Department says it approached the non-profit group just weeks before the budget and had still not signed an agreement • Sign up to receive the top stories in Australia every day at noon

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This article is more than 2 years old

The government approached a non-profit group that will receive a record grant for reef protection only a few weeks before it announced the deal in the federal budget.



And the government’s announcement of $444m for the Great Barrier Reef Foundation remains an “intention” – there is still no agreement between the foundation and the Department of Environment and Energy, a Senate estimates hearing has heard.

Labor, the Greens and crossbench senators spent hours grilling the government on Monday on what due diligence was done before the environment minister, Josh Frydenberg, announced the grant to the foundation on 29 April.

Stephen Oxley, the first assistant secretary in the department’s heritage, reef and marine division, told a hearing on Monday afternoon the government had announced “its intention to enter into this partnership” and was now determining whether it could be established.

He said the government had first approached the foundation in early April.

“We are in a process at the moment where both the government and the Great Barrier Reef Foundation have expressed their intention to enter into a partnership agreement,” he said.

“We are now going through quite a comprehensive due diligence process where we conclude whether it can be consumated, for want of a better word.”



Labor senator Kristina Keneally said the government did not seem to have undertaken any process at all before announcing the grant and questioned whether a deal was in place at all.

“I did a lot of due diligence on my husband before we got married. You don’t seem to have done any due diligence on this organisation before you announced a half a billion dollar commitment to them,” she said.

Oxley said as part of the budget process, the department had looked at the foundation, its governance, project management and “the quality of the people who sit on the foundation board” to determine if the foundation was capable of increasing the size of its operations from $8m to $10m a year to $444m.

The hearing also heard that there had been no decision on where the funds would be held once an agreement was struck.

During hearings earlier in the day, officials said the government had chosen the foundation for the grant without conducting a competitive process.

Under sustained questioning from senators, the government failed to explain how it decided to award $444m to the foundation, a charity with six full-time staff, instead of using the money to fund work by departmental agencies.



“I’m trying to understand what was the process that led to this massive amount of taxpayer dollars going to one foundation,” senator Keneally told environment department officials. “Was there any competitive tension? Was there any testing of capacity? Was there any open invitation?

“Was there any opportunity for any other organisation to put forward a plan? Was there any contest between the foundation and between the [Great Barrier Reef Marine Park] authority’s capacity to deliver this outcome? How was this decided?

“With the greatest respect, it seems you can’t answer these questions here today – or you’re unwilling to.”

Department secretary Finn Pratt told the hearing there had been no tender or grant application process for the funding, which the foundation has described as being “like winning lotto”.

He and the minister, Simon Birmingham, did not elaborate when asked repeatedly how the government had reached a decision that the foundation was the appropriate vehicle to administer the funds.

“Senator, the government’s decision was to make a grant to the Great Barrier Reef Foundation for this purpose,” Pratt said, adding there had been “a substantial budget process over quite an extended period” for barrier reef expenditure.

He agreed to take on notice questions about whether other organisations working on the reef had been made aware the money was available before it was announced as part of the federal budget.

Birmingham told the hearing: “The government obviously did due diligence in relation to the foundation, has a history of engagement with the foundation and believes the foundation is well-placed to lead efforts in this regard which is why, indeed, this injection with a detailed plan is being made.”

Senators were told the money would be delivered as a lump sum to the foundation but spent over seven years.

Greens senator Peter Whish-Wilson asked why the money had not gone straight to the Reef Trust, which was set up by the Coalition, or agencies such the Australian Institute of Marine Science or the marine park authority.

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“I’m very concerned that you’re essentially outsourcing this record investment – to use your words – in the Great Barrier Reef, to a private entity when we have other entities set up, whether it’s Aims or the Reef Trust or [the authority],” he said.

“There’s plenty of other places where we could be allocating this money that we would have effective control over as government.”

Department officials said the government had not abandoned the Reef Trust and that the money going through the foundation would go through the trust as well. They said executives from Aims were already providing advice to the foundation.

Dean Knudson, deputy secretary for environmental protection, said one of the advantages of granting the money to the foundation was it had the ability leverage additional funding from private sources.

In a later hearing, Russell Reichelt, chief executive and chair of the marine park authority said he learnt of the grant a few weeks before the government announced it in April.

Reichelt is also a member of the Great Barrier Reef Foundation’s board and said he had been told about the grant in his capacity as the authority’s chief executive before the foundation was informed.

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He said he had excused himself from foundation meetings that discussed the grant and whether to accept it, to avoid any potential conflict of interest.

Keneally attacked the government for failing to provide a clear timeline of events relating to the awarding of the grant.

“I’ve got to say with the greatest of respect and as someone who has overseen a number of these processes at state government level, I cannot imagine, ever, a government just without a competitive or open process or some type of public service comparator just blithely awarding nearly half a billion dollars to an organisation that has six full-time employees,” she said.

Birmingham said the government had not blithely awarded the funding to the foundation.

“The government is in negotiations with the foundation and discussions with the foundation about precisely how the funding will be used,” he said. “There will be clear conditions around that as has been made obvious in evidence to the committee already.”