Auditor-General Grant Hehir’s report, released on Wednesday, uncovered massive politicisation of the scheme, finding then sports minister McKenzie intervened in hundreds of cases and engaged in “distribution bias” by targeting cash at marginal seats.
Compounding the damage for McKenzie is the report’s suggestion her actions were potentially unlawful.
“There are no records evidencing that the minister was advised of the legal basis on which the minister could undertake an approval role, and it is not evident to the ANAO what the legal authority was,” the report says.
When the Keating government’s Ros Kelly resigned from the ministry in 1994 over a similar “sports rorts” scandal, she and her advisers used a whiteboard in her office to dole out cash to marginal seats.
McKenzie’s staff adopted a 21st-century approach, using a spreadsheet to conduct what the ANAO described as a “parallel assessment process” on top of the official guidelines as administered by Sport Australia.
Helpfully, a staff member added two columns to the spreadsheet “Successful” and “Electorate Status”, with each application colour-coded either blue for Liberal, green for National, red for Labor or orange for independent to identify which party held the seat.
The Community Sport Infrastructure program was announced in mid-2018, making up to $500,000 available to grassroots groups and councils to build new or upgrade facilities such as playing fields, ground lighting, clubhouses and change rooms, as well as purchase equipment.
The program was wildly oversubscribed, with 2056 proposals received, seeking $396.6 million in funding. The initial tranche announced by the government was just $30 million but this was boosted to $100 million over two further rounds.
Sport Australia (the former Australian Sports Commission) whittled the list down to an initial 426 lucky recipients using three criteria: whether a project would increase community participation in sport, whether the project was a priority for a local council or state-national sporting organisation, and the maturity of the project’s design and ability to be delivered.
The criteria was then crunched together to produce a score out of 100 – the higher the score, the greater merit a project had.
On November 13, 2018, Sport Australia board members were presented with the list of 426 applicants that would be sent to McKenzie’s office for approval.
But five days earlier, her office had requested and received an updated spreadsheet from Sport Australia with all projects and their merit score.
According to the ANAO, this parallel assessment within McKenzie’s office was “a basis for the minister deciding which projects should be funded with additional analysis on ‘marginal’ electorates held by the Coalition, as well as those electorates not held by the Coalition that were to be ‘targeted’ in the 2019 federal election”.
By November 20, her staff had identified 705 projects in marginal and targeted seats.
There were 481 in 30 Coalition-held marginals, 126 in targeted Labor seats and 98 projects in four seats held by independents. The lowest merit score was just 13 for one project.
Under the first $30 million round of funding, McKenzie’s office presented an alternate list, telling Sport Australia she would approve 82 projects in the 30 Coalition marginal seats to receive cash and 32 in the 17 target seats, a success rate of 17 per cent for applicants.
In the Parliament’s remaining 103 seats, just 82 projects were proposed to be funded, a 7 per cent success rate.
“The applications that the minister’s office was proposing be successful were not those assessed as having demonstrated the greatest merit in terms of the published program guidelines,” the ANAO report says.
The swing seat of Braddon in northern Tasmania (then held by Labor) provided a good example of McKenzie’s meddling. The project judged to have the most merit was initially proposed to be funded but the next two highest-ranked projects were not.
Instead, the projects ranked fourth and fifth on merit received funding in round one, while the project judged the most meritorious with a score of 93 got nothing during the life of the scheme. The Liberals won the seat last year.
Nine of the 10 seats that received the least funding were Labor-held.
When the successful applicants were formally announced on December 11, 2018, of the 224 grants, 91 were not on the original list that had been endorsed by the Sport Australia board.
The political interference was even more blatant in later rounds. For round two, 162 projects were not on the list of 204 applications that Sport Australia planned to recommend.
By the third round, announced in the April 2019 budget just days before the election was called, Sport Australia had a list of 245 projects it recommended for funding, but McKenzie’s office overruled this with a list 228 projects she had already approved. Her list had 167 projects that had not been recommended by Sport Australia.
In each round, McKenzie’s office told Sport Australia which applications were going to be approved for funding before it had provided any written advice.
All up, McKenzie and her staff approved 420 projects out of 684 funded that had not been endorsed by Sport Australia, while hundreds of applications judged more worthy of taxpayers’ funds missed out.
Her approvals saw $41 million showered on the 47 contested seats. Another way of putting it was nine of the 10 seats that received the most money were either Coalition marginals or those on the Coalition’s hit list.
Nine of the 10 seats that received the least funding were Labor-held, including four that got nothing.
McKenzie also played hardball over the timing of announcements. Coalition MPs were the first to be notified about projects that had been funded in their electorates, receiving a letter from McKenzie and a template media release and urged to contact successful applicants to drum up publicity.
Non-government MPs received the same letter (but not the media release) seven days later in the case of round one funding, and 14 days later for round two.
On the same day non-government MPs received their hard copy letters for round two funding on February 19, 2019, Coalition candidates contesting those seats were emailed the same information electronically.
In the case of the Yankalilla bowlers, this gave Downer the jump. Sharkie’s staff contacted McKenzie’s office that same morning she received the letter asking for contact details for the bowling club.
While the response was prepared within 15 minutes, McKenzie’s office did not send it to Sharkie until the afternoon of the next day.
By that time, Downer’s campaign had already made arrangements with the bowling club to make the formal announcement, novelty cheque and all, two days later.
When the controversy erupted, the bowling club’s secretary, John Humphrys, told the local newspaper it had been his idea to ask Downer to present the cheque to “make an impact” with members in recognition of her lobbying for the cash.
Unfortunately, the auditor-general’s report does not reveal which projects McKenzie and her staff wanted funded against the advice of the bureaucrats. Groups which missed out are understandably reluctant to go public with their disappointment for fear of being blackballed.
The audit criticises McKenzie’s office for keeping inadequate records of decision-making, with some choices at odds with the program’s aim of improving participation by female and disabled athletes.
A skating rink’s application to redevelop its toilets into more “user-friendly facilities” had a merit score of 98 out of 100 and was recommended for a $45,000 grant but was ignored by McKenzie’s office.
When McKenzie was considering third round applications, she dismissed Sport Australia’s warnings of “risk” over the program, which complained it lacked the resources to properly administer the program and could not shovel the cash out the door quickly enough.
On the accountability front, the ANAO report reveals Sport Australia told the government that under its act, it was required to be the approver of funding.
However, McKenzie insisted she would have the final say. In this case, a direction to the Sport Australia board should have been issued to allow her to assume this power but none was forthcoming.
“In the absence of a section 11 direction, there was no legal authority evident to the ANAO under which the minister was able to be the approver of CSIG program grants to be paid from the money of Sport Australia,” the report says.
Despite the skewing of funding, McKenzie’s chief of staff told the ANAO they tried to avoid partisanship.
“The success of the program relied on the support across Parliament so [we] needed to make sure the spread of projects reflected the statistics and could be seen as fair,” the staffer said.
“Equally we were sensitive to the accusations of pork barrelling so we were very conscious of projects for the Nationals, as the National Party Deputy Leader, for Victoria as senator for Victoria or with independents as her electorate office was in Indi so we made sure that we were not over-
represented in these areas.”
But McKenzie, who is now Agriculture Minister, is unrepentant over her handling of the grants program, seizing on the ANAO’s finding that no ineligible projects had been funded.
“No rules were broken in this program,” McKenzie told ABC radio on Thursday.
“The reality was there were many hundreds of meritorious projects that we just didn’t have the funding available for.”
It’s perhaps ironic that it took funding to a bowling club to reveal the scale of this latest sports rorts. After all, if there is anything bowlers know about, it’s the importance of bias.