Anthony Chisholm (Queensland, Australian Labor Party, Assistant Minister for Education) Share this | Hansard source

On behalf of the Chair of the Joint Committee of Public Accounts and Audit, I present the government response to the report of the committee on its inquiry into Commonwealth grants administration. In accordance with the usual practice, I seek leave to incorporate the document in Hansard.

Leave granted.

The document read as follows—

Australian Government response to the Joint Committee of Public Accounts and Audit Report 495:

Inquiry into Commonwealth grants administration

September 2024

Response to the Committee's Recommendations

Recommendation 1

2.93 The Committee recommends that the Australian Government implement the recommendation from JCPAA Report 484 to add an eighth principle to the Commonwealth Grants Rules and Guidelines that decision makers should adhere to the guidelines, which the previous Government agreed to but failed to actually implement.

Agreed

The Government will implement this recommendation through the Commonwealth Grants Rules and Principles 2024 (CGRPs), which come into effect on 1 October 2024. The CGRPs will replace the Commonwealth Grant Rules and Guidelines 2017.

The CGRPs include a new key principle for grants administration, 'Consistency with Grant Guidelines and Established Processes'. Officials involved in grants administration must have regard to the key principles (paragraph 4.4b) and entities must put in place practices and procedures to ensure that grants administration is conducted in a manner that is consistent with the key principles (paragraph 6.3).

Under this new key principle, the CGRPs make clear that:

2.94 The Committee recommends that the Department of Finance amends its Resource Management Guide No. 412—Australian Government Grants—Briefing, Reporting, Evaluating and Election Commitments to clarify the definition of an election commitment for the purpose of delivering grants programs.

Agreed

The new CGRPs explicitly state that they apply to all forms and types of grants, including election commitments (paragraph 2.4).

The Department of Finance will update Resource Management Guide 412 to adopt the definition of election commitment used by the Parliamentary Budget Office.

Recommendation 3

2.95 The Committee recommends that the Australian Government amends the Commonwealth Grants Rules and Guidelines 2017 to provide that:

Agreed with qualifications

The Government agrees with the need to strengthen and provide greater clarity in relation to: the use of merit-based processes (and to document reasons for not using such processes); the role of various stakeholders in grants administration; the process for making recommendations; and recording and reporting requirements. The Government will address the various elements of this recommendation as follows:

Competitive, merit-based processes

The CGRPs include a new key principle for grants administration, 'Merit-based Processes'. Officials involved in grants administration must have regard to the key principles (paragraph 4.4b) and entities must put in place practices and procedures to ensure that grants administration is conducted in a manner that is consistent with the key principles (paragraph 6.3).

This new key principle maintains the existing default position that competitive merit-based selection processes should be used to inform the award of grants unless specifically agreed otherwise by a minister, accountable authority or delegate. However, noting that there are instances where non-competitive processes are appropriate, the principle provides that the rationale for using a different approach to the default should be documented and included in the grant opportunity guidelines.

Clarifying stakeholder roles

Third parties that undertake grants administration processes on behalf of the Commonwealth must adhere to the key principles and applicable requirements of the CGRPs and the published grant opportunity guidelines. The term 'third party' is defined in the CGRPs to include any person or entity involved in the grants administration process who is not a minister, accountable authority or official, including parliamentarians and external committees. otConsistent with the key principle of 'Governance and Accountability', officials must clearly define the roles of third parties in grants administration (paragraph 14.3), including through the grant opportunity guidelines, operational guidance and entity procedures. This would include, for example, explaining the role of parliamentarians and other stakeholders who will provide advice or recommendations to decision makers (paragraphs 2.10 and 2.11).

Finance will also develop guidance to support entities to consider when it may be appropriate for other inputs such as advocacy and representations to be considered in grants decision making, consistent with the key principles of 'Collaboration and Partnership' and 'Probity and Transparency'.

Recommendations to decision makers and recording and reporting requirements

The CGRPs include new mandatory requirements for strengthened briefing by officials and decision making, recording and reporting by ministers (paragraphs 4.6 and 4.7). In addition to the existing requirements under the CGRGs, officials will be required to provide ministers with clear advice on the merits of grant applications and to indicate which applications can be supported within the available funding. In addition, officials must recommend that applications that do not meet any of the selection criteria be rejected. Officials are also encouraged to make other specific recommendations regarding the grant applications. These recommendations could, for example, be based on other factors outlined in the grant opportunity guidelines (paragraph 4.7(d)). The new key principles of 'Consistency with grant guidelines and established processes' makes clear that grant opportunity guidelines should clearly set out how such factors will be assessed and applied ( paragraph 13.3).

In addition to the existing requirements under the CGRGs, the CGRPs will require ministers who are the approvers of grants to record the basis for approving grants that officials have recommended be rejected and the basis for not approving grants which officials have recommended be approved. Ministers must also record in writing any conflicts of interest relating to a grant that they approve (paragraph 4.10).

The CGRPs will also require the Minister for Finance to table in each House of Parliament a copy of reports received from ministers under paragraph 4.11(a) (approval of grants in own electorate) and 4.12(a) (approval of grants which officials recommended be rejected), as soon as practicable after the end of each quarter (paragraph 4.13). The decisions by ministers under paragraphs 4.11 and 4.12 must also be recorded on GrantConnect.

References to guidance

While the CGRPs do not reference specific Resource Management Guides, the CGRPs note that additional guidance, tools and templates are available on the Finance website (paragraph 2.12). This approach is appropriate to ensure guidance material can be updated as required without the need to amend the CGRPs, which is a legislative instrument. The Department of Finance is providing a range of support for officials to support implementation of the CGRPs and exploring further education opportunities to increase awareness and understanding of the grants framework and to improve grants administration. Recommendation 4

2.96 In keeping with the key principles of 'Governance and Accountability' and 'Probity and Transparency' in the administration of Commonwealth grants, the Committee recommends that the Department of Finance develops 'good practice' examples of record-keeping templates with an accompanying checklist that give effect to the rules and principles of the CGRGs that all Commonwealth entities be strongly encouraged to use for any grants or 'grants-like' programs. These templates and checklists should prompt both public officials and ministers to clearly document all decisions and decision-making processes throughout the operation of a grants program. The following requirements are recommended:

Agreed with qualifications

The CGRPs highlight that officials must retain appropriate records, consistent with their obligations under Part 2-3 of the Public Governance Performance and Accountability Act 2013 and the Archives Act 1963 (see CGRPs, paragraph 3.15). Entities must also ensure that they have in place appropriate internal policies and processes that are consistent with the requirements of the CGRPs (paragraph 6.3).

The Department of Finance is developing guidance to support officials to implement the new CGRPs. This guidance will include appropriate links to the support and guidance provided by the National Archives of Australia, which sets policy and standards on data management and record security.

To support consistency across government, the Department of Finance has developed a range of tools including templates for grant opportunity guidelines and agreements, a checklist for officials who are briefing ministers and templates to assist ministers to report to the Minister for Finance on decisions to award grants in their own electorates or against the advice of officials under paragraphs 4.11 and 4.12. Entities are strongly encouraged to use these templates and checklists. Recommendation 6

2.128 The Committee recommends that the Australian Government amends the Commonwealth Grants Rules and Guidelines 2017 and makes any consequential amendments to other legislation to provide that:

Agreed with qualifications

Division 6A of Part 2-4 of the PGPA Rule mirrors the existing requirements under the CGRGs where a minister is involved in the making of a Corporate Commonwealth Entity (CCE) grant.

Division 6A will be updated to reflect the new obligations applying to ministers under the CGRPs, which come into effect on 1 October 2024.

Following the implementation of these amendments, Finance will undertake further work, in consultation with CCEs, to explore whether the remaining elements of the CGRPs should apply to CCEs, and the appropriate mechanism/s to do so. Recommendation 7

3.23 The Committee requests that the Department of Finance reports back to it on its progress in implementing the recommendations of the audit into the grants hubs by the Australian National Audit Office within 12 months of the date of this report.

Agreed

The Secretary of the Department of Finance wrote to the Chair of the JCPAA on 8 June 2024 providing an update and acquitting this recommendation. A copy of this letter is available on the JCPAA inquiry website.