$25bn in Coalition grants made through closed process with no competitors, report finds

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Almost half of $60.2bn in federal government grants awarded over the past four years has not gone through a competitive open tender process, a new report on federal grant spending has found.

The auditor general has published an “information report” on the $60.2bn worth of government grants awarded under the GrantsConnect program, which is the centralised reporting mechanism administered by the Department of Finance.

The report, which gives a breakdown of 108,206 separate grants awarded between December 2017 and 30 June 2021, also found that about a quarter of regional development grants worth more than $600m were delivered in major cities.

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However, some of these grants were awarded to organisations based in capital cities which funded projects in regional areas.

According to the analysis, 42% of grants were awarded through a closed, non-competitive process, while ad-hoc, one-off grants were the most numerous at 24%.

It found the proportion of grants awarded through a targeted or restricted competitive process had increased from 10% in 2017–18 to 31% in 2020–21.

“The commonwealth grants rules and guidelines specify that ad hoc/one-off grants generally do not involve planned selection processes, but are instead designed to meet a specific need, often due to urgency or other circumstance,” the report says.

One-off grants, which are determined on an ad hoc basis, were “usually by ministerial decision”, it says.

According to the report, 27% of regional development grants funding were delivered to postcodes classified as “major cities of Australia” with a value of $624m, while an additional $860m, or 37%, was paid in grants to “inner regional” areas.

By value, 60% of regional development grants were awarded to recipients associated with postcodes classified as “inner regional” or “outer regional” and 8% to “remote” or “very remote”.

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The top 10 recipients of regional grants by value are mostly large regional councils, with large grant amounts also going to the University of Newcastle and the NSW government’s Health Administration Corporation.

Of the $322m in rural development grant funding, Wine Australia received the largest award at $33m, accounting for 15% of the total value of this category.

Because most of these grants (96% of the total value) did not specify a postcode of where the rural grant would be spent, the Australian National Audit Office did not do a breakdown of where this funding was directed.

Across all grant types, about half did not report a postcode where the funding was spent.

Labor’s shadow infrastructure minister, Catherine King, said the figures showed the Coalition “continually favour projects based in the major cities”.

“It’s one thing for the Morrison-Joyce government to namecheck regional towns, it’s another for them to actually invest in them,” she said in a statement.

Across all grant types, five universities make up half of the top 10 recipients of awards by value, with the University of Melbourne and Australian Rail Track Corporation Limited, a commonwealth company, the top two recipients by total value received.

The value of grants went mostly the category of ageing, with $11.9bn of the total spent in this area, followed by health, wellbeing and medical research (18%) and Indigenous (14%).

The report found that 12% of the grants selected through an open competitive selection process were approved before the closing date of their associated grant opportunities, while 20% had a “reported selection process” that was different to what was reported for their related opportunities.

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The most common difference was opportunities reported to be “open non-competitive”, but later reported as a “ad hoc/one-off” grant awards (3,849). There were also 852 grants awarded through a “targeted or restricted competitive” process but with opportunities describing the selection process as “open competitive”.

About 19% of the total value of the $60.2bn in grants was down to variations, with $48.9bn awarded through initial grant agreements and $11.3bn added through variations.

Six per cent of all grants, valued at $5.2bn, reported a confidential contract clause.

Of the more than $60bn in grants awarded over the period, 10 government departments accounted for $55.9bn of the total value of awards, with the Department of Health administering $24.7bn, or 41%.

The national audit office says the “information report” is based on data extracted from the Department of Finance, and makes clear it “is not an audit or assurance review report and does not present a conclusion”.

The government has come under increasing pressure over its use of grant funding in Coalition and marginal seats, with the so called “sports rorts” affair leading to a damning auditor general report that found the government funded a range of projects that had not been recommended by the department.

An analysis of the latest round of the Building Better Regions Fund found that almost 90% of the $300m grants round was spent in Coalition and marginal seats.

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