Written by George Williams, deputy vice-chancellor and professor of law at the University of NSW, Director at the Centre for Public Integrity. Originally published in the Australian 9 Nov 2021
NSW Premier Dominic Perrottet made a name for himself as a politician willing to champion big reforms. He has called for NSW to drop stamp duty in favour of an annual land tax, a rewrite of the Federation, and an overhaul of the GST carve up. He has now taken up another fight - that of rebuilding public trust in how governments grant money to community programs.
Perrottet has distanced himself from former premier Gladys Berejiklian's remarkable and brazen defence of pork-barrelling. She said it would be no "surprise to anybody that we throw money at seats to keep them" and recognised that all governments misuse public money in this way "from time to time". She justified it as "not illegal", despite this being the case only because parliament has failed to outlaw the practice.
By contrast, Perrottet has made clear his expectation that taxpayer funds are distributed fairly and with integrity. He has initiated a review to ensure that NSW grants "achieve value for public money, are robust in their planning and design, and adopt key principles of transparency, accountability, and probity".
It is fair to say that many, if not most, government grant programs across Australia fail to meet this standard.
We are long past the point of asking whether Australian governments have a problem with pork-barrelling. The practice is well out of hand, as documented by a legion of state and federal examples involving the misuse of billions of dollars of taxpayers' money. A common problem is what occurs at the endpoint of the grant process.
Governments set up systems whereby community organisations such as sporting clubs submit lengthy documents demonstrating why they deserve public funding. The club must show why it is eligible to receive the grant and how it meets the funding criteria. A government department or agency then assesses each bid to determine which are the most meritorious based on the criteria and benefits to the community. This then forms a recommendation to a minister as to what should be funded.
Too often, ministers can ignore everything that has gone before. They can favour projects that have failed to put in a competitive bid, or even any bid at all, as well as projects lacking any chance of delivering a positive outcome for the community despite their enormous cost.
A minister can also apply their own, undisclosed, criteria. They might, for example, approve a grant based on whether it will deliver votes in marginal seats or return a favour to a political donor. The result is a form of corruption whereby ministers allocate public money to unworthy projects to advance their personal and political interests. Ministers are usually adept at hiding this. They may avoid keeping a record of their decision-making, instead relying on oral conversations or even whiteboards that can be erased. They also cloak outcomes with a narrative about community benefit that may have nothing to do with the real basis of the decision.
It may only be where a minister makes a mistake, such as by keeping a paper record or spreadsheet, or through the careful forensic work of auditors-general that the misuse of taxpayers' money comes to light. The findings by numerous government auditors make for disturbing reading. At the federal level, the Australian National Audit Office regularly examines the administration of commonwealth grants.
Since 2019, it has scrutinised federal grant programs distributing more than $5.5bn of public funds. Every one of them was found to have one or more flaws.
Fortunately, despite the magnitude of the problem, the maladministration of government grants is not difficult to fix. Reforms have been identified over many years by parliamentary inquiries, integrity bodies and experts. The issue is not an absence of solutions, but a lack of political will to implement them.
The starting point is to move beyond guidelines and codes of conduct that appear to prevent pork-barrelling but in practice are not enforced. Unsurprisingly, these documents can carry little weight until a political scandal becomes so damaging that a ministerial resignation is required. They demonstrate why self-enforcement by politicians is ineffective.
Instead, parliaments must enact enforceable standards. Legislation should set out the criteria and process by which grant money will be allocated. It should also provide for greater transparency over grant processes by mandating regular reporting to parliament. Ministers should also tell parliament when they approve a grant that has been found to be ineligible or unworthy of funding.
The rules must also come with penalties that make pork-barrelling illegal. A minister who allocates public money by prioritising their personal interests over those of the community should commit an offence. Together, these changes would bring about a seismic shift in how ministers allocate grant funding. This is what Perrottet should aim for if he is to turn his words into action.
