Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Finance and Deregulation. What steps is the government taking to improve the management of discretionary grants? How will improving the grants system help in the government’s fight against inflation and rising interest rates?

Lindsay Tanner (Melbourne, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I thank the member for Wills for his question. Inflation is now at 3.6 per cent, and that has been putting upward pressure on interest rates. The government is committed to clamping down on government spending, which is rising at 4½ per cent in real terms, and getting better value for money out of Australian taxpayers’ dollars and greater efficiency in government spending. One particular area where we are committed to doing this is with respect to individual grants, or discretionary grants, that are made by the government to individual organisations for a variety of purposes.

Recently my department gave me some data on developments in that area of discretionary grants, and it makes very interesting reading. In 2000 the then Liberal government handed out a total of 3,941 discretionary grants at a cost of $579 million. In 2002 the figure was 6,141 grants at a cost $451 million—the number of grants went up; the amount of money went down. By 2006 the number had gone up to 14,539 grants at a total cost to taxpayers of slightly over $2.7 billion. And in 2007, last year, the number leapt dramatically to 49,060 grants at a total cost to the taxpayer of over $4.5 billion. So, within the space of five years, the total amount being spent by the Australian government on discretionary grants had multiplied tenfold, from $450-odd million to $4.5 billion. The increase in the amount of money involved in 2007 alone—last year, the election year—was 67 per cent.

It is also worth noting that, of the 49,000 individual grants handed out by the former Liberal government last year, 30,700 were for figures below $5,000. Indeed, when you look at the list of the smallest grants, it is an interesting picture. The smallest individual grant handed out by the Howard government last year was for the grand total sum of $70. That is not a unique figure by any means. When you look at the list from smallest upwards, the next largest is $79. Then there is an $85 one, another $85 one, another $85 one, a $90 grant, a $96 grant and a $98 grant. There is a very long list of very, very small grants. That explains why there are 30-odd thousand of them under $5,000 and why such a huge leap occurred.

My department advises that the cost of administering many of these grants would have been significantly higher than the actual amount of the grants themselves. It advises that the cost of $4.5 billion to the taxpayer does not, of course, include the cost of administering the grants, which perhaps explains the blow-out in the total cost of government and the size of the Public Service over the past few years. It advises that many agencies are failing to use the central register of discretionary grants to ensure that we do not get double dipping—individual grant recipients doubling up on grants. And it also advises that we have over 150 separate grant-processing IT systems in the Commonwealth at present.

Many of these grants are worthwhile. However, there are a few that are a bit dodgy—for example, the rainmaker. The member for Wentworth had a recommendation of $2 million on a grant for a bit of cloud seeding and he decided that he would make that a $10 million grant. Others are for cheese factories that get money after they have closed their doors, historic railways where no trains run or ethanol plants that never produce any ethanol—and the list goes on.

The former Liberal government converted the Australian government into a giant vote-buying machine. It presided over an appalling misuse of Australian taxpayers’ money. This government, the Rudd government, is committed to introducing strict rules to ensure that we get genuine benefit for taxpayers from the application of these grants and that they are handled in a proper and prudent way. The rules we have already introduced include: no minister can make a decision about a grant that applies in his or her own electorate; no minister can make a decision about a grant without getting departmental advice; no minister can unilaterally override departmental advice; and ministers are required to announce decisions on grants promptly. We have a detailed further review underway to analyse all aspects of delivery of discretionary grants to ensure that the taxpayer gets value for money, that there is genuine probity and accountability and that we ensure, in overall terms, that the value that is delivered to the Australian economy and Australian society justifies the amount of money that is spent.

The reason for this is simple. The Rudd Labor government is committed to delivering value for money for Australian taxpayers, greater efficiency in the way the government spends its money and greater benefit to the Australian community because we understand that, of that $4½ billion, every last dollar is coming from working familys’ budgets and we have a very serious obligation as a government to ensure that we do not fritter it away in the way the former government did.