ICAC evaluates the impact of government grants

On 23 August 2024, the Independent Commission Against Corruption (ICAC) published its third and final report in the ‘Grants Administration’ project, titled ‘Grants Administration: Final Report’ (the Report). The Report sets out general observations on grants management in the public sector and raises areas of potential reform for the governance and administration of grants.

Whilst the Report sets out the ICAC’s findings from its review into grants awarded by the State government, there are still useful takeaways from the Report that are relevant and applicable to the local government sector.

A copy of the Report can be found here.

Findings from the Report

A key observation made by the ICAC that underpins the Report is that despite the large expenditure of public funds by the State government on grants (approximately $3.8 billion over a four-year period), there is a noticeable lack of formal mechanisms in place to ensure transparency and accountability. The ICAC noted that, in most agencies, the grants function of that agency is fully centralised into one grants team. The ICAC also observed that whilst most agencies have internal grants policies and procedures, there are minimal laws and guidance on grants that apply to the public sector at large.

One of the more significant concerns raised in the report is the integrity of election commitment grants, which are often perceived as being politically motivated (often referred to as ‘pork barrelling’). The ICAC calls for stricter controls and greater transparency to prevent pork barrelling and to ensure that grants are awarded based on merit and public interest rather than political considerations.

The Report stresses the importance of accountability in the administration of public funds. It recommends that all decisions related to grants should be open to scrutiny and that mechanisms should be in place to hold public officers accountable for their actions. The ICAC considers that this is crucial for maintaining public trust and ensuring that taxpayer money is used effectively.

Areas for reform and take home messages

Throughout the Report, the ICAC raises several areas for grants reform, which it considers will assist in addressing the issues with public sector grants identified in the Report. Whilst these areas are raised in the context of grants awarded by the State government, they are still relevant to grants, sponsorships and incentives offered by local government councils.

The Report raises the following areas for reform which we consider are of particular relevance to the local government sector:

• establish centralised reporting systems to provide a comprehensive overview to the public of all grants that are awarded;
• develop more robust frameworks across all agencies involved in grants administration; and
• encourage greater public engagement with grants administration and make information about grant applications, decisions and outcomes more readily accessible.

Should the Report lead to any potential law reform, we will, as always, keep abreast of any such developments and keep the sector updated.

However, even in the absence of any law reform, councils may wish to implement mechanisms directed at addressing some of the areas for reform identified by the ICAC.

For example, grants policies and protocols could be developed (if not already in place) or updated to include centralised reporting mechanisms, increased online publication with respect to applications and outcomes, and an increased degree of public engagement (particularly for larger grants).

Should you have any queries in relation to any matters raised in this article, please contact Dale Mazzachi on +61 8 8210 1221 or dmazzachi@normans.com.au, Chris Alexandrides on +61 8 8210 1299 or calexandrides@normans.com.au or Christian Beltrame on +61 8 8217 1315 or cbeltrame@normans.com.au.