Matters raised in
evidence about the
$444 million Foundation Partnership
sets out the issues raised in evidence about the $444 million Foundation
that such a large increase in funding for the Reef should have
been administered by a public agency, to ensure proper oversight, transparency,
accountability and value for money;
the serious challenges and risks for the Foundation in delivering
the agreement given its size and unpreparedness, particularly in upscaling its
operations, while keeping down administration costs, and maintaining
transparency in its awarding of funding;
the potential for unnecessary duplication of funding,
administration costs and governance frameworks in the Reef sector;
the need to manage conflicts of interest effectively, both within
the governance of the Foundation and more broadly in the Reef-related sector;
Foundation's investment of Commonwealth funds should avoid industries that
contribute to climate change or other causes of damage to the Reef; and
shortcomings of Commonwealth investment concentrated on Reef repair and
rehabilitation, rather than on addressing underlying causes of environmental
damage to the Reef, particularly climate change.
Choice of an organisation
outside of government
was interested in why a single organisation outside of government was chosen to
administer $444 million in Commonwealth funds, instead of this investment being
managed by experienced and expert Commonwealth agencies. On the choice of a
beneficiary outside Government for such a substantial grant, the former Prime
Minister, the Hon Mr Malcolm Turnbull, stated that it was due to the resolve of the
Treasurer and Minister for Finance to fund a Reef proposal, 'so long as it was
expensed in 2017/18', which:
reason why a partner outside the Commonwealth Government sector was
sought; it also brought with it the possibility of leveraging the
Commonwealth's contribution with private sector contributions.
allowed the Government to book the grant expenditure in one year, 2017/18,
notwithstanding that the investment of the funds in the various reef projects
by the GBRF would take place over a period of six years.
The choice of
using a non-government organisation to deliver such a substantial public
investment was criticised by some stakeholders. For example, Mr Matt Rose,
Economist with the Australian Conservation Foundation (ACF), told the committee
that funding for Reef activities would be delivered to on-ground projects more
quickly through established Commonwealth bodies:
[the Foundation] have to build their expertise and their scale very quickly,
whereas if the money was given directly to government agencies or dispensed
through the environment department grant process then that money would hit the
ground quicker into Great Barrier Reef science, which is extremely important.
Slattery, a Campaigner for the ACF, expanded on this argument and stated:
...a further comparison could be
drawn with the Great Barrier Reef Marine Park Authority [(GBRMPA)], whose
operating revenue in 2016–17 was about $61.8 million. If [the $444
million] funding package is spread over the six years that the foundation have
suggested it will be, that would be an operating revenue of about $74 million a
year. The point we would make is that there are existing Commonwealth agencies
that are already delivering rehabilitation, research, reef restoration
projects, and doing so very successfully, so it is concerning to us why that
money would be redirected to a private foundation that does not have the
comparable levels of experience and delivery of programs at this scale.
It was also
noted that Commonwealth agencies are subject to greater oversight than private
organisations. For example, Ms Anna Maria Arabia, Chief Executive, Australian
Academy of Science, suggested that:
where a government department has been able to administer that, you can ensure
transparency, accountability and all of those features I outlined earlier. I would like to think and believe
that the Great Barrier Reef Foundation would be able to incorporate all those
principles and would be working with government. Time will tell.
Other submitters expressed disappointment that the $444 million of
expenditure in the Reef was not given to GBRMPA. They noted its good track
record of disbursing funding, program delivery, consultation through the sector
and that it had sufficient staffing levels to drive positive outcomes for the
Reef. For example, the Australian Coral Reef Society Inc. (ACRS) suggested it:
...would have preferred that such a large amount of taxpayer
funding for such an important block of work was delivered through a government
agency with reef expertise, to coordinate decisions on allocation of money.
This organisation (for example, GBRMPA) could have consulted with other
government, academic and research organisations to determine the most effective
ways to use the funds.
submission made by the Science Party expressed a hope that the Foundation would
work with GBRMPA to identify efficient and effective measures to assist the
Reef. It commented that:
simply not acceptable to give such a large amount (or any amount) of public
money in such an unprecedented manner, to an organisation that has neither
planned nor applied for it.
absurdity of the grant is heightened by the fact that the Great Barrier Reef
Marine Park Authority (GBRMPA; the agency established by the government to
manage and advise on the reef) has an annual budget in the tens of millions,
considerably greater than that of the GBRF, but well below the grant amount.
Dr Russell Reichelt, the Chairman of GBRMPA at the time he gave
evidence, told the committee that governments had the prerogative to set budget
allocations, and that GBRMPA was supportive of the Foundation Partnership:
The budget process is just a matter for the government.
Agencies like ours are advised after their processes are finished...Don't forget
that the scope of the work on the $443 million is in areas such as R and D and
catchment management, which are not typically things that we would get funding
for anyway...We've been well looked after in terms of our base funding, and
then these funds—however they're administered; through whatever partnership—for
us is good news for the reef.
CSIRO did not make substantive comment on the Government's choice of the
Foundation Partnership to disburse funds for Reef-related research and
activities. However, Dr Larry Marshall, Chief Executive Officer of CSIRO,
CSIRO is a delivery organisation, and so are AIMS and GBRMPA.
We see the foundation more as management of funding...and leveraging other
organisations to actually deliver programs.
asked the Australian Institute of Marine Science (AIMS) directly if it would be
capable of administering such a substantial Commonwealth investment in the
Reef. Dr Paul Hardisty, the Chief Executive Officer of AIMS, told the
you exactly what I would have said [were this offered]. I would have said, 'We
are probably not the right place to put the whole $443 million because there
are a lot of aspects that are operational and we are a research agency.' A lot
of what's being funded in the other components isn't research. Are we of a
scale and do we have the experience and capability to manage, for instance,
$100 million for reef restoration and adaptation? Absolutely, we are and we do.
It was also
noted in evidence that the Commonwealth has significantly depleted funding for
the department. Mr Lyndon Schneiders, National Director of The Wilderness
Society, stated that the $444 million for the Partnership was 'extraordinary in
the context of the gutting and aggressive cuts that have been made by this
government to their own environment department'.
Mr Matt Rose, an economist with the ACF, argued that the funds for the
Partnership could be disbursed by the department itself:
think the government needs to give a private organisation with links to some of
Australia's biggest companies money to build capacity when it's ripped money
out of the environment department. Give $45 million to the environment
department to build back some of that capacity and let them do reef grants as
well. It's too much money to give a tiny foundation like this, in our opinion.
Potential loss of the
Reef's World Heritage status
put forward for the Commonwealth's establishment of the Partnership, was that
it had partially been motivated by the short-term need to meet spending
commitments in the Reef 2050 Plan Investment Framework. This commitment,
endorsed by UNESCO, was to spend a total of $716 million on measures
protecting the Reef between 2015 and 2020.
received by the committee argued there has been a serious shortfall in the
Government's delivery of Reef-related investment, which meant there is a real
risk that the World Heritage Listing Committee of UNESCO could potentially
de-list the Reef as a World Heritage Area.
Mr Rose, ACF,
suggested that a reclassification of the Reef's UNESCO status could be
it's a terrible look for the government with this iconic marine park that
they've neglected to look after. The World Heritage Committee is quite a
powerful committee in terms of the publicity it can generate in instructing or
letting people know that it has been listed as in danger. There are
ramifications for the country with that listing, as well, in terms of tourism
and our role as a player in the international diplomacy. It's a very big deal.
So the government does have that imperative to try and spend the money and show
that it's trying to do something about the reef.
Rose also provided the committee with a summary of this shortfall:
federal government promised that it would spend $716 million between 2015 and
2020 on their place in the Reef 2050 plan. If we take the Great Barrier Reef
Foundation money as it's been budgeted, which is in last year's budget, and
say, 'Well, that's spent,' the government pretty much meets that commitment to
the World Heritage Committee. There's a small shortfall of $34 million.
department responded to this assertion by noting that ACF estimates of a
shortfall in Commonwealth expenditure on Reef-based activities were not based
on the full range of Commonwealth measures being undertaken. These included:
...other Departmental programs that support Reef 2050 Plan
delivery, such as the National Environmental Science Program, as well as
funding to the Great Barrier Reef Marine Park Authority, the Australian
Institute of Marine Science, the Australian Maritime Safety Authority and other
Australian Government agencies contributing to delivery of Reef 2050 Plan
However, the committee notes that the report of the
Auditor-General stated that the department had raised this matter with the
Commonwealth as a serious concern, stating in its timeline that on 16 June
Government advised by the [department] of the need to
'escalate the response to the declining health of the reef' to avoid an
'in-danger' listing by the World Heritage Committee.
Partnership delivery and administration
The committee explored some potential areas of concern that were raised
in evidence regarding the Foundation's capacity to manage such an unprecedented
level of Commonwealth funding. This went to several areas, including: risks
from a rapid upscaling of the Foundation's budget and workload; administration
costs; avoiding unnecessary duplication and complexity in the Reef sector
managing conflicts of interest; and ensuring transparency in funding
Risks of upscaling and program
As outlined in the previous chapter, the departmental evaluation of
potential risks for the $444 million grant suggested that the Foundation would
face challenges to upscale its work, develop its 'delivery capacity' and in
addressing a lack of expertise in crucial component areas of the Partnership.
Some evidence considered over the course of this inquiry also noted the
significant challenges the Foundation faces, particularly in increasing its
capacity and administration of such a massive growth in its budget.
For example, 350.org Australia submitted:
The organisational challenges associated with this kind of
rapid increase in revenue are vast. It will take time and expose the Foundation
to substantial execution risk. It is important to remember that the primary
delivery mechanism for the Reef 2050 Plan, the Foundation, currently has
only six full-time and five part-time employees. Allowing a single
organisation, that has primarily functioned as a grantmaking institution to
third party beneficiaries, to essentially hold the GBR recovery program in its
palm, is a huge risk both for the reef and for the $444,000,000 of public
The ACF commented that, as well as the significant increase in budget,
the Foundation would also have to manage to transition from being a grant
making organisation concentrated on research, to disbursing funding for
the Foundation has primarily functioned as a grant making institution issuing
research funding to third party beneficiaries. This is the principal way in
which the Foundation has delivered programs and activities related [to] Reef
restoration and protection. It remains unclear whether a pipeline of viable
research and other projects exists at the scale required to match the
Foundation's increase in funding capacity. A shortage of viable projects ready
and able receive funding may restrict the Foundation's ability to deliver Reef
2050 Plan outcomes through its existing operating model.
While noting that the Foundation has a good record of fundraising and
corporate engagement, the ACRS commented on the limitations of its staffing
arrangements, noting that:
...it does not have the depth of full time staff fully occupied
with reef issues that an organisation like the GBRMPA has. A funding allocation
of this magnitude will require significant expansion of the GBRF team to
responsibly manage the expenditure and ensure the directed outcomes for the GBR
have the best chance of success. Appropriate resourcing for administration will
be important, as will selection of appropriate staff to fill these and project
Mr Stephen Oxley, a First Assistant Secretary at the department,
recognised that 'there were and would be risks or challenges for the Foundation
in stepping up' to the scale of activity associated with the $444 million
Partnership. However, he assured the committee that its governance arrangements
and 'the quality of the people who sit on the foundation board' meant that,
'while the scale of the investment was beyond what the foundation was managing
now, it would be able to step up'. Mr Oxley added:
It's also important to remember that it is not just the
foundation that is going to be delivering this. It is going to be partnering
with organisations throughout Queensland, primarily, in the delivery of these
funds. So we expect that it will be doing partnership agreements with the
regional natural resource management bodies. We expect that there will be skin
in the game, so to speak, for the Australian Institute of Marine Science, because
the foundation isn't going to become overnight a marine science delivery
Dr Marshall, CSIRO, confirmed that the Foundation would also be assisted
in meeting its new responsibilities by experts seconded from research
organisations and universities. This includes Dr Christian Roth, a
CSIRO Senior Principal Research Scientist assigned to assist the Foundation
with the design and preparation of the program from July to December 2018.
The committee notes that the Foundation's Resourcing Plan provides an
indication of the growth in staffing levels to 1 July 2019.
4.1–Great Barrier Reef Foundation staffing levels
Source: Great Barrier Reef Foundation, Resourcing Plan,
The plan goes on to state that the Foundation has:
...employed flexible short-term approaches to scaling up its
personnel such as seconding experts from other organisations and engaging with
consultants. This offers value for money in the first six months of the Reef
Trust Partnership when there is an immediate and heightened need for project
design and subject matter experts. It is anticipated that the number of
consultants will reduce from 1 January 2019 when longer term staffing
arrangements are fulfilled.
It is anticipated that subcontracting and outsourcing will be
amongst the methods used to fulfil our resourcing needs. The Agreement clearly
states the requirements for all contracts using funds from the Reef Trust
Partnership. The GBRF will ensure all contracts comply with the Agreement and
the GBRF's Procurement Policy.
This information concurs with the concerns that were raised in evidence
received by this committee, as well as similar evidence considered by the ANAO,
that the Foundation would need to lift its staffing numbers significantly to
scale up its operations, including significant expenditure on external
and capacity in meeting fundraising targets
The Government stated that a central reason for the selection of the
Foundation for a Partnership outside government was its fundraising track
record, particularly the potential it has to leverage private and philanthropic
donations for Reef-based research and programs. This was also cited in the
department's Reef Trust–Great Barrier Reef Foundation Partnership Proposal
The Foundation has demonstrated its capacity to attract
co-investment (refer Proposal Section 6.4). Fundraising is core business for
the Foundation and it has a good track record of raising funds and partnering
with the national and international non-government sector. The Proposal
includes evidence of fundraising for reef protection projects, including $10.45
million from BHP Billiton for the Raine Island Recovery Project and for eReefs.
For the Australian Government's funding of $12.5 million for the Foundation's
Resilient Reefs portfolio of projects, the Foundation raised $25 million in
additional cash and in-kind contributions. In 2009, the Foundation developed
and published a $100 million project portfolio 'Resilient Reefs Successfully
Adapting to Climate Change', which was
co-developed with input from more than 75 people representing
15 organisations (refer Proposal Section 6.5 and Appendix 3). The
Foundation's proposal also notes it will launch and implement a
$100 million fund raising campaign which was approved by the Foundation's
Board in 2018.
However, some evidence examined by the committee questioned how the
Commonwealth could make the Foundation accountable for its fundraising efforts
in the non-government sector, and also pointed to instances where the
Foundation had not been able to meet its funding targets from private
The committee sought evidence from the Foundation about how it would
ensure its targets leveraging non-government sources of funding were met in a
transparent and accountable way. Although Ms Marsden, Managing Director of the
Foundation, acknowledged the role of the Commonwealth, she also suggested that
the Foundation would ultimately be accountable to the public:
I think we remain accountable to our partners in this, which
are the Reef Trust, the department and government, and questions should be
asked, particularly if we start to publish the kinds of targets and the
endeavours that we hope to do. But the bottom line is: we're accountable to the
public. The public want to see as much money raised and directed towards reef
projects, so, for us to hold our heads high and really be able to have the role
and the status of being the lead charity for the reef, we have got to deliver.
So we are accountable to the reef and we are accountable to the Australian
The committee also sought information on a water remediation project for
the Cape York Peninsula that the Foundation attempted to undertake in
partnership with the Queensland Government. This did not go ahead, allegedly
because corporate donors were not attracted to support the project. In response
to questions, Ms Marsden told the committee:
There was an agreement between the Queensland government, the
Office of the Great Barrier Reef, to provide $3 million of match funding for a
project that we could bring a partner into. There was a discussion around a
project in Cape York. At the final stage, the partner fell through, but the
Queensland government agreed that it would find a new project with us. So that
$3 million matched funding arrangement or offer was moved onto another project,
called Reef Islands, which has been fully funded at $14 million.
Collaborative Investment Strategy
On 12 October 2018, the Foundation released its Collaborative Investment
Strategy (the strategy).
The Foundation stated that through the strategy, it will 'amplify the impact of
the investment by the Australian Government in the Reef through the continued
application of a collaborative investment model'. The Foundation indicated
that it would increase the Government's investment by $300 million to $400
million over the next six years.
The strategy is not a detailed work plan. Individual work plans will be
developed by January 2019. These will 'remain commercial in confidence, to
ensure the [Foundation's] positioning in a competitive fundraising environment
is on compromised'. Secured donations will be published on the Foundation's
The Foundation recognised that 'this strategy will be exposed to
uncertainties and unpredictable variabilities in the external environment. To
factor this into our planning, a target range for each component has been
developed with an overarching collaborative investment financial target set of
$300M – $400M'.
The fundraising component summary is provided in Table 4.2.
Table 4.2: Fundraising
Source: Great Barrier Reef
Foundation, Collaborative Investment Strategy, p. 7.
terms of the Grant Agreement, the Foundation is allowed to expend up to $44.5
million of the grant in administration and upscaling costs, which works out to
roughly 10 per cent of the initial grant payment total. This is made up of
$22.5 million in administration written into the direct upfront payment of
the grant, and the interest on the grant up to a further $22 million, which the
Foundation can use for administration costs.
expressed concern with the size of potential administration costs. For example,
Mr Rose, ACF, argued:
you've got an environment department sitting there that gives out grants, why
do you have to spend $45 million, that should be going into reef science, on
building the capacity of a private organisation? That's a question we'd ask,
and it's something we're very concerned about. That money should be going into
reef science, not into administration, because you have a perfectly competent
department that could do that administration.
also from the ACF, commented that the Partnership would create unnecessary
administration costs, particularly when the Foundation redirects Commonwealth
funding back to Commonwealth agencies. He noted that this had happened in
the past, with the Foundation awarding funding to bodies including AIMS, GBRMPA
and universities. Mr Slattery added:
this raises the spectre that this money is being provided from the Commonwealth
to the foundation and that that money will then be delivered back to the
Commonwealth via, essentially, a churn process where the foundation will
obviously apply administration costs et cetera. To be frank, it's a really
inefficient use of Commonwealth funds.
was shared by Greenpeace, which stated:
Australia's lead scientific
organisations, including the CSIRO,
[GBRMPA], the [AIMS] and Australia's universities, play
a critical role in Reef-related projects. Indeed,
the lion's share of the
[Foundation's] disbursements to date have
been to these agencies. It is poor practice
to introduce additional administrative costs and overheads by channeling money
through a Foundation backed by private interests, especially when a key member of the
Reef Trust Partnership Management Committee is
also a director of Origin Energy.
Barnden, the Principal Lawyer with Environmental Justice Australia, informed
the committee that he had examined the Foundation's accounts, and believed that
its administration costs were in the order of 35 per cent. He stated:
foundation does not necessarily take substantive actions to achieve its goals;
instead, it distributes the funds to others to do this. These are called
project costs in the accounts. Over the last five years, the foundation's
average revenue was $7.7 million per year. Of that, it spent just over
$5 million each year on project costs. This means around 35 per cent of
the funds used by the foundation are eaten up as administrative costs and this
is the high end of administrative costs for a charity. The ACNC recognises
difficulties in equating higher administrative costs with effectiveness.
However, its guidance provides the example of a charity that distributes funds
to others as having administrative costs of 10 per cent whereas organisations
undertaking the work had administrative costs of 35 per cent. We think that the
minister and the department should have reviewed the foundation's accounts and
come to a view on the effectiveness of its previous oversight of funding.
administration costs of the Foundation, Ms Marsden, its Managing Director,
We have a
firm commitment to cap our overheads at 20 per cent, and we make a firm
commitment to all of our donors that 80c in every dollar gets to the reef. The
contract we have with the government is very similar to the contract that we
have used with the Australian government in the past—and with the Queensland
government, where we cap our administrative overheads at 10 per cent.
The department also responded to concerns about the administration costs
for the Partnership, arguing that they are set lower than for most other
Commonwealth grants. Mr Dean Knudson, Deputy
Secretary of the department, stated that:
particular, I think it's important to note here—because this is part of getting
at the question of value for money—that normally, when the department
administers a grant, we're looking at a 15 per cent cap on administration for
the recipient. This is at 10 per cent.
duplication and complexity to the Reef sector
received evidence that argued the $444 million Partnership between the
Commonwealth and the Foundation would lead to duplication and increased
complexity in the governance frameworks of the Reef-related sector.
This perception was apparent in evidence obtained by the committee from
stakeholders directly, as well as information made available publicly through
an email from CSIRO Executive Director, Mr Peter Mayfield, to his colleagues
shortly after the grant was announced, indicates he perceived that the
Partnership could add complexity to the sector, and commented that it 'would be
good if [Commonwealth departments] could review the governance. It's getting
very messy with layers upon layers'.
provided by AIMS expressed concern on governance issues in initial meetings
with the secretaries of the Departments of the Environment and Energy, and
Industry, Innovation and Science:
raised not 'reinventing the wheel' with additional layers of governance in a
space where several well established advisory bodies and plans are already in
place (Reef 2050 plan, Reef Advisory Committee, Independent Expert Panel);
details of how the funding would be managed; whether the $100m earmarked for
science would be guided by the current RRAP feasibility study (which the
government had funded with $6m earlier in the year) and to what extent; the
ability of the GBRF funding to enable a coordinated, collaborative approach
among the nation's science agencies and universities; and whether the current
RRAP feasibility study should be altered to accommodate the changed funding
told the committee at its 21 September 2018 hearing that there were still some
areas that were still uncertain in the Foundation Partnership's governance:
At the time, which was only a few weeks—just two weeks or so
I think—after the announcement, there was very little clarity about how this
was going to unfold, and there was concern about how the funds would be
managed, organised, delivered and passed through. We didn't know. You have
to understand that for AIMS this is material, then it goes to council and it
needs to be discussed. [At the next council meeting] I'm going to tell them
what I just told you: we've got more clarity but there are no guarantees.
stakeholders emphasised that the Commonwealth and Queensland Governments should
maintain responsibility for the governance and delivery of the Reef 2050 Plan.
WWF-Australia called for these matters to be clarified following the new role
of the Foundation in the Reef sector:
role of the Foundation does not mean that the Australian and Queensland
governments will not need to meet their Reef responsibilities. In fact it will
be critical that the roles and responsibilities of each entity is set out, so
there is clarity around delivery and the ability to assess performance.
example, both governments have agreed on new pollution reduction targets
specific to the 35 catchments that flow into the Great Barrier Reef. The actions
and investment needed to achieve these targets must be clearly set out–and then
responsibility assigned to either the Australian or Queensland government or
the Foundation. Annual report cards should assess the performance of programs
undertaken by the three separate key investors.
Regarding the potential for the Foundation Partnership to add a layer of
complexity and administrative costs to Reef funding, the committee notes that
the first Reef Trust Partnership funded project announced by the Foundation was
an award of $574 000 to AIMS, which is a Commonwealth agency.
This grant is to undertake a health check of remote far northern reefs.
In the media release announcing the project, Dr Hardisty, AIMS, seemed to
indicate that these activities had been part of the agency's ongoing
'commitment to survey the current health of the Great Barrier Reef, as it has
done every two years for the past 35 years'.
transparency in funding decisions
Budget Estimates, the department indicated that the Foundation's scientific
body, the International Science Advisory Committee (ISAC), would be used to provide detailed
analysis on projects and to provide the Foundation 'with some guidance on what
they think would be appropriate projects to fund'.
Nevertheless, stakeholders queried how the Foundation will make decisions about
the allocation of funding to recipients.
The ACRS emphasised that it considers the
Foundation has a good record of supporting Reef projects and engaging with
stakeholders. However, it advised the committee that:
strongly encourage that a requirement be incorporated into this award for the
GBRF to establish a clearly articulated strategy for open, democratic,
competitive and strategic allocation of these government funds. While we
understand that the funds will be used for addressing strategic research
priorities that have already been set, we maintain that they should be
allocated in a manner that potentially galvanizes meaningful critical inquiry
across the whole research community.
Submitters also questioned whether it would be appropriate for
individuals who provide advice to the Foundation to also be eligible to receive
funds disbursed under the Grant Agreement. For
example, although the Academy of Science expressed confidence that the
Foundation would apply 'appropriate rigour and transparency in its activities
and funding decisions', it specifically argued that individuals who advise the
Foundation should not be eligible to receive Partnership funding to avoid
potential conflicts of interest.
The Science Party submitted that there was a risk that donors to the
Foundation would seek favour when making submissions for funding under the
Probity is a requirement for procurement in the public
sector. With no such requirement imposed on the GBRF and without a requirement
that contracts be publicly tendered, the process of disseminating the $444m
grant becomes open to abuse. There is even the possibility for other entities
to 'buy' favour for contracts on projects using a donation to the GBRF. These
donations could then be claimed against tax.
of the Foundation and managing conflicts of interest
The committee was interested in real or perceived conflicts of interest
that may affect the Foundation's work, not only at the board level, but also in
the membership of the Chairman's Panel, other donors, and potential funding
Board of Directors
In assessing potential risks of the Partnership measure, the department
noted that the then Chairman of GBRMPA, Dr Reichelt, was also a member of the
Foundation's Board of Directors. The department stated:
The only 'perceived' conflict of interest identified by the
Foundation is that Dr Russell Reichelt, a Director of the Foundation, is the
Chairman and Chief Executive of the [GBRMPA] which is a potential recipient of
grant funding. The Foundation state that Dr Reichelt is a member of the
Foundation's Board as an independent expert in his own right, not in his
professional capacity as CEO and Chair of GBRMPA.
The Department notes that the Foundation has a policy and
procedures relating to conflict of interest in place. The Foundation's process for managing conflict of
interests is described in Section 7.7 of their Proposal.
evidence to the inquiry, EJA summed up some concerns with the potentially
problematic nature of Dr Reichelt's two roles:
Dr Reichelt has been a director of the foundation since
31 August 2004 and director of the authority since 1 November 2007.
So for one decade he has held these two positions simultaneously and there
has been an ongoing relationship, including a financial relationship, between
the two entities. Last year, the foundation received $69,300 from the
authority, and the authority received $200,000 from the foundation. So it
seems to me that it's likely there should have been at least some concerns
around conflict of interest previously.
Dr Reichelt addressed this issue directly at a committee hearing,
It's acknowledged that there is a potential for conflict of
interest as a result of the roles that I've held and hold and, as such, I
declare my interest at every board meeting of both the authority and the
foundation. To prevent potential conflict of interest generated by recent
discussions around the funding proposal, I removed myself from all discussions
held by the board of the foundation when they were considering the approach
they received from the Australian government and, going forward, I won't be
participating in any foundation board discussions about allocation of funding
as a foundation board member while I remain chair of the authority.
evidence questioned the broader capacity of the Foundation to administer the
governance risks of such a significant grant, given the high number of its
directors with backgrounds in sectors with vested interests in Reef-related
compete for funding for Reef activities, particularly GBRMPA;
that benefit from the Reef, such as tourism; and/or
may contribute to the environmental degradation of the reef directly (such as
fossil fuel producers or mining) or indirectly through investment portfolios
(such as banking or finance).
For example, the ACF noted that Mr Grant King, a board member and
president of the Business Council of Australia (BCA), had recently publicly
advocated for 'continued growth' of fossil fuel exports, and argued this was a
'stance completely incompatible with a healthy [Reef] and with the Foundation's
Mr Grant was given an opportunity to speak to this issue at a public hearing.
He commented that, while he understood that 'people might see an inconsistency'
between his BCA position and Foundation board membership, he did not 'think
that inconsistency exists'.
Mr Barnden, EJA, commented that, whereas Commonwealth organisations like
GBRMPA have had to address conflict of interest and diversity issues at board
level, the Foundation has no such requirements to do so:
I understand the history of [GBRMPA] is that it has had some
criticism around previous directors and their involvement in the fossil fuel
industries. Those criticisms have apparently been addressed. We have this
review which was released last year which recommends that the directors of the
authority hold no cross-directorships with relevant interest groups.
The authority also has requirements for characteristics of board members,
like having Indigenous representatives and having tourism representatives. So
we see that the authority has a balance, but we don't have those same
requirements for the foundation.
Members of the Chairman's Panel,
corporate partners, and other donors
Some evidence raised questions about the potential conflicts of interest
between the aims of the Partnership and the commercial or professional
interests of members of the Chairman's Panel, corporate partners and other
donors to the Foundation.
The committee is aware that members of the Chairman's Panel include
representatives of AGL, BHP, ConocoPhillips, Peabody Energy, Rio Tinto, and
It was suggested to the committee that some of these organisations took
positions on critical Reef issues that were irreconcilable with the
environmental needs of the Reef, and the Foundation's work under the
Partnership. For example, ACF argued:
There are many members of the foundation's chairman's panel
who have links to fossil fuel companies, including the president of Peabody
Energy, George Schuller. Across the world, Peabody has actively funded climate
The ACRS noted stakeholders could be concerned that the Foundation 'may
have to consider the perceptions of its donors when making decisions on the
uses of this funding and the choices of recipients'. The ACRS indicated that
any such pressure from stakeholders may be difficult to manage, as the
Foundation will not be subject to the same transparency obligations and
consultation processes applied by government decision-makers.
The Foundation's awarding of
Some evidence advanced the view that the Foundation should develop
effective approaches to the management of conflict of interests in funding
decisions, including managing the perceptions of its donors about the projects
they chose to fund. For example, ACRS submitted:
We strongly encourage that a requirement be incorporated into
this award for the GBRF to establish a clearly articulated strategy for open,
democratic, competitive and strategic allocation of these government funds.
While we understand that the funds will be used for addressing strategic
research priorities that have already been set, we maintain that they should be
allocated in a manner that potentially galvanizes meaningful critical inquiry
across the whole research community.
We note concern that the GBRF may have to consider the
perceptions of its donors when making decisions on the uses of this funding and
the choices of recipients, and how this could affect future donations for the
Ms Arabia from the Australian Academy of Science commented that there would be a certain
amount of difficulty in the Foundation's seeking appropriate scientific advice
for its funding of projects, while ensuring that competition for funds was fair
and transparent. Ms Arabia stated:
It is difficult. On the one hand, as you point out, you want
the best scientific advisers to be advising the direction going forward, but
they can't be responsible for allocating funds...Historically, where a government
department has been able to administer that, you can ensure transparency,
accountability and all of those features I outlined earlier. I would like to
think and believe that the Great Barrier Reef Foundation would be able to
incorporate all those principles and would be working with government. Time
will tell. You need scientific advisers advising on priorities, but you draw
the line—they then need to be competing in a competitive process for those
funds. Otherwise, there's an inherent conflict.
The committee is aware that some CSIRO staff have close links to the Foundation,
including secondment to assist the Foundation in its transition and growth. In
addition, Dr Marshall is a member of the Chairman's Panel. Of these ties, CSIRO
When you then get to the issue of what the nature of a
transaction between the foundation administering the grant and CSIRO is, there
are many people inside CSIRO involved in the decision-making process on the
CSIRO side, so we are not relying in any way on a conflicted person in relation
to that side of the transaction. We have fairly robust processes internally to
be able to handle that sort of thing automatically, especially for a
high-profile situation like this, so I'm pretty comfortable that we've got it
covered. The criteria that are in the answer to question 3 are generic;
they're not specific precisely to this. They're not custom designed for this
circumstance; they're generic ones. They reflect the way we make those
On governance issues more generally, in a Senate Budget Estimates
hearing, Mr Knudson from the department suggested that the Foundation's
governance arrangements 'will be adjusted to account for not only the size of
the money that they will be administering but also, quite frankly, the deeper
relationships that will need to be created with existing entities like the
[Reef 2050 Plan] independent expert panel'.
As part of this adjustment, he noted that the grant agreement for the
Partnership 'provides for a Commonwealth Observer on the Foundation's Board of
Directors to observe and report to the Department on the administration of the
grant and the performance of the Foundation in delivering the grant'.
The Foundation informed the committee that its conflict of interest
policy is publicly available on its website.
Ms Marsden also indicated to the committee that a governance and advisory
framework would be published 'within six months'.
The Foundation's investment of
The submission made by The Australia Institute and Future Super noted
connections between the banking sector and the Foundation:
$443.3 million in grant funding is currently sitting in term deposits with six
banks and five of those banks have connections to the GBRF’s Chairman Panel and
two of them with members of the GBRF Board.
Mr Richie Merzian, Director of the Climate
and Energy Program for The Australia Institute, argued that investments
undertaken by banks contributed to climate change in the following way:
The big four are the largest funders of the fossil fuel
industry in this country. Based on research by Market Forces, lending by the
big four to the fossil fuel industry increased 50 per cent between 2016 and
2017. This matters because the emissions associated with those funded
fossil fuel projects over their lifetime are equivalent to five times the
emissions reductions that Australia will need to make in order to meet our
Paris target. The foundation, by parking its money with these banks, is
indirectly supporting the operations and growth of an industry that is directly
contributing to the reef's greatest threat. This can change if the foundation
adopts a divestment strategy regarding its banking and an investment policy to
guide the use of its undispersed funds.
Institute and Future Super submitted that the Investment Policy that the
Foundation must develop under the Agreement should exclude investment in 'the
fossil fuel industries that directly contribute to climate change',
as well as in companies that 'directly contribute to threats to the [Reef]
including climate change'.
Great Barrier Reef Foundation is to gain credibility in its role protecting the
Great Barrier Reef it needs to align its investments with the health of the
Reef. The Foundation has an opportunity to select its banking partners and its
investment portfolio based on an ethical fossil free investment policy that
screens out companies and projects that threaten the Reef.
Institute and Future Super highlighted that there is currently no stipulation
that the Foundation's Investment Policy is aligned with abating climate change
or addressing other causes of damage to the Reef, including poor water quality,
coastal development, or over-fishing.
underlying causes of damage to the Reef
amount of evidence received by the committee noted that the Foundation's work
under the Partnership would be directed into mitigation and adaptation
programs. It was argued that the Commonwealth's adoption of this approach would
not address the critical underlying causes of damage to the Reef, particularly
climate change from fossil fuel consumption; the deforestation of Reef catchment
areas; and the run off of sediment, chemicals and fertilisers, which reduce the
quality of water around the Reef.
Rice, Acting Chief Officer and Head of Research for the Climate Council of
Australia, suggested that the funding of the Foundation Partnership will be
'nothing more than a golden bandaid solution and possibly a monumental waste of
The Australian Academy of Science provided a summary of the reasons why
the policy would fail to address crucial underlying environmental issues:
The Academy notes with concern many of the ongoing stressors
to the Great Barrier Reef World Heritage Area-such as global warming, land
clearing, coastal development, port expansion, dredging, dumping of maintenance
dredge spoil, commercial and recreational fishing, ship anchoring, and many
other impacts of escalating shipping-all of which continue to accumulate. The
proposed funding does little to address these issues.
In the aftermath of unprecedented back-to-back coral
bleaching and mass mortality in the northern and central GBR, the Academy is
concerned with the direction of attention away from curbing the escalation of
the major stressors on the Reef in favour of small-scale restoration projects
such as underwater fans, coral sunscreen and coral gardens.
The committee considered a large amount of evidence that argued that the
Commonwealth should be working to reduce climate change, which was the cause of
the most significant damage to the Reef, including reducing carbon emissions,
which is the greatest single cause of climate change.
appearing as then Chairman of GBRMPA at Budget Estimates 2018–19 commented that:
long run the steady rise in global ocean temperatures continues to be the
single biggest risk to the health of the Great Barrier Reef.
We acknowledge the national and international efforts to reduce greenhouse
gas emissions to meet the goals of the Paris agreement, and I am sure this
committee is extremely aware of the importance of meeting these targets if the
health of tropical coral reefs is to be secured.
Queensland Government submitted that the lack of focus on climate change in
Commonwealth policy meant that current measures would be insufficient to
protect the Reef's future. It was argued:
change is the most pervasive threat to the Great Barrier Reef. Successive
bleaching events in 2016 and 2017 were unprecedented in their level of impact
and are clearly linked to man-made global warming. Almost half of the Reef's
shallow water corals were killed as a result of these two bleaching events and
the situation can only be expected to worsen as climate change continues to
A number of
submitters spoke of the need for the Government to make more efforts to address
climate change, noting that it was of the utmost importance in any efforts to
preserve the Reef.
Queensland Government concluded that the new Commonwealth funding 'is
appreciated'. However, it warned:
commensurate effort by the Australian Government to reduce Australia's carbon
emissions, and show strong leadership in the international arena to drive
global action, the new funding will be insufficient to protect the Reef for
Dr Rice of
the Climate Council of Australia argued that the current approach of
Commonwealth investment in the Foundation Partnership would be unsuccessful, as
putting 'measures on local stressors without really tackling climate change is
not going to do anything'. Instead, he suggested:
partnership program should really be doing is recommending much stronger
federal government greenhouse gas emission reduction targets. If we don't do
that, non-climate mitigation activities such as culling the crown of thorns
starfish and improving water quality will be nothing more than a bandaid
the situation is caused by the burning of fossil fuels—coal, oil and gas. That
is driving up global temperatures, and that is increasing the frequency and
intensity of marine heatwaves. Since the 1980s we have already seen a
quadrupling in the occurrence of marine heatwaves, driving up the chances of
coral bleaching because the corals become stressed by temperatures that are one
to 1.5 degrees above the average summer maximum. Ultimately the only way we can
stop the stress on the reef is to cut the emissions at source.
further in its criticism of the Commonwealth Government's approach. It argued
the Partnership funding should 'be revoked on the basis it does not adequately
deal with climate change'. It added that any further funding decision 'must
deal with mitigation of climate change and the source of carbon emissions,
including from Australia's fossil fuel exports'.
and effects of run-off
received evidence from stakeholders that suggested the Partnership would not
sufficiently tackle another significant cause of damage to the Reef, namely water
degradation caused by deforestation and land clearing, which results in run-off
off of both sediment and fertiliser.
Mr Schneiders, The Wilderness Society, stated that addressing deforestation
would not need a large amount of funding, but could be achieved by clear
guidance on and enforcement of Commonwealth laws, in association with new state
thing is that you would not need $444 million to effectively address issues
surrounding land clearing and tree clearing. What it would take, and what has
started to happen in Queensland, is stronger state based laws being in
place-and they have been put in place by the Queensland government quite
recently-and the Australian government implementing their own existing laws,
particularly in respect of commitments under the Environment Protection and
Biodiversity Conservation Act to protect the habitat of rare, threatened and
endangered species and the commitments that they've made to UNESCO that they're
going to work together with the Queensland government to address the outrageous
rates of clearing. It wouldn't cost $444 million.
Arthur noted that deforestation and poor land use in Queensland had resulted in
a number of poor outcomes from the Reef, including high levels of fertiliser in
the river discharge nourishing and encouraging crown-of-thorns starfish
populations. He argued that the Foundation lacked expertise in this area:
GBRF Board lacks is expertise or experience with the greatest single threat to
the Great Barrier Reef, namely the poor quality of water flowing to the GBR
from Queensland rivers. This poor quality is a consequence of historic and
ongoing poor land management practices in farming, forestry and coastal
development industries in terrestrial Queensland; the absence of expertise
related to Queensland land use on the Board of the GBRF is noteworthy.
failure of the Partnership agreement to address the effects of run-off of
sediment and undissolved nitrogen from fertilisers, the Academy of Science
objectives of the Reef 2050 Plan will fail to achieve its objectives if funding
for improving water quality is not increased. Reduction in nutrients and
sediment from rivers flowing into the GBR is far short of target levels. Particularly
noticeable is the small reduction in dissolved inorganic nitrogen - 17%
compared with a target of 50%. This nutrient is most closely linked with
crown-of-thorn starfish infestations. In this regard, the new package merely
represents business as usual. The Academy recommends increasing the level of
funding for water quality, to be paid directly to [National Resource Management
Regional Bodies (NRMs)]. While improving water quality will not prevent future
bleaching events, it can improve the capacity of the Reef to recover.
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