By Chris Borthwick, Thinker-in-Residence, Our Community
COMMENT: The Federal Government has just given close on half a billion dollars in a grant to the Great Barrier Reef Foundation. To give you some idea of how much half a billion dollars is, it would, if converted to five-dollar bills and laid out side by side to shade vulnerable corals from the sun, cover 74 hectares, or about 30 acres in old money (which would make a stunning Youtube video, actually, and I rather hope the Foundation does it).
Unusually, this grant was made without a tender, without public advertisement, and without the Foundation even asking for it. The entire process, from freeing up the funds to awarding the grant, took 11 days. The government has released no details of its departmental advice, assuming there was any.
It is no reflection on the Foundation itself to observe that this is not grantmaking best practice. Indeed, the government is setting an absolutely appalling example to the field - and as an organisation that argues for best practice in grantmaking, we're obliged to call them out on it.
As is often the case, the gold standard for ethical and effective practice can be found in what the party that has just done a thing said about the same thing when they were in opposition. In the early 1990s Ros Kelly, a Labor government minister, was caught out deciding on the distribution of sports grants on a whiteboard in her office, which meant that there was no record of deliberations. The other side of politics thought this was iniquitous. When the Liberals were back in government the Labor side felt that what was sauce for the goose was sauce for the gander, and called them out on a Regional Partnership Package (RPP) that went through without documentation.
In both the Sports Rorts affair and the RPP business parliamentarians called on the National Audit Office as the final authority on how these affairs should be conducted. In the Kelly case, the Auditor-General found it impossible to "assess" Kelly's "decision-making procedures". He could, he said, find no documentary records. She was forced to resign.
The then Auditor-General said of his inquiry into the Liberal's Partnership Package
the concern [was] that decisions on projects were open to the interpretation that they had been made for political reasons and not on the merits of the project…
In this context, …
His general finding was that
Ministers are expected to discharge their responsibilities in accordance with wide considerations of public interest and without regard to considerations of a party political nature. Where they are approving the making of a grant, Ministers are approving the expenditure of public money. This role brings with it particular accountability obligations, including statutory requirements which govern the circumstances in which Ministers may provide such approvals. In particular, the financial framework requires that a grant not be approved by Ministers unless reasonable inquiries have been undertaken that demonstrate that the proposed expenditure will make efficient and effective use of public money.
Environment Minister Josh Frydenberg and Foreign Affairs Minister Julie Bishop (holding pictures) with politicians, Australia's Chief Scientist Dr Alan Finkel, Independent Expert Panel Chair Professor Ian Chubb, Reef 2050 Advisory Committee Chair Penelope Wensley and Great Barrier Reef Marine Park Authority Chair and CEO Dr Russell Reichelt at the announcement of the massive grant. Picture: Great Barrier Reef Foundation website
His recommendation was that
In the interests of transparency and accountability, ANAO has proposed that consideration be given to changes to the existing financial framework governing the expenditure of public money so as to require approvers of spending proposals to record the basis for their decision where this is not apparent from the existing documentation.
The current Auditor-General has expressed an interest in the Reef Foundation transaction, and I fully expect him to concur with the views of his predecessors about good practice in this area.
Half a billion dollars is, of course, less than a tenth of one percent of the federal budget. But as an American politician once said, "Half a billion here, half a billion there, and before you know it you're talking about real money."
Both sides of politics have been known to deviate from strict accountability on grants matters. Politicians cannot, apparently, be relied upon to see and follow the bleeding obvious, and a systemic solution is needed. The Auditor-General's rules on what constitutes an acceptable standard of public administration should be enshrined in legislation as soon as possible.
Cover image attribution: Workfortravel/WikiCommons
Social impact bonds are a way of getting private investors to fund for-purpose programs, with their ethically-minded investing repaid if sought-after outcomes are achieved.
Federal agencies have made big strides in reducing decision times for grant applications, as grantmakers show a promising downward trend, SmartyGrants stats show.
"It's time to clear the air and be honest about how much time, energy, and resources these systems are sapping from non-profit organisations - and how simpler, more efficient systems would achieve all the same information objectives and dramatically increase their utility."
The Australian Institute of Grants Management is keen to help you get the most out of your grants program. That's why we've developed a Grants Health Check.