Public servant whose report led to the resignation of Bridget McKenzie finds program lacked transparency, but rejects audit office findings

This article is more than 7 months old

This article is more than 7 months old

Bridget McKenzie’s selection of projects for $100m in sports grants lacked transparency and diverged significantly from Sport Australia’s recommendations, Australia’s top public servant has found.

But despite criticising the former sport minister’s handling of the community sport infrastructure grant program, Phil Gaetjens has rejected the Australian National Audit Office’s conclusion it was targeted at marginal and target seats.

Gaetjens’ comments are contained in a submission to the Senate inquiry into sports grants, the first intervention by the secretary of the Department of the Prime Minister and Cabinet in his own words since Scott Morrison asked him to report on McKenzie’s adherence to ministerial standards.

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Gaetjens’ report triggered McKenzie’s resignation on 2 February over a conflict of interest in one grant, but the government has blocked its release on the basis it is a confidential cabinet document.

In the submission, Gaetjens said McKenzie had “wide discretion” about the “other factors” she could consider and that she had “acted within the remit of the guidelines” when approving grants.

Gaetjens agreed with the ANAO that there were “significant shortcomings” with her decision-making role, agreeing that McKenzie’s office had undertaken “a separate and non-transparent process in addition to the assessment by Sport Australia”.

“Key among these were the lack of transparency for applicants around the other factors being considered, and the disconnect between the assessment process run by Sport Australia and the assessment and decision-making process in the minister’s office.

Facebook Twitter Pinterest Phil Gaetjens, the secretary of the Department of Prime Minister and Cabinet. Photograph: Mike Bowers/The Guardian

“This lack of transparency, coupled with the significant divergences between projects recommended by Sport Australia and those approved by the minister have given rise to concerns about the funding decision-making.”

Gaetjens cast doubt on the conclusion that a spreadsheet generated in November 2018 that was colour-coded by electorate and party was the basis of McKenzie’s decisions, noting that decisions were made months later in three rounds in December 2018, February 2019 and April 2019, and that 30% of projects labelled “successful” on that sheet were not funded.

He said this evidence “does not accord” with the ANAO’s conclusion that McKenzie’s office had focused on marginal and target electorates.

“I did not find evidence that the separate funding approval process conducted in the minister’s office was unduly influenced by reference to marginal or targeted electorates.”

Gaetjens also noted McKenzie’s evidence to him “that she had never seen the adviser’s spreadsheet and that neither she nor her staff based their assessments on it”.

On Thursday, ANAO officials told the first sports grants inquiry hearing that McKenzie was not interviewed and did not formally respond to its draft report when asked for comment.

Gaetjens said 32% of proposed projects in marginal or target seats were ultimately approved, compared with 36% in other electorates. He noted that 180 marginal or targeted projects were recommended by Sport Australia, and 229 were ultimately approved by the minister, representing a 27% increase, but the number of projects funded in non-marginal non-target seats also increased from 325 to 451, or 39%.

Gaetjens argued McKenzie’s intervention had improved the geographical spread of projects, with only five electorates missing out on any funding, compared with 30 that were set to miss out if Sport Australia’s recommendations had been adopted.

“Further, the evidence I have reviewed does not support the suggestion that political considerations were the primary determining factor in the minister’s decisions to approve the grants.

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“On this basis, and while there were shortcomings in the administration of the program, I concluded senator McKenzie did not act in breach of the standards with respect to fairness.

“I did find that senator McKenzie breached the standards by failing to declare her memberships of two organisations and that she had an actual conflict of interest when awarding funding to one of those organisations, the Wangaratta Clay Target Club, which was neither declared to the prime minister nor managed.”

Gaetjens did not interview anyone from the prime minister’s office, and acknowledged he did not have all the information available to the ANAO.

The Gaetjens submission did not address the ANAO’s finding that it was “not evident” what McKenzie’s legal authority was to approve grants.

On Friday Labor’s Anthony Albanese accused Scott Morrison of personal involvement in the $100m program and misleading parliament by claiming that all projects funded were eligible.

He cited evidence from the ANAO on Thursday evening that in fact 43% of projects were ineligible when agreements were signed and that Morrison’s office had made “direct” representations about which projects should be funded, including exchanging versions of the spreadsheet with McKenzie’s office.

The government has continued to defend the eligibility of projects, citing the fact that “no project which was funded was assessed as ineligible at the time the assessment was made”, as the finance minister, Mathias Cormann, said on Friday.