2.1
The CSIG program presented an opportunity for Australian sporting communities to access much needed grant funding to improve their facilities. This chapter focuses on how grant decisions were made and how those who missed out were affected. Later chapters will explore in more detail the governance issues and political interference in the CSIG program.
How decisions were made
The assessment process
2.2
The assessment process followed by Sport Australia involved four stages. Stages one and two, conducted by Sport Australia staff, involved checking eligibility and conducting a merit assessment. Stage three involved further assessment by a panel to produce a list of recommended applications, and stage four was endorsement by the board.
2.3
Entities eligible to apply for grants included sporting organisations, local government entities, remote education institutions (in defined circumstances) and not-for-profit organisations. There were three selection criteria and associated weightings: community participation (50 per cent); community need (25 per cent); and project design and delivery (25 per cent).
2.4
According to the Australian National Audit Office (ANAO), Sport Australia’s assessment process largely followed the published guidelines. It involved assessing each application for eligibility, then applying the selection criteria to determine an overall score out of 100 for ranking them. The ANAO told the committee that it had calculated that all CSIG program funding could have been allocated to applications that scored 74 or more out of 100.
Minister to approve grants
2.5
The committee heard that the CSIG program was originally designed on the basis that Sport Australia would be the decision-maker as a corporate Commonwealth entity.
2.6
During the development of the guidelines, however, the minister's office insisted to Sport Australia that the minister wished to have the final say in approving grants. This occurred across multiple drafts, despite drafting by Sport Australia that the decision maker be an official in the independent statutory agency.
2.7
The published CSIG guidelines stated that:
The Minister for Sport will provide final approval. In addition to the application and supporting material, other factors may be considered when deciding which projects to fund.
Funding decisions for Rounds 1, 2 and 3
2.8
For the first round of funding, Sport Australia initially submitted its draft assessment results to the minister, but did not subsequently provide the board-endorsed list to the minister. This was because the minister's office had informed Sport Australia which applications would be approved before the assessment panel (and the board) had considered the assessment results.
2.9
The committee heard that, for the second and third rounds, Sport Australia used the results of its assessment work, but 'the assessment panel and the Sport Australia board did not otherwise play a role in deciding which applications should be recommended'.
2.10
Amongst the projects that received funding for Round 3, there were five late applications and four amended applications. The applications were funded despite late applications and amended applications being 'ineligible under the guidelines'.
2.11
The minister's office explained to Sport Australia that the minister had identified ‘emerging issues since the completion of the assessment process’, and that the late and amended applications ‘were all constructed according to the guidelines and are considered priorities that have not been met’.
2.12
The ANAO noted that several of the late applications were incomplete, and had scored poorly as a result, reflecting the fact that ‘in some cases Sport Australia felt they didn't have a great deal to conduct an assessment of’.
2.13
In its report the ANAO noted that, unlike the previous two rounds, Sport Australia did not amend its recommended list at the minister’s request for the third round. Instead it provided a set of recommendations to the minister and the signed brief replaced Sport Australia's list with a 'significantly different' alternative list including projects that scored as low as 39 in the merit-based assessment process.
Distribution bias
2.14
The Auditor-General told the committee that the basis for the minister’s decisions was 'not clearly documented' and that there was ‘evidence of distribution bias in the award of grant funding', with a focus on projects in seats considered by the minister's office to be 'marginal' or 'targeted'.
2.15
According to the Auditor-General:
The award of funding reflected the approach, documented by the minister's office, of focusing on marginal electorates held by the coalition, as well as those electorates held by other parties or Independent members that were to be targeted by the coalition at the 2019 election.
2.16
The committee heard that the assessment undertaken by the minister was essentially a ‘parallel’ process, based on ‘unpublished criteria’, which did not reflect the recommendations of Sport Australia.
Decisions based on 'other factors'
2.17
Under the CSIG program guidelines, the minister could consider ‘other factors’ in order to address emerging issues and/or priorities that had not been met. These requirements were included during the drafting of the guidelines at the minister’s request.
2.18
Senator McKenzie submitted that ministerial discretion had been built into the CSIG program from the start, and that her decisions were informed by Sport Australia’s assessment.
2.19
According to Sport Australia, 'the minister had wide discretion under the program guidelines' and that was public knowledge at the time the program guidelines were published.
2.20
Ms Kate Palmer, the former CEO of Sport Australia told the committee:
Considering that Minister McKenzie was the ultimate approver, under the structure of the program, we anticipated that she would be considering undertaking a process. I would not call it a parallel process. It was expected that the minister would consider other factors, as were set out in the guidelines.
2.21
The Secretary of the Department of the Prime Minister and Cabinet, Mr Phillip Gaetjens, submitted that he ‘found no constraints in the guidelines limiting the other factors that the Minister may consider, so a wide discretion was available’.
2.22
The committee heard, however, that the failure to record what other factors the minister took into account in the minister's decision-making process represented a significant weakness in the minister's decision to award grant funding. The ANAO observed that:
If you actually go to the section around the merit criteria it says, 'Eligible applications will be assessed against three selection criteria: community participation, community need and project design and delivery.' It doesn't say 'and other criteria we have not yet told you about'.
Impact on local sporting communities
2.23
Revelations about the way in which the CSIG program was administered had a detrimental impact on local sporting clubs and councils that did not receive a grant, despite their applications scoring higher than many successful applications.
Reliance on volunteer labour
2.24
Local sporting clubs and councils told the committee that they had spent considerable time, labour and in some cases money on grant applications. Those responsible for preparing applications were mostly volunteers juggling their voluntary labour with paid jobs and other responsibilities.
2.25
The committee heard that the deadline for applications was very tight, and that the task of preparing the grant application and consulting with other stakeholders was time consuming.
2.26
Mr Nigel Dillon, Life Member and former Vice President of the Barmera Monash Football Club in South Australia, estimated that he had put at least 100 hours of his time into preparing his club's application, in addition to time spent consulting stakeholders.
2.27
Ms Bodye Darvill, President of Gippsland Ranges Roller Derby said the application process for the CSIG program was rigorous in terms of the amount of evidence, information, planning documents and project outlines required. She told the committee:
… on this grant specifically, in the lead-up to submitting it I would have been spending three or four hours a night every night for a few weeks getting all the documentation together, writing it up, sending it through to the rest of the committee for their feedback and thoughts and just circulating it around. So it was a very intense application to put in.
2.28
Local councils, with limited staff and resources were also impacted. Several witnesses described significant staff time required to pull together the application, which in some cases, equated to over 200 hours.
Planning and fundraising efforts
2.29
In some cases, preparing the grant application was part of a larger process of planning and fundraising.
2.30
For example, members of the Echunga Netball Club undertook significant fundraising efforts to support their grant application:
For a small Club, membership between 80−100 over the past 6 years this is a massive effort of which we are rightly proud. Learning that assistance from these Grants should have been applied to our application, especially with such a large contribution ourselves, has been frustrating.
2.31
In another instance, Mr Andy Carr, President, Beechworth Lawn Tennis Club in Victoria, estimated that developing his club's case for funding took more than three years to get to a point where the project was 'eligible and worthy of consideration'.
2.32
Some clubs spent significant sums of money from their own funds in preparing their applications, employing builders or other professionals to draft plans as part of the application process, while others relied on goodwill from members, supporters, sponsors and others who provided free professional assistance. The Olympia Football Club, for example, spent around $20,000 in architects and related fees.
Impact for state and local grants
2.33
For some clubs, the failure to secure grant funding in the CSIG program has had a 'knock-on effect' in terms of their ability to secure funding from state or local grant programs.
2.34
The Gippsland Ranges Roller Derby’s inability to secure a grant meant that it was unable to leverage state funds to complete the renovation of the club's old agricultural shed:
The flow on effect of this decision to award funds based on politics, rather than adherence to the assessment criteria and merit-based scoring, was that our club missed out on not just $45,000 from Sports Australia, but on another $50,000+ those funds would have allowed us to leverage from State Government funding.
2.35
The Kyneton District Soccer Club’s failure to secure grant funding in the CSIG program had also jeopardised the club's ability to secure funding from state grant programs.
2.36
The Olympia Football Club told the committee that it is now in a state of limbo because of the missed opportunity of a grant through the CSIG program:
We have all our permits, we are DA approved, we have a builder ready to go and we have 50 per cent of the money. The builder has said that the project will take 16 weeks, but we are only 50 per cent there with the money, so we're halfway, but we're stuck. We can't actually do anything else anymore. We've tried other avenues to get funding. The money that we missed out on in this grant would have been enough to finish the project. We've already spent over $800,000 of the club's money in developing a pitch on the ground and we can't afford to put any more money into our facility.
Poor communication with unsuccessful applicants
2.37
The committee heard overwhelming evidence of poor communication with applicants involved in the CSIG program.
2.38
Witnesses expressed concern that the assessment process for the CSIG program had been shrouded in secrecy and that they received no feedback apart from being told they were unsuccessful.
2.39
For example, Mr Neil Sharpe, Chief Executive Officer, South Adelaide Football Club, advised that he received no feedback on why the club was unsuccessful in the first round, and was not told about a second or third round.
2.40
Mr John Harry, Chief Executive Officer, City of Salisbury, told the committee it was important for applicants to be provided with reasons why their application was not successful, so that they could improve on future applications.
2.41
The Shire of Manning felt the process of notifying the unsuccessful application was ‘unacceptable’ as there was no ability to receive feedback:
… this was considered unusual by our organisation as the Federal Government had previously allowed for a feedback process for other grant programs which we often utilised to improve future grant applications.
2.42
Mr Nigel Dillon from the Barmera Monash Football Club also shared his experience:
We thought we had all the bases covered this time with regard to a wide range of sports across the community, from gender to the elderly to the youth to disadvantaged … To find out that you're not successful and you don't get any feedback and then you see it reported in the media that basically you've met all the merit criteria and then you miss out, that's quite devastating really.
Failure to explain ministerial decisions
2.43
Witnesses commented on a lack of transparency surrounding the minister's decisions, including consideration of 'emerging issues' and unmet priorities that were not explained in the program guidelines, and a lack of explanation as to how they were addressed in successful applications.
2.44
Witnesses noted that the reasons for decisions to award grants to some applicants over others was not made to clear to applicants. Mr Darren Lines, President, McLaren Football Club, observed that ‘it was a very secretive process’ and that clubs were awarded grants ‘for unknown reasons’.
2.45
The committee heard that community sports organisations would expect the minister would have final sign-off on a government-funded program involving taxpayers’ money, but that they expected the process to be administered by Sport Australia and undertaken fairly and transparently and in accordance with the published criteria.
2.46
A number of unsuccessful applicants voiced their concerns about the failure of the minister to reveal what other factors were taken into account in the decision-making process.
2.47
Dr James Meyer, President of the Goolwa District Pony Club told the committee:
… Sports Australia administered a merit based, rigorous assessment protocol of these grants, and I think it would be fair if we could be made aware of these other factors that have come into play.
2.48
The Gippsland Ranges Roller Derby submitted that the CSIG program guidelines did not indicate the level of discretionary intervention by the minister to the extent that it was exercised in the club’s case:
There remains no explanation of why funds were awarded to applicants with considerably lower 'gradings' on applications, and for ten times the amount requested by our club. If the criteria and merit-based scoring are not relevant to the awarding of grants, it begs the question of why applicants need to perform against them.
2.49
The Woodville-West Torrens Football Club noted that many Australians had lost faith in the Australian political system. Mr David Couzner, the club’s Football and League Director, told the committee that:
When you hear the Prime Minister and the sports minister at the time promoting that it's about engaging women in sports and creating an equal playing field for both genders, to then find out that money is not afforded to organisations that are trying to engage with their communities and create healthy environments is very disheartening from the football club's point of view.
2.50
Mr Nick Cater, past president of the North Shore Country Club and Residents Association said the club took the program guidelines on good faith and put their time and effort into following the process:
We believe we should be able to have a strong trust in a government process such as this – that they will do the right thing and have an open, transparent process. Again, we’re disappointed.
2.51
Mrs Sarah Black, General Manager at the Olympia Football Club, also expressed concern about the politicisation of the decision making process:
You would hope that when you put in an application it is based on the actual application, not on politics or seats or anything else that goes on, because otherwise you would say that's electorate funding, not a grant.
2.52
The former CEO of Sport Australia, Ms Kate Palmer, suggested that while Sport Australia respected the right of ministers to make their own decisions, unsuccessful applicants, whose projects were highly ranked by Sport Australia, were justified in feeling disappointed:
… that highlights the need for us to be much clearer in our communication around the guidelines and to be much more explicit about the process that is going to be followed so that they understand the risk of them not receiving a grant, whether their program has merit—and all of them had merit—or not.
2.53
In its report on the ANAO’s performance audit into the CSIG program, the Joint Public Accounts and Audit Committee (JPAAC) noted:
The ANAO’s identification of the inconsistent approach taken between rounds is concerning, particularly in relation to communication of decisions to grant applicants. This could potentially cause issues for grant applicants, such as being unable to begin work on projects until announcements were made. Administration of the CSIG would have also been further improved by more timely and consistent communication with grant applicants and MPs regarding the outcome of their applications.
Providing a safe and inclusive environment
2.54
The inquiry heard repeatedly that communities around Australia have a clear and ongoing need for funding to address inadequate and run-down facilities.
2.55
Community Sport Australia, which represents state sports federations, described the high demand for community grants to upgrade community sport facilities across Australia:
The response to the Community Sport Infrastructure grant program in itself is interesting, to say the least. An initial allocation of $29 million became $60 million and then $100 million. Out of 45,000 to 50,000 clubs nationally, 2,000 clubs put pen to paper. The 2,000 asked for some four times the end allocation, so the demand case is obvious.
2.56
Witnesses told the committee that the need for improved sporting facilities is a safety issue, particularly for women. The committee heard of a lack of change rooms, for example, the Woodville-West Torrens Football Club uses curtains hung across a room for girls to change behind its facility. The Greensborough Hockey Club said ‘most of our kids get changed in the car’ and that its women’s masters’ teams ‘get changed behind the shelter sheds’.
2.57
The Woorabinda Aboriginal Shire Council had applied for CSIG program funding for a community gymnasium as a way to encourage youth and women’s participation. The CEO, Mr Michael Hayward, outlined how the project would have supported broader social and health outcomes for women and children:
In our communities, as you may be aware, we do have some issues, and a facility like this would have helped go a long way towards not resolving but at least supporting programs that would engage women, and engaging youth to get physically active and have something to do after school.
2.58
The committee also heard that inadequate facilities was proving a barrier to participation and impacting membership. The Anglesea Golf Club sought a grant to upgrade its locker rooms to attract more members, especially female members. For the Kyneton District Soccer Club, poor playing surfaces have led to players having to travel to other sports grounds in winter months, and membership has declined significantly as a result.
The need for financial redress
2.59
Several unsuccessful applicants shared the view that the Australian Government should offer another round of grants, or fund all grant applications recommended by Sport Australia but denied funding for reasons other than merit.
2.60
The South Adelaide Football Club told the committee they would welcome another round of funding:
One thing: footy teaches you to battle the highs and the lows of any sort of season, so this is another part of that, but we'd love the opportunity to get some feedback and present again I suppose. It's as simple as that.
2.61
The City of Glen Eira considered that the decision not to fund their application, given it scored 83 out of 100 in the assessment process, was inconsistent with the published criteria and was seeking advice on any legal redress that may be available to it.
2.62
Following the release of the Auditor-General's report, the Prime Minister foreshadowed that the Government would consider further funding for local sport infrastructure projects in the context of the 2020−21 Budget, telling the House of Representatives on 5 February 2020 that he would work with the Treasurer in preparing for this year's budget 'to see how we can provide further support for this important infrastructure that brings communities together'. The 2020-21 Budget did not include sport infrastructure grant funding.
Committee view
2.63
The committee appreciates the importance of grant programs such as the CSIG program for sporting communities. It notes that volunteer members devote significant time and resources in preparing their applications in accordance with program guidelines, and acknowledges the frustration and anger felt by those whose projects were recommended for funding as part of the Sport Australia assessment process, only to be rejected by the minister in favour of lower-scoring applicants.
Failure in process
2.64
Sport Australia largely followed the published CSIG program guidelines in assessing grant applications, producing a list of applicants through a merit-based process to recommend to the minister. The committee finds it unacceptable that ultimately those recommendations were ignored in favour of applicants selected by the minister’s office.
2.65
However, there were clear failings in Sport Australia’s internal administration of the program. Sport Australia failed to provide the minister with a list of recommended applicants for Rounds 2 and 3. As a result, Sport Australia seemingly played no role in recommending grant applicants in those latter rounds, despite the merit-based assessment process outlined in the program guidelines because the Minister's office told Sport Australia which projects it would be awarding grants to.
2.66
In addition, Sport Australia’s communication with unsuccessful applicants was inadequate. Applicants received little or no explanation for the decisions not to fund their projects. The committee notes however that it would have been difficult for Sport Australia to provide reasons for the lack of funding for highly ranked projects given the ministerial intervention in the decision making. As a result grant outcomes were not transparent or supported by valid reasons. Given the clear oversubscription of the program, Sport Australia’s communication about the process, timing and outcomes was also clearly deficient.
2.67
The committee considers that the failures in the process highlight the need for significant improvements in communication with grant applicants and basic administrative decision-making by Sport Australia.
2.68
The committee recommends that Sport Australia significantly improve communication with applicants, both successful and unsuccessful, and ensure clear and timely reasons for decisions are provided.
Impact on sporting communities
2.69
The committee notes that unsuccessful applicants have received no information from the government about whether they will have an opportunity to resubmit their application or be given an opportunity to have their application reconsidered.
2.70
Some unsuccessful applicants indicated that they were seeking advice on any legal redress that may be available to them in relation to this program, particularly given the level of resources many had committed to preparing their applications.
2.71
The committee notes that a legal firm has initiated proceedings in the Federal Court in a test case seeking to overturn the ASC's decision to reject its client's application for a community sports grant and determine if the ASC acted unlawfully.
The need for funding
2.72
The committee notes that, despite the promises made by the Prime Minister, the 2020−21 Budget did not contain provision for additional funding to meritorious clubs that had missed out on grants in the CSIG program, nor to any similar program.
2.73
In order to provide redress to the unsuccessful applicants, the committee supports the suggestion put forward by several witnesses during this inquiry, that the Australian Government fund in full all grant applications that were assessed as meritorious and recommended by Sport Australia.
2.74
The committee recommends the Australian Government immediately fund in full all projects that were assessed as meritorious and recommended by Sport Australia, but dismissed in the final ministerial funding decisions.