Labor says it would use a grant agreement clause to force the return of any unspent funds

This article is more than 2 years old

This article is more than 2 years old

Labor has warned the Great Barrier Reef Foundation to prepare to return a $443.8m grant in the event of change of government.

In a letter to the foundation’s chair, John Schubert, the opposition’s environment spokesman, Tony Burke, said a Labor government would use a clause of the grant agreement to force the return of any unspent funds if it wins the next election.

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Burke said Labor will use clause 25.1.1. of the agreement by changing government policy on the spending of the grant.

The agreement states the department can terminate the agreement with the foundation or reduce its scope if there is “a material change in Australian government policy that is inconsistent with the continued operation of this agreement”.

“The effect of this would be that in the event of a change of government, all unspent money would be expected to be returned to the commonwealth in accordance with the grant agreement, this includes sub-contracts made by the foundation,” Burke’s letter states.

He advised Schubert that because an election could be called at any time the foundation should be mindful of Labor’s commitment when making decisions on how to spend the money.

“It would be grossly inappropriate for the foundation to be making spending decisions which will affect future financial years, given the appropriateness of this grant will be determined by the Australian people at the election”.

Schubert and fellow board members Stephen Fitzgerald and Grant King will give evidence at a public hearing on 18 September that is part of a Senate inquiry examining the controversial grant.

The government has defended its process as transparent, despite awarding the funds without a tender process after the former prime minister Malcolm Turnbull and the then environment and energy minister, Josh Frydenberg, met with Schubert on 9 April.

The Guardian revealed last month that the government was warned by the department that there was a “significant” risk that on-the-ground projects would be delayed because of the grant.

Documents obtained under freedom of information laws also showed that, up until the 9 April meeting, Frydenberg’s office and the department had been discussing a smaller grant of $5m that was awarded to the foundation for a reef islands project.

In his letter to Schubert, Burke says Labor had made its concerns about the probity of the grant and lack of process clear and “it would be grossly inappropriate for a large portion of a six year grant to be committed in the period before the election that will most certainly be in less than twelve months”.

He said Labor would give any recovered funds to government agencies that work on the Great Barrier Reef.