I believe you've broken a fundamental compact that you have with the Australian people and with the Australian taxpayer …
1.1
Australians abhor the improper use of public funds for political advantage. They expect that all governments and public entities will act in a lawful, transparent and accountable manner, and that all citizens will be treated fairly and with respect.
1.2
Community sport infrastructure grant programs are a particularly sensitive area for governments, especially given the limited funding available to local clubs and organisations, and the heavy burden placed on local volunteers to manage and support community sports in Australia.
1.3
Perhaps nowhere has this been more obvious in recent years than in the public outcry over the evidence that Senator the Hon Bridget McKenzie, the former Minister for Sport (the minister), had intervened in the Community Sport Infrastructure Grant program (CSIG program) in order to gain political advantage for Coalition candidates and members in the 2019 federal election.
Background and context for this inquiry
1.4
The CSIG program was one of three new Commonwealth grant programs given to Sport Australia in 2018−19 to support Australians to get more active and to make sport as inclusive as possible. The objective of the CSIG program was 'to support local communities to participate, recreate, learn and develop together'.
Response to CSIG program
1.5
The CSIG program received an overwhelming response from the community. Sport Australia received 2056 applications for grants amounting to $397 million, far in excess of the $29.7 million in funding initially made available for the CSIG program. The Australian Government subsequently increased this budget and the CSIG program was ultimately delivered over three rounds of announcements, with 684 projects receiving a total of $100 million in grant funding (see Table 1.1 below).
Table 1.1: CSIG program funding announcements and decisions
|
|
|
|
|
|
|
|
|
|
|
1
|
2018−19 Budget
|
29.7
|
11 Dec 2018
|
224
|
28.7
|
|
2
|
December 2018 Mid-Year Economic and Fiscal Outlook (MYEFO)
|
30.3
|
4 Feb 2019
|
232
|
31.9
|
|
3
|
2019−20 Budget
|
42.5
|
4 Apr 2019
|
228
|
39.4
|
|
Totals
|
102.5
|
|
684
|
100.0
|
Source: ANAO analysis of the ASC and Department of Health records, Auditor-General Report, p. 16, Table 1.1
Public controversy
1.6
Public concerns about the award of grant funding under the CSIG program arose after the publication of an image showing the Liberal candidate for Mayo, Ms Georgina Downer, an unelected candidate for the upcoming federal election, presenting a 'mock' cheque featuring her image and Liberal Party branding, to the Yankalilla Bowling Club. The Shadow Attorney-General, the Hon Mark Dreyfus QC MP requested that the Auditor-General for Australia (the Auditor-General) investigate the circumstances surrounding this matter. Labor Senators also raised the matter at Senate Estimates on several occasions.
1.7
In his report presented to the Parliament on 15 January 2020, the Auditor-General found that the award of grant funding for the CSIG program was not informed by an appropriate assessment process and sound advice, and that the successful applications were not those that had been assessed as the most meritorious under published CSIG program guidelines. The Auditor-General cited serious concerns about the CSIG program's governance, including concerns about the minister’s legal authority to make grant decisions and evidence of a 'distribution bias' in the award of grant funding in advance of the 2019 federal election.
1.8
The governance matters raised in the Auditor-General's report attracted immediate and intense media scrutiny and public commentary. In response, the Prime Minister sought the advice of the Secretary of the Department of the Prime Minister and Cabinet, Mr Philip Gaetjens, on whether there had been 'any apparent breaches' in the Statement of Ministerial Standards in relation to the minister's administration of the CSIG program.
1.9
In preparing advice from the Prime Minister, Mr Gaetjens undertook a two week process which involved consideration of information provided by Sport Australia, Senator McKenzie and her staff in relation to her decision making. This included a spreadsheet dated 20 November 2018, recommendations assessed by Sport Australia and the minister’s final approvals. The scope of the considerations did not include the minister’s legal authority, decision-making during caretaker period, or the process of the minister’s decision-making.
1.10
Mr Gaetjens concluded that, whilst there were shortcomings in the administration of the CSIG program, 'Senator McKenzie did not act in breach of the Standards with respect to fairness'. Mr Gaetjens found only that the minister had 'breached the Standards by failing to declare her memberships of two organisations and that she had an actual conflict of interest when awarding funding to one of those organisations'.
Minister for Sport's resignation
1.11
The Prime Minister received Mr Gaetjens' advice on 1 February 2020. On 2 February 2020, the Prime Minister announced that Senator McKenzie had submitted her resignation from the ministry on the grounds of the conflict of interest issues highlighted in Mr Gaetjens’ report. The Prime Minister stated that he would not be releasing the advice received from Mr Gaetjens as the report was a Cabinet document and remains subject to the rules of Cabinet confidentiality.
1.12
During these events, the ABC reported that it had obtained documents relating to the CSIG program's assessment process, including emails sent by Sport Australia to the minister's office in March 2019, in which executives voiced concern about the decision making process. The documents included a spreadsheet, apparently prepared by the minister's office, indicating that 94 of the 223 successful projects in the first round of the CSIG program did not meet Sport Australia's 'threshold' score above which all applications were recommended to be funded. The ABC reported that, based on its analysis, 54 per cent of grants funded in Round 1 were awarded to key and marginal seats (defined by the ABC as having margins of less than 6 per cent). On 29 January 2020, the ABC published a list of applicants whose projects had scored highest in the CSIG program but whose applications were not successful.
Senate inquiry
1.13
In view of the seriousness of the matters raised in relation to the way in which the minister determined the award of grant funding, the Senate established the Select Committee on Administration of Sports Grants (the committee), on 5 February 2020, to inquire and report on the administration and award of funding under the CSIG program, for inquiry and report by 24 March 2020, with particular reference to:
(a)
program design and guidelines;
(b)
requirements placed on applicants for funding;
(c)
management and assessment processes;
(d)
adherence to published assessment processes and program criteria;
(e)
the role of the offices of the Minister, the Prime Minister and Deputy Prime Minister, and any external parties, in determining which grants would be awarded and who would announce the successful grants; and
(f)
any related programs or matters.
1.14
On 27 February 2020, the Senate granted an extension of time for reporting until 24 June 2020. On 10 June 2020, the Senate granted a further extension from 24 June to 8 December 2020. On 30 November 2020, the Senate granted a further extension from 8 December 2020 to the last sitting day of March 2021 (18 March 2021).
Conduct of the inquiry
1.15
The inquiry was advertised on the committee's website and the committee wrote to relevant organisations inviting submissions by 21 February 2020. The committee agreed to continue to receive submissions after this date.
1.16
The committee published a media release on 11 February 2020 calling for submissions to the inquiry. The committee published a second media release on 25 February 2020 advising that the date for submissions had been extended to 28 February 2020. The committee published a third media release on 4 March 2020 advising that the date for submissions had been extended to 1 May 2020.
1.17
The committee received a total of 53 public submissions, including one submission with the name withheld. A list of submissions received by the committee is available at Appendix 3 and copies of public submissions can be accessed on the committee's website.
1.18
The committee held a total of 12 public hearings as follows:
ten public hearings in Canberra on 13, 27 and 28 February 2020, 22 and 23 July 2020, 3 and 27 August 2020, 2 September 2020, 2 November 2020 and 12 February 2021;
one public hearing in Adelaide on 10 March 2020; and
one public hearing in Melbourne on 12 March 2020.
1.19
The conduct of the inquiry was impacted by the COVID-19 pandemic, which resulted in a number of public hearings being delayed over the course of 2020. The committee appreciates the contributions made by witnesses at the inquiry’s public hearings, and acknowledges the challenges of giving evidence remotely over the phone and by video.
1.20
A list of witnesses who provided evidence at the public hearings is available at Appendix 4.
Interim report
1.21
The committee published an interim report on 1 December 2020 to inform the Senate of a claim for public interest immunity received from Senator the Hon Richard Colbeck, Minister for Youth and Sport.
1.22
The report concluded that the claim for public interest immunity did not sufficiently explain the specific harm to the public interest that would result in disclosure. It recommended the Senate require the Chair of Sport Australia to produce the legal advice that it received on the issue of the legal authority of the minister and whether Sport Australia acted within its power under the CSIG program. The report also noted that the committee had provided the opportunity to receive the legal advice confidentially and in camera.
1.23
On 1 December 2020, the Senate adopted the report’s recommendation requiring Sport Australia to table its legal advice. On 3 December 2020, the Acting Chair of Sport Australia wrote to the President of the Senate making a claim of public interest immunity in relation to the legal advice on the basis of legal professional privilege. Sport Australia advised that the Federal Court is considering an application from an unsuccessful grant applicant.
Joint Committee of Public Accounts and Audit report
1.24
The Joint Public Accounts and Audit Committee reported on its inquiry into the Auditor-General’s performance audit of the CSIG program on 7 December 2020.
1.25
The report explored ‘thematic and systemic issues for grants administration’ and made several recommendations focused on improving compliance with grant policies and guidelines.
1.26
In relation to the CSIG program, the report recommended Sport Australia review its guidelines in relation to all current and future grants programs to clarify the authority, duty and role of the Minister for Sport and the Australian Sports Commission Board (the board) in relation to decision-making.
Structure of the report
1.27
This report is presented in five chapters:
Chapter 1 provides the rationale and context for the inquiry.
Chapter 2 describes how grant decisions were made and the impact that had on the community.
Chapter 3 examines shortcomings identified in the governance of the CSIG program, including outstanding questions regarding the minister’s legal authority to make grants.
Chapter 4 describes the extent of political interference in the CSIG program and the role of the minister and the minister’s office in the decision-making process, and the involvement of the Prime Minister and his office.
Chapter 5 describes the obstruction of evidence experienced by the committee in the course of this inquiry and makes concluding comments.
Notes on terminology and references
1.28
References in this report to Committee Hansard are to the official transcripts. Page numbers may vary between the proof and official transcripts.
1.29
The Australian Sports Commission (ASC) and Sport Australia were used interchangeably in evidence to this inquiry. In this report, except where quoted evidence differs:
'the ASC' refers to the legal entity known as the Australian Sports Commission , established under the Australian Sports Commission Act 1989 (ASC Act) and is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013;
'the ASC board' or 'board' refers to the Board of Commissioners appointed by the Minister for Sport under the ASC Act; and
'Sport Australia' refers to the entity and staff of the ASC responsible for administering the CSIG program. The ASC adopted the name 'Sport Australia' in 2018−19 to 'reflect is changing role in sport', and it is the name commonly used in evidence to this inquiry.
1.30
The report of the Australian National Audit Office (ANAO) is generally referred to as 'the Auditor-General's report', except where quoted evidence differs.
Acknowledgements
1.31
The committee thanks all of the individuals and organisations who submitted to the inquiry and appeared as witnesses.
1.32
The committee acknowledges the efforts of the Auditor-General for Australia, senior management and staff at the Australian Sports Commission (ASC/Sport Australia), and relevant government departments for their assistance during the course of the inquiry.