to the ANAO under which the minister was able to be the approver of CSIG program grants to be paid from the money of Sport Australia.”
The “evident” part is just politeness. There was no legal authority at all.
The chain of events, therefore, is this:
- The federal government gave $100 million to Sport Australia to spend by way of making grants of funding under the CSIG.
- The minister usurped Sport Australia’s legal function, and Sport Australia allowed her to do so, although it knew there was a legal hole.
- As Sport Australia allowed the minister to make the grant decisions (for which she had no legal authority), and then just handed out the money as she directed, its actions had no legal authority either.
Fact is, not only was the $100 million pork barrelled into marginal electorates and utterly rorted from the perspective of ministerial responsibility, but McKenzie had no legal power to do it at all.
Consequences? In a world of actual consequences, apart from McKenzie being sacked, a few could be anticipated.
One is potential personal liability for the graft. Under the Public Governance, Performance and Accountability Act, if a Minister causes a loss of Commonwealth money by their own “misconduct”, then they are liable to reimburse the Commonwealth for so much of the loss as is “just and equitable” to attribute to them.
As to whether McKenzie’s actions constituted misconduct, that’d be for the courts — but it’s hard to see it any other way. She acted outside the law and everyone involved knew it.
Which also raises the prospect of a criminal prosecution. The ancient common law crime of misconduct in public office still exists in this country and there’s no reason why it should not catch a Commonwealth minister who takes public funds without authority and spends them for political (and therefore also personal) gain.
Then there are the rights of the poor sods in hundreds of community sporting organisations who followed the rules of the CSIG game, diligently prepared their grant applications and missed out only because the game had been fixed from the start.
As the advertised terms of the program were a farce and there was never any intention of their being applied, there is potential for civil claims to be brought by unsuccessful applicants who were, in short, dudded.
Class action against Sport Australia and/or its board? Why the hell not.
Finally, if I were one of those lucky pony clubs who did get their hands on some of the $100 million, I’d be seeking some urgent legal advice on whether there’s a risk of it being clawed back. The money was spent by a person who had no legal right to spend it. There’s a whole minefield of complex law about what happens in a situation like that, and it’s not as simple as finders keepers.
Of course, we don’t currently live in a world of actual consequences. This isn’t a government with even the faintest interest in propriety or the rule of law.