Labor says government has ‘failed the test Scott Morrison set for Bridget McKenzie’ by funding an ineligible project

This article is more than 7 months old

This article is more than 7 months old

A donor to the Liberal National party received a $5.5m jobs and investment grant, despite potentially being ineligible because it is a registered training organisation.

In April 2018 Nolan Meats was approved to receive the grant under the $200m regional jobs and investment package’s business stream, despite being listed as a registered training organisation, a disqualification under the program guidelines.

According to a scathing auditor general report, released in November, the program received 12 applications that were ineligible for funding, including one that was successful.

The shadow infrastructure minister, Catherine King, said the government had “failed the test Scott Morrison set for Bridget McKenzie” by funding an ineligible project.

Before McKenzie’s resignation over a failure to disclose membership of a shooting club that received funding, Morrison repeatedly defended her handling of the $100m community sports infrastructure grants program on the basis that no rules were broken and all projects were eligible for funding.

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The regional jobs and investment package’s guidelines warn applicants that the infrastructure department “cannot waive the eligibility criteria under any circumstances”.

In the Wide Bay Burnett region, where Nolan Meats received funding for its Gympie abattoir, the auditor general found “none of the eight highest applications ranked and scored the highest were awarded funding”.

At a parliamentary inquiry hearing on Friday, infrastructure department officials were unable to name the ineligible company and which minister had intervened on their behalf, taking both questions on notice.

But the department’s regional programs general manager, Donna Wieland, told the joint committee of public accounts and audit that one applicant was assessed as ineligible because it was judged to be a registered training organisation.

“Further investigation found it had registered as an RTO to provide training to its staff; its main core business was not to provide training,” she said.

Wieland said that one of the ministers on the panel assessing the project had contacted the department expressing that the panel was “interested in funding” the project anyway because training was only incidental to its business.

Although the Nolan Meats grant is listed on GrantConnect as having been made on 15 December 2017, the auditor general found the ministerial panel had met to discuss Wide Bay Burnett projects on 7 February and 1 March 2018, with approval recorded on 19 April 2018.

The auditor general said the ministerial panel for that region was chaired by then-regional development minister John McVeigh, who became a minister on 20 December 2017, and included small business minister Michael McCormack, Liberal MP James McGrath and former rural health, sports and regional communications minister Bridget McKenzie.

King said that “both the department and audit office confirmed the ineligible company was only included because of intervention from the minister’s office”.

“Michael McCormack must explain why this company received special treatment when so many others that followed the rules missed out,” she said.

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Nolan Meats disclosed a $3,000 donation to the Liberal National party in November 2017, one of a number of donors to receive grant funding under the regional jobs and investment program including Shoalhaven Starches, in the Manildra Group, and Teys Australia Murgon.

Tony Nolan, a director of Nolan Meats, said the donation was made because “we supported the National party in the past and we continued our support”, but ruled out any link to the government grant. “No, of course [that wasn’t the reason].”

Nolan said the donation may have been prompted by a fundraising call from the local branch, but could not recall who had approached the company.

He confirmed to Guardian Australia it was a registered training organisation because it trained its own staff. “Being an RTO is not our primary business but it is a critical component, to give our workers portable skills in the meat industry,” Nolan said.

The $5.5m Nolan Meats grant will be spent in a $10m meat-processing expansion to double production capacity from 550 to 1,100 cattle a day at its Gympie abattoir.

“Once completed, this expansion will create 200 direct full-time equivalent positions which will generate a $34m yearly boost to the local economy,” the program description said.

The grant term is from April 2018 to December 2020. Labor has also questioned whether the project may have been ineligible because guidelines require projects to be ready to commence within 12 weeks of executing the grant agreement. Nolan Meats issued a a call for tenders due on 27 August.

Nolan said the project “definitely” began within 12 weeks of receiving the grant and the main building tender was the last of about eight callouts for work on the project. “Preliminary works started way back – it is not an issue.”

Guardian Australia has contacted McCormack and McVeigh for comment.