Here we have a government found to have misused taxpayer money to further its political interests. It raises serious integrity issues

'Sports rorts' grants explained: how we got here and why it all matters

The pressure on Bridget McKenzie over the government’s sport grant program is far from subsiding.

It’s been seven days since the auditor general released his damning report, but the calls for McKenzie’s resignation have only intensified.

At this point, it’s worth reminding ourselves how we got here and why it all matters.

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What is the sports grants program?

The scheme in question is the community sport infrastructure program, which was announced in 2018 and doled out up to $500,000 to fund to local sporting clubs to improve their facilities in the lead up to the 2019 election.

The overarching aim was to boost participation in physical activity and sports.

It’s a worthy concept, and one that was welcomed by cash-strapped local clubs.

So much so that the government was inundated with applications when the first of three funding rounds opened in 2018. Not everyone could be successful.

How was the money distributed?

In a perfect world, the government would have objectively and fairly worked out which clubs were most needy and where the money could be best spent. That’s not what happened.

The rough process for distributing the money went like this:

1. An individual club applied for a grant, filling out forms and stating what it wanted to do with the money and why it was needed.

2. Sport Australia, the government body administering the scheme, assessed the application against transparent and objective guidelines.

3. Each application was awarded an overall score to reflect its merit. Successful projects, if things had gone as planned, would have needed a score of 74 and above.

4. Recommendations were made by Sport Australia to the sport minister, who at that time was McKenzie.

5. The sport minister made the final decision on which clubs would get money.

It’s important to note that Sport Australia did nothing wrong in all of this.

The mess was created in that last step, when the minister’s office became involved.

The audit report released last week found that McKenzie’s office ran its own parallel assessment process that was separate to the guidelines Sport Australia had developed to objectively and fairly distribute the money.

Who received money under the scheme?

Grants were frequently directed to marginal seats, or seats the Coalition was targeting in the upcoming election. Sport Australia’s recommendations were, in many cases, ignored. In the scheme’s second and third rounds, 70% and 73% of the chosen projects went against Sport Australia’s findings.

This led to the complete politicisation of the scheme.

Coalition MPs jostled and lobbied for money to go to their own electorates.

Marginal seats like Hasluck and Indi were flush with cash. Candidates were gifted happy sport clubs, smiling faces, big cheques and great PR.

Money also found its way to clubs that had direct links to Coalition ministers and senior MPs. One grant went to a shooting club that McKenzie herself was a member of. Other money went to clubs that had the Indigenous affairs minister, Ken Wyatt, as a patron, the treasurer, Josh Frydenberg, as a member and the assistant minister Sarah Henderson as a sponsor.

And grants were awarded for projects that had questionable links to the program’s overarching goal: boosting community participation in sport.

One of Australia’s best golf courses, the Royal Adelaide Golf Club, got $50,000 to install solar panels. Royal Adelaide is a members-only golf course that costs a small fortune to join.

Half a million dollars went to a rowing club in the affluent Sydney suburb of Mosman, while another golf club was given $190,000 to build a new foyer and install a lift, in part so it could attract more wedding bookings.

Compare that, for example, to Coledale Waves football club, south of Sydney, which has no lights, a single field, and no women’s change rooms, despite having 600 registered players. It missed out on a grant.

“Do we feel angry? Yes, probably – and disappointed that taxpayer money was spent in this way,” Martin Smith, a coach at the club, said.

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OK, but why is it such a big deal?

This is a pure example of pork-barrelling. Here we have a government found to have diverted and misused taxpayer money to further its political interests.

It raises serious integrity issues.

It also tells us that taxpayer money is not being used in the best way possible.

But it goes further than that. Scandals like this fracture the already-damaged trust Australians have in their government.

The government has also been caught red-handed by one of the few independent public watchdogs operating at a federal level. If the findings have no repercussions, it also raises questions about the power of our public watchdogs.

Is this legal?

The short answer: possibly not.

The government says all of the projects that were given grants were eligible to receive them. That may be so.

But questions about the lawfulness of the scheme arise in two other respects.

The first is whether the laws underpinning the sport grant scheme actually gave authority to McKenzie to make decisions in the way that she did. The auditor general said he could not find the lawful authority on which McKenzie relied.

Sport Australia, the brand name for the Australian Sports Commission, is a government agency with some degree of independence.

The law bestows on McKenzie only a limited degree of involvement in its decision-making.

She has the power to direct Sport Australia, but to do so she must follow a formal parliamentary process. The law says she must inform the agency in writing if she is considering issuing it a direction, give the chair an opportunity to respond, and then publish and table any directions she does issue in the lower house and Senate within 15 sitting days.

That did not occur.

Second, questions have been raised about whether the government has put itself in breach of the constitution by getting involved in local sports funding.

A recent high court case against the federal government’s chaplaincy scheme found the commonwealth can’t spend money unless there is parliamentary authorisation and unless it was supported by the constitution. Anne Twomey, a leading constitutional expert, said the commonwealth would likely rely on its nationhood powers as a lawful basis for the powers. But that would require it to prove it was acting on a national emergency or doing something state governments couldn’t do.

“We know that the states can, and do, give out sports grants,” Twomey said.

“So it doesn’t seem to fit either of those, which means there’s a bit of a problem in terms of supporting this program.”

The attorney general, Christian Porter, is investigating the lawful basis for the scheme. Suggestions of a class action by unsuccessful applicants have also been made. So we’re likely to hear more on the legal front soon.

What is the government’s defence?

So far, the Coalition has backed in McKenzie.

The refrain it uses in its defence is that the projects that won funding were all “eligible”.

The government is also claiming the grants are having a positive impact in their respective communities.

Morrison said on Monday the program is “delivering very much-needed grants to local communities to build sporting facilities that I know those communities are very appreciative of”.

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Where to next?

Labor, far from a cleanskin in this area, is continuing to put pressure on McKenzie.

Labor’s Anthony Albanese told Adelaide radio on Wednesday that it was “just red hot. This is just a rort. It fails the pub test. It fails every test.”

The media continues to dig through the long list of successful applicants, investigating who got grants and who missed out.

Porter is investigating the lawfulness of the scheme and a possible class action waiting in the wings. There will be a host of worthy clubs that missed out, which will be watching this debate rage, unsure of whether to speak out publicly or not.

The upshot? The headache is far from over for the Coalition.