In order for governments to keep trust, it's really essential that they are seen to administer government programs fairly and impartially, without use of political favouritism.
Obstruction of evidence
5.1
The committee has faced significant obstruction in its attempts to gather evidence that would explain who was involved and responsible for grant decisions (including the extent of involvement of the Prime Minister and others), what were the reasons for decisions, and whether those decisions were made in accordance with the law.
5.2
Documents that go to these questions were sought on multiple occasions by the committee, and individual senators, through all available mechanisms within the Senate. This included via requests for information through committee hearings, Senate Estimates, Senate Orders for the Production of Documents, and questions on notice taken at hearings and also through direct written requests. Appendix 2 provides a summary of the key information requested and refused by government ministers and public officials, and the reasons provided, during the course of this inquiry.
5.3
Despite the numerous requests, including Orders for the Production of Documents agreed to by the Senate, the following key documents have been withheld:
a summary of the legal advice given to the board of Sport Australia relating to funding decisions under the CSIG program;
a copy of the full unredacted list of grant applicants as they relate to Sport Australia’s assessment scores and comments;
a copy of the terms of reference and full report (the ‘Gaetjens report’) of the Secretary of the Department of the Prime Minister and Cabinet (DPM&C), Mr Phillip Gaetjens, relating to the application of the Statement of Ministerial Standards to the former Minister for Sport (minister); and
a copy of the talking points memo prepared in the minister’s office for her meeting with the Prime Minister which discuss the number of targeted and marginal seats that could be funded through an expansion of the CSIG program budget.
Public interest immunity claims
5.4
Attempts to gain access to information were met with considerable ministerial intervention, with a series of public interest immunity claims made by the Minister for Sport and Youth and the Attorney-General.
5.5
Where the committee asked for documents detailing grant applications, including the colour-coded spreadsheets, it received public interest immunity claims citing privacy concerns. The Minister for Youth and Sport, in relation to two Orders for the Production of Documents, argued that disclosure would identify individuals and organisations (including the identity of grant applicants). This claim was also relied upon by Sport Australia in relation to subsequent requests for information about grant applicants.
5.6
Where the committee had requested copies of correspondence between the Prime Minister’s office, DPM&C, the minister’s office and Sport Australia, and when it specifically asked for the Gaetjens report and related advice, Cabinet confidentiality was cited as the basis for withholding the information. Senator the Hon Mathias Cormann, Minister for Finance and Leader of the Government in the Senate, and later DPM&C in its response to questions on notice, argued that disclosure would reveal information that was the subject of, or used to inform, Cabinet deliberations.
5.7
Finally, in relation to requests for information relating to the legal basis of the minister to have made decisions under the CSIG program (including legal advice obtained by Sport Australia), public interest immunity claims were made on several occasions on the basis of prejudice to legal proceedings and legal professional privilege. The reasons provided was that the disclosure would reveal the fact or content of legal advice or could prejudice pending legal proceedings. Even where the committee offered to receive evidence confidentially, it was not provided.
5.8
The committee has rejected all of the public interest immunity claims that were made to it on the basis that the claims did not sufficiently justify withholding the information requested.
5.9
In relation to legal advice obtained by Sport Australia, the committee took the further step of tabling an interim report on 1 December 2020. In relation to that report, the Senate agreed to require that the Chair of the ASC table its advice. Subsequently the Chair of the ASC wrote to the President of the Senate claiming public interest immunity on the basis of legal professional privilege.
Lack of documented records
5.10
The committee also encountered an apparent lack of other records that would have greatly assisted it with its inquiries. There were no documented records of the reasons for the minister's decisions to award grant funding to projects not recommended by the ASC board. There was also no documented evidence to explain the criteria or factors applied by the minister in her decision-making.
5.11
The committee was also unable to view documented records of a teleconference arranged by the Secretary, Department of Health, with the Chair of the ASC board and CEO of Sport Australia, on the evening of 5 April 2019, to discuss a colour-coded spreadsheet sighted for the first time just prior to giving evidence at a Senate Estimates hearing. The committee heard that the Secretary of the Department of Health had also destroyed notebooks that she had used to take notes of her meetings.
Heavily redacted documents
5.12
The committee received several heavily redacted documents which rendered the information in those documents of little value to the inquiry.
5.13
For example, the Minister for Sport and Youth provided the committee with a heavily redacted version of a colour-coded spreadsheet to the committee, however the extent of the redactions prevented the committee from scrutinising the rationale for the minister’s funding decisions.
5.14
The committee was also unable to fully scrutinise redacted correspondence between the minister’s office and the Prime Minister’s office. Copies of emails between the minister’s office and other ministerial offices were provided, however, due to the extent of the redactions it is not always clear which ministerial office sent or received the emails.
5.15
The committee was unable to determine whether the redactions went beyond what would be reasonable to protect an individual’s right to privacy balanced against the public interest in publishing the names of community organisation. It is not apparent that any CSIG applicants had requested that the identity of their organisations be kept private.
Evidence from the former minister
5.16
The committee notes that Senator the Hon Bridget McKenzie appeared at a public hearing on 12 February 2021, by order of the Senate. At the hearing Senator McKenzie told the committee that she was solely responsible for the decisions made under the CSIG program, not the Prime Minister or his office.
5.17
However, Senator McKenzie was unable to fully explain evidence showing significant interactions between her office and the Prime Minister’s office during the program. The reason for emails showing the Prime Minister was ‘yet to consider’ a list of proposed grant applicants and why the Prime Minister’s office had requested the Prime Minister ‘approve’ grants were not fully explained.
5.18
In addition, the role of the minister’s staff and staff in the Prime Minister’s office in changing the list of approved grants after the minister had signed off on the decision brief, remains unanswered. Senator McKenzie conceded that she did not know who had made changes to her decision brief but assumed it was someone within her office.
Information held by the Australian National Audit Office
5.19
The committee notes that it was unable to access several documents obtained for the purposes of the Australian National Audit Office (ANAO) audit of the CSIG program. This included emails and/or messages forming both direct and indirect representations from the Prime Minister’s office to Sport Australia.
5.20
The ANAO made a public interest immunity claim in relation to evidence that it had collected, on the grounds that disclosure would pose risks to the ANAO’s operations and result in the disclosure of information collected during its audits and subject to confidentiality provisions in its governing legislation.
5.21
The committee acknowledges the ANAO’s efforts to assist the committee with its inquiry within the boundaries of its independent audit role and legislative requirements. Despite its constraints dealing with evidence collected during an audit, the ANAO provided extensive and detailed descriptions of the information that it had relied upon for its audit conclusions, all of which have been invaluable to this inquiry.
A lack of accountability and transparency
5.22
The Parliament and community should be deeply concerned about the practice of obstructing evidence to a parliamentary committee. The committee was repeatedly frustrated in its attempt to bring clarity to the matters under investigation. Information considered crucial to the inquiry was subject to public interest immunity claims, obscured in heavily redacted documents, contested by witnesses, or simply not available to be presented as evidence.
5.23
At times, these constraints created the impression of an orchestrated effort to obstruct the inquiry's investigations and prevent close scrutiny of the minister's, and the Prime Minister's, involvement in determining the outcomes of the CSIG program. This committee considers the obstruction of evidence to be a serious transgression of parliamentary process. It actively undermines public scrutiny of government actions and policymaking, and bypasses long-established principles of good governance.
5.24
The committee is of the view that public interest immunity claims were used during the course of the inquiry to withhold more information than was necessary, obstructing the committee in its work. The committee considers that in the interests of transparency and accountability, ministers must act cooperatively with Senate committees, and wherever possible, provide information in alternative formats such as de-identified summaries or on a confidential basis.
5.25
The committee notes that the ASC board was initially willing to provide to the committee a confidential summary of legal advice that it had received regarding funding decisions under the CSIG program. Despite the committee’s efforts to facilitate a confidential viewing, the summary of the legal advice was never provided to this inquiry. A subsequent public interest immunity claim made by the Minister for Sport and Youth in relation to Sport Australia’s legal advice had the effect of muting any further discussion with the committee. This example is telling of the obstructive approach taken by the government throughout this inquiry.
5.26
In the committee’s view, more could have been done by the board to explain the reasons why the board believed that Sport Australia had acted within its legal authority. Their inability to do so represents a broader failure by Sport Australia to fulfil its responsibility, as a corporate Commonwealth entity, to provide maximum transparency of the governance of public programs to the Senate and its committees, and to be accountable to the people of Australia through the Parliament and its committee system.
Concluding remarks
5.27
The Australian sporting community has a straightforward expectation of government in regards to the distribution of taxpayer-funded sports grants. That the rules for playing are fair and transparent, and that those who make decisions will play by the rules. The CSIG program was presented as a competitive, merit-based program with community interests at heart, however in reality, it was used by government as a way to fund campaign announcements.
5.28
This inquiry has exposed an overt and organised practice by the government of inappropriately using Commonwealth grants for partisan political purposes, and a failure to act transparently and accountably in relation to the expenditure of public monies.
An exercise in pork barrelling
5.29
Overwhelming evidence shows that Senator McKenzie, and her office, in consultation with the Prime Minister’s office, used the CSIG program as a vehicle for gaining political advantage for Coalition candidates in the 2019 federal election by favouring applicants located in marginal and ‘targeted’ electorates. The evidence available to the committee indicates clearly that the Prime Minister’s office, and likely the Prime Minister, were aware of the use of electorate information to identify projects in marginal and targeted electorates well before the first grant recipient was announced.
5.30
The minister's office made substantive changes to the list of approved projects during the course of the CSIG program, resulting in a shift from projects located in safe electorates to those located in Coalition-held electorates considered marginal or 'target' electorates held by the Australian Labor Party or Independent candidates. Nine of the ten electorates that received the most funding were identified as marginal or targeted.
5.31
The merit-based assessment process outlined in the published CSIG program guidelines was overridden by a separate ‘parallel’ process, undertaken within the minister’s office, with input from the Prime Minister’s office. The grants selected by the minister were wholesale replacements of Sport Australia’s list of merit-based recommendations. For example, during Round 1, the majority (69 per cent) of the recommended applications were not approved by the minister. In addition, the minister’s departure from Sport Australia’s recommendations resulted in lower scoring applications receiving grants. In Round 3, for example, the ANAO noted that there had been significantly less meritorious grants awarded, with scores ranging from 39 to 95, as opposed to Sport Australia’s recommendations, which ranged from 68 to 98.
5.32
The process deviated from the merit-based assessment process by replacing Sport Australia's list of recommended projects with a significantly different alternative list based on unpublished criteria that did not reflect Sport Australia's recommendations. Some applicants received preferential treatment by being invited to amend or put in a late application to the program, while other applicants were not afforded the same opportunity. Additionally, no records were made to explain changes made to the approved list of projects.
5.33
It appears that the minister's staff, in consultation with the Prime Minister's office, made significant changes to a list of approved projects after the list had been approved by the minister, resulting in a net increase of nearly $3 million in grant funding. The changes constitute a serious overreach of the authority of ministerial staff and reflect the inadequacy of current measures to hold ministers and their staff to account.
5.34
Finally, Sport Australia, an independent statutory agency meant to be operating at arm’s length from the minister, failed to uphold the procedural integrity of the program. Program staff repeatedly raised risks with the minister’s office regarding the minister’s involvement in the approval process and attempted to push back, but concerns were ultimately dismissed by the Minister's office, while the board and executive of Sport Australia were seemingly missing in action.
Secrecy and obstruction
5.35
The inquiry was significantly obstructed by the reluctance of relevant ministers and public officials to disclose relevant information.
5.36
Fundamental questions about the minister’s legal authority to make grant decisions under the CSIG program remain unanswered. This casts doubt over the legality of $100 million in grants made under the CSIG program. Evidence before the committee confirms that, at a minimum, the minister acted without appropriate advice about her legal authority which has exposed the government to legal action.
5.37
In addition, it is apparent that the Prime Minister's office played an active role in determining the outcomes of the CSIG program, including the expectation that the minister would seek the Prime Minister's authority on approved projects. However, the extent of the involvement of his office in decision making remains unclear due to the government’s failure to produce all relevant records from that time.
Continuing decline in trust
5.38
At the heart of this inquiry lies the public expectation that our governments administer public funds in a fair, transparent and accountable manner.
5.39
The CSIG program represents the kind of behaviour that fails to meet public expectations of how public money should be spent, and deepens public cynicism about the integrity of government decision making and expenditure.
5.40
Sporting clubs and councils that spent considerable time and resources to apply for a grant under the CSIG program and who unfairly missed out as a result of the minister’s interventions are now in a precarious position. Some clubs have been unable to complete important community projects that promote inclusiveness and community participation. It remains to be seen whether the current legal challenge in relation to the CSIG program offers an opportunity for redress to those applicants who were treated unfairly.
5.41
The committee recognises the importance of federal grant programs in achieving government policy objectives, and the significant benefits they provide to Australians as a result of governments working across jurisdictions and in partnership with organisations and individuals to deliver projects that will benefit whole regions and communities.
5.42
Government must provide financial redress to those clubs and councils who unfairly missed out on a sports grant, and take steps to rebuild public trust in its decision-making, ensuring that all future grant programs are administered fairly and transparently.
The need to strengthen Australia’s integrity framework
5.43
Evidence heard during this inquiry sheds light on flaws in the current system designed to constrain political influences on the expenditure of public funds for community grant programs.
5.44
The administrative and governance failures evident in the CSIG program demonstrate how easily regulatory frameworks, guidelines and standards are able to be bypassed by executive government and public officials, with no consequences for any regulatory breaches that do occur.
5.45
However the controversy of the CSIG program is not an isolated case in the federal sphere. There is an increasing tendency for ministers to prioritise political considerations in the expenditure of public funds, and a tolerance amongst Commonwealth entities of practices that undermine the principles of transparency and accountability.
5.46
These practices reflect significant vulnerabilities in Australia's integrity framework, particularly in relation to community grant programs administered by Commonwealth corporate entities.
5.47
The failure to hold decision-makers to account gives rise to community anger and resentment about how governments conduct themselves in Australia. It also highlights the glaring disparity between how those in positions of authority are perceived to flout laws or rules with impunity, while ordinary citizens are required to strictly adhere to laws and rules or face severe penalties. This significantly undermines public trust in government and the political system.
5.48
There is an urgent need for an effective national integrity framework, starting with a national integrity commission that has the necessary powers to protect Australia's democratic institutions and values from illegal, unethical or corrupt practices.
5.49
The committee urges the government to implement a national integrity commission with powers to investigate and sanction the improper use of Commonwealth grant programs.
5.50
The Auditor-General’s fundamental role in Australia’s integrity landscape must also be safeguarded, and the necessary funding to undertake audits of public expenditure must be provided.
Order for the production of documents
5.51
There remain significant unanswered questions at the end of this inquiry due to the obstruction and lack of transparency by the government.
5.52
The Australian community deserves to know the full extent of what went wrong with the CSIG program and how it was able to be used for industrial-scale pork barrelling in the context of a federal election.
5.53
It is also fundamental to the operation of community grant programs that questions around the legality of the CSIG program and the role of the minister in its administration, are fully understood and subject to public scrutiny, so that where appropriate, redress and reforms can take place.
5.54
The committee considers that the requests for information made throughout this inquiry must be answered transparently and with respect for the processes of the Senate and its committee system.
5.55
The committee recommends the Senate adopt a resolution requiring the production of the following documents:
That the Senate orders that there be laid on the table by the Minister for Sport no later than 10.00am on 12 May 2021, the following documents:
the legal advice given to the board of Sport Australia relating to funding decisions under the CSIG program;
the full unredacted list of grant applicants as they relate to Sport Australia’s assessment scores and comments;
the full list of applications recommended for funding by Sport Australia, regardless of whether that recommendation was later changed;
the talking points memo prepared by staff within Senator McKenzie’s office for her meeting with the Prime Minister on 28 November 2018; and
any other relevant documents including attachments, spreadsheets and briefs.
That the Senate orders that there be laid on the table by the Minister representing the Prime Minister no later than 10.00am on 12 May 2021 the Gaetjens report and any documents used to inform the report.
Senator Anthony Chisholm
Chair