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.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
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developed a far longer guide for grant administration, Implementing better practice grants administration, but that was withdrawn in 2017 after the Department of Finance complained that the guide both duplicated the CGGs and set too high a standard for departments by “suggesting better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.