A very brave decision, Minister (in the absence of delegation)
There is no need, by way of introduction, to recap on the politics associated with the sports rorts affair, which have consumed front pages and column inches for some weeks. Let’s pause though to summarise the key elements of the Community Sport Infrastructure Grant (CSIG) program and the key findings of the Australian National Audit Office (ANAO) audit.
CSIG program
The CSIG program was introduced in 2018 in a bid to improve local community sport infrastructure, to ensure that communities have access to quality sporting facilities and encourage greater community participation in sport and exercise.
The program was to be administered by Sport Australia, a corporate Commonwealth entity with a separate legal persona, capable of exercising legal rights such as entering into contracts and awarding grants. Sport Australia is not subject to the Commonwealth Grant Rules and Guidelines (CGRGs), which provide expectations for all non-corporate Commonwealth entities regarding grant administration, although it has a Grant Management Framework which is based on the CGRGs.
Grants totalling $100 million were awarded to 684 projects across three rounds of funding in December 2018, February 2019 and April 2019.
According to the published program guidelines, all eligible applications were to be assessed against three weighted merit criteria, with funding to be awarded on a competitive basis by the Minister for Sport.
The decision for the ANAO to undertake an audit into all grants under the CSIG program came about in March 2019, following a request to look into the circumstances surrounding the presentation of a cheque to a bowling club for a project that received over $127,000 in funding under the second round of grants.
The objective of the ANAO audit was to establish whether or not the award of funding under the CSIG program was informed by an appropriate assessment process and sound advice.
Key findings of the audit
The ANAO report was published on 15 January 2020, and found that the grant funding awarded was overall not informed by an appropriate assessment process and sound advice.
Although Sport Australia’s assessment of applications was largely in accordance with the published program guidelines, the Minister’s Office had commenced its own assessment process.
The ANAO found that in doing so the Minister’s Office had considered factors outside of those specified in the program guidelines, in particular, noting projects that were located in Coalition ‘marginal’ and ‘targeted’ electorates. This consideration was not consistent with the published grant guidelines and this supplementary assessment process, rather than the Sport Australia process, predominantly informed the Minister’s funding decisions.
Under the published guidelines, the cut-off score for a project to receive funding was 74 out of 100. The ANAO found that 417 grants, attracting 61 per cent of the funding, had been made to projects that scored less than the cut-off score under the published guidelines.
The legal issues
Delegation – did the laws underpinning the grant scheme give the Minister authority to make the decisions that were made?
Although the program guidelines specified that the Minister for Sport was to approve CSIG funding, the ANAO found no records demonstrating that the Minister was advised of the legal basis on which the Minister could give approval and it was not evident to the ANAO what the legal authority was.
The Australian Sports Commission Act 1989 (Cth) (Act) gives powers to Sport Australia, including the power to make grants or enter into contracts (section 8 of the Act). Under section 11, the Minister has power to give Sport Australia written directions in relation to policies and practices to be followed in performing its functions and exercising its powers.
Prior to giving a direction to Sport Australia, the Minister must inform Sport Australia in writing that the Minister is considering giving the direction and give the Chairperson of Sport Australia an opportunity to discuss the need for the direction. Further, the direction must be published in the government gazette and tabled in parliament.
The ANAO found no evidence that any section 11 directions were issued to Sport Australia during the 2018-2019 period and that therefore, in the absence of any written direction, there was no legal authority under which the Minister was able to approve funding or determine grants to be paid by Sport Australia.
Although the Act affords Sport Australia the power to delegate specific powers and functions to a named list of people, the Minister is not on that list.
Constitutional validity
A second legal issue that arises is whether the government acted outside the Constitution by becoming involved in the funding of local sports. In Williams v Commonwealth of Australia (2012) 288 ALR 410 (the ‘School Chaplains case’) the High Court found that the Commonwealth Government could not spend money unless firstly, there was authorisation by parliament and secondly, the scope was supported by the Constitution.
The Commonwealth Parliament may only legislate on subjects listed in the Constitution, and there is no head of power in relation to ‘sport’.
An argument seeking to rely on nationhood powers as a lawful basis for the powers would fall short, as this would require the government to provide that either it was acting in a national emergency or doing something that state governments could not do. State governments can and do give out sport grants.
Procedural fairness
Under the Statement of Ministerial Standards (to which the NSW equivalents are the NSW Ministerial Code of Conduct and the Code of Conduct for Members), 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 consideration’.
Given the findings of the ANAO audit, it is difficult to see how the Minister met the required standards in exercising ministerial discretion (even if there had been legal authority to do so).
Relevance for NSW
The issue of delegation (here, could the Minister act as the delegate to the agency?) is an interesting one and no doubt there are concerned ministers and agencies around the country examining the legal authority of past decisions in light of the sports rorts affair, particularly in instances of what we might conveniently call ‘captain’s picks’.
Agencies may find themselves subject of criticism in circumstances where advice is not sought, where doubt exists.
Given the broad residual powers of the states, it is unlikely that a situation will arise where the states do not have the power to legislate (contrary to the position of the Commonwealth in local sports funding), assuming a low incidence of transgressions into the express powers of the federal government.
Authors: Christine Jones & Rebecca Weakley
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Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.
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