Ministers keep saying in relation to the sports-rorts affair that Bridget McKenzie had ministerial discretion to make the grants and that she was only exercising normal ministerial powers. They also keep saying that no rules were broken.

This either shows a complete misunderstanding of the powers of ministers within the legal system, or a desire to mislead the media and the public.

So to what extent do ministers have discretion and what are the limits on it? Ministers have discretion in directing their departments, but do not have the same ministerial discretion in directing corporate entities such as Sport Australia.

If we were being charitable to Senator McKenzie (and every other minister spouting about ministerial discretion) we could say that she was confused and really thought the same rules applied to making these sporting grants as would normally apply in relation to a departmental grant program.

Perhaps somehow she was not informed that she had only limited legal powers in relation to the Sport Australia, despite it pointing this out.

But even if this was so, she must still have known and believed she was subject to the following constraints.

Four constraints on ministers

First, section 71 of the Public Governance, Performance and Accountability Act 2013 says that a Minister must not approve expenditure of public money unless satisfied, after making reasonable inquiries, that the expenditure would be a "proper use" of the money. "Proper" is defined as meaning "efficient, effective, economical and ethical".

Second, the Minister would have to comply with the Commonwealth Grants Rules and Guidelines, which are imposed by a statutory instrument. They require that Ministers must not approve grants without first receiving written advice from officials on the merits of the proposed grants and must record, in writing, the basis for their approval, relative to the grant guidelines and the principle of achieving value for money. While Ministers may approve grants that are not recommended by officials, they must report to the Finance Minister on all such instances, including a statement of reasons, such as the basis of approval for each grant.

Third, the Minister is subject to administrative law in making decisions that involve the exercise of discretion. Ministers must not take into account any irrelevant considerations or act for an improper purpose or in an irrational manner. Ministers must take into account relevant considerations, such as meeting the criteria set out by the scheme's guidelines. Where a Minister is required to be satisfied of a fact before acting, the Minister must be able to point to the evidence relied upon to support the finding of fact. There also needs to be a logical relationship between the facts relied upon and any findings made by a Minister. So when a statute requires the Minister to be satisfied that expenditure is efficient, effective, economical and ethical, the Minister must be able to show the facts she relied upon and how they logically supported her reaching that conclusion.

Fourth, when it comes to the "ethical" decision-making required by statute, the Statement of Ministerial Standards gives guidance as to ethical ministerial behaviour. Ministers must act 'in the lawful and disinterested exercise of the statutory and other powers available to their office', rather than for party-political advantage. Official decisions must be "unaffected by bias or irrelevant considerations, such as considerations of private advantage or disadvantage".

A leaked spreadsheet assessing applications for a Federal Government sports grants program. ( ABC News: Matthew Doran )

Did McKenzie meet the standards?

Given the findings of the Auditor-General, it would be difficult to conclude that the Minister met these required standards in exercising ministerial discretion.

But as the Auditor-General pointed out, the key problem here was that the grant money and the power to distribute it was vested in an independent corporate entity, Sport Australia, not the Minister or her Department.

There was no ministerial discretion that could be exercised. The relationship between the Minister and Sport Australia was defined by statute. There was no power for the Minister to act as a delegate for it. She had a limited power to instruct Sport Australia, but her instructions had to be in writing and, for transparency reasons, published in the Gazette and Parliament. She made no such instructions. If she had no power to approve the grants, she was not acting within the scope of the law.

True, the Commonwealth Grants Rules and Guidelines don't apply in relation to discretion exercised by Ministers in approving grants made by corporate entities (which is unsurprising if the Minister has no power to approve the grants anyway). But even so, if the Minister believed that she had power to approve these grants, she was still subject to all the other constraints noted above, such as only approving grants for the "proper use" of the money and not acting for an improper purpose or upon irrelevant considerations or with bias.

What needs to be made really clear here is that Ministers do not have an unfettered discretion to approve grants however they wish. They are subject to constraints found in statute, in administrative law, in statutory instruments such as the Commonwealth Grants Rules and Guidelines, and in policy statements, such as the Statement of Ministerial Standards.

There are many "rules", and none of them support making grant decisions based upon the location of recipients in targeted and marginal seats for party-political advantage.

This is because the primary rule, as recognised by the High Court, is that Members of Parliament and Ministers are obliged to act at all times, in fulfilling their official duties, in the public interest.

Anne Twomey is a Professor of Constitutional Law at the University of Sydney.