A deeper look at ministerial grant decisions will help improve government

Ministerial decision-making over grants funding is again making headlines. This time the spotlight has appeared on two ministers, former sports minister Bridget McKenzie and current home affairs minister Peter Dutton.

In fairness, the sport grants affair is not new. But with the former minister appearing before a Senate hearing and an audit report sitting accusingly on the public record, renewed interest was inevitable.

The focus on Minister Dutton and safer communities grants is new. A different minister and a different program but the same basic criticism. Ministerial decisions which did not follow the careful assessments of officials, creating a suspicion of politics trumping proper process. 

Those with long memories will recall another sports minister being similarly accused. Not even expansive use of a 1990s era white board could save her. Being sports minister is trickier than you might think.

Much has changed in public administration since 1994. The formal rules and accountabilities governing the administration of grants have been strengthened. Additional transparency measures have been mandated. Yet concerns remain.

At face value, the rules governing grants administration look sound. Tended by the Department of Finance, the Public Governance, Performance and Accountability (PGPA) Act and Commonwealth Grants Rules and Guidelines outline clear expectations of ministers and their officials.

Under these rules, grant programs must promote the “proper” use of public resources. This means that ministers must not approve expenditure unless satisfied, after reasonable inquiry, that resources are being used efficiently, effectively, economically and ethically.

The rules require officials to ensure that grants are made legally and that ministers are made aware, in writing, of relevant processes and requirements. Grants should also be made using competitive, merit-based selection processes unless specifically determined otherwise. 

What may surprise some is that ministers may approve grants not recommended by their officials. But they must record decisions in writing and must report occurrences annually to the Minister for Finance.

The grant rules apply to all government programs, unless other legislative requirements exist. Well, almost all. Government corporations are exempt – Sport Australia, for example – even when they deliver grant programs that look and feel like any other managed by government. This is an oversight the Auditor General is rightly keen to address.

Public scrutiny of government decisions protects the integrity of our democracy. Ministers and officials should bear the burden of demonstrating that their decisions and actions are appropriate. In the sport grants affair, the Auditor General clearly found government wanting. It is too early to say what judgment might be made on safer communities grants.

Our scrutiny of government also needs to be thoughtful and forward looking. It needs to recognise that good public administration requires nuance as well as formal rules. Ministerial accountability is critical, but opportunities to improve the system should not be lost in a simple game of ministerial gotcha.

Three features of the sport grants affair, for example, warrant deeper thought and action.

The first relates to substantive differences between the criteria used by Sports Australia and those used by the Minister (or her office) to assess applications. This simply shouldn’t happen. It makes a mockery of the grants process and undermines the integrity of government decision making. But the fact it did happen begs the question, why?

Differences in the criteria supplied to the Auditor-General by the minister’s office and those used by Sport Australia are revealing. Most noticeable is the emphasise placed by the minister’s staff on the geographic distribution of funding. None of the 3 major and 10 sub criteria used by Sport Australia went to the issue of geographic fairness.

Geographic distribution is often at the heart of tension between ministers and officials over grant decisions – especially grants designed to support local communities. It arises in many grant programs, across many departments. Yet only rarely is geographic distribution considered formally by officials.

Decisions around geography are sensitive. Public concern rightly focusses on preventing ministers making decisions based on electoral advantage rather than underlying merit. Yet ensuring a fair geographic distribution of limited government resources is also a reasonable policy objective.

Addressing this tension requires more work at the policy design and program development stage. A novel solution, apparently employed in recent volunteer grants, of distributing funds equally to every electorate is unlikely to be appropriate very often.

Given how often the issue arises, some whole of government attention would be worthwhile. The focus should be on identifying approaches which provide distributional fairness without undermining merit-based competition. Not an easy task to be sure, but an important one.

The second deeper issue involves the role ministerial advisers played in determining minister’s final decisions. It is to the minister’s credit that she has taken responsibility for the management of the program. But it is also apparent that the minister was not fully aware of actions being taken in her name – a common Canberra problem it seems.

Perhaps more concerning is a sense that Sport Australia may have adjusted its processes to give advisers more room to influence ministerial decisions. This, and the fact that the office maintained a sophisticated second set of decision-making criteria, raises questions about the proper working relationship between office staff and government officials.

The important role ministerial advisers play in government has evolved largely without design or structure. The sport grants affair provides yet another example of why a more professionalised approach is needed. Here we can look to a panel of former and current office chiefs of staff who are developing some advice to government, with a report due soon.  

The final issue relates to the way officials assess and rank applications. Reports on the assessment done for the safer communities program refer to rankings with scores out of a hundred down to a level of two decimal points. Sport grants were also assessed on a hundred-point scale.

Mathematical measures are attractive. They allow for clear rankings and unambiguous cut-offs. Using precisely weighted selection criteria aids transparency and a sense that officials are discharging their responsibilities well.

While precision is desirable, false precision is not. Assessing grant applications is overwhelmingly a matter of judgment, not science. The hard reality is that two panels assessing the same set of applications will rarely come up with the same set of scores. 

Precise numerical assessments can create a false impression that any ministerial deviation from official rankings must be political in nature. Crass political decisions do need to be avoided. But this starting impression is unreasonably constraining.

Ministers should be free to make a different judgement to officials. However, these judgments need to be soundly based and open to external scrutiny. They should consider only the published program criteria and be explained transparently and openly.

To assist ministers, officials should avoid falsely precise assessments. This is not to argue against numerical assessments. But it is a call for assessments to more appropriately acknowledge the judgments being made – an approach that is perfectly consistent with the rules as they stand.

Sean Innis is Principal of Damala St Consulting. He is a Fellow of the Australian Studies Institute at the Australian National University and Senior Fellow of ADC Forum.

 First Published in The Mandarin on 25 February 2021