Government Sector Finance Amendment (Grants) Bill 2023

Hansard ID: HANSARD-1323879322-130922

Hansard session: Fifty-Eighth Parliament, First Session (58-1)

Government Sector Finance Amendment (Grants) Bill 2023

Second Reading Speech

Ms JO HAYLEN (Summer HillMinister for Transport) (10:18:32):

— I move:

That this bill be now read a second time.

Accountability, transparency and integrity need to be at the heart of government. That is why New South Wales Labor made an election commitment to bring integrity back into the grants system, and I am pleased to be able to bring that about today by introducing the Government Sector Finance Amendment (Grants) Bill 2023. The former Liberal Government's track record on administering grants was simply appalling. Despite mounting evidence—indeed, damning evidence—that the administration of grants in New South Wales was broken, the former Government persistently refused to legislate to restore faith in the grants system. I do, however, recognise the steps it took but it refused to take the step that Labor will now take to legislate those protections. We are fixing the system now.

Every year in New South Wales the Government typically spends around $4 billion on grants. When done correctly, grants can be a highly effective mechanism for providing government support to people across New South Wales, including individuals, organisations and local communities. As all members know, grants programs provide significant benefit to people right across this State. That makes it even more critical that a strong framework for regulating grants is in place, ensuring they are administered fairly and achieve value for money. It is essential that taxpayer money—public money—spent on grants is money spent wisely. Grants are not a plaything of a political party, and they are not the gift of the government of the day. It is essential that they are directed towards enriching the lives of people across New South Wales. The bill before the House is directed at this very cause. The integrity and transparency enhancements will be mandatory; they will be entrenched in the law.

Grants Administration Guide

Under the Government Sector Finance Amendment (Grants) Bill 2023, amongst other integrity measures, a Minister must not approve a grant unless satisfied that its expenditure is efficient, effective, economical and ethical and that it would be value for money for the people of New South Wales. The bill will build on the existing framework for regulating government grants to help ensure that we deliver effective, efficient and ethical grants for the people of New South Wales. The framework was forged from much scrutiny in the previous Parliament, and it is bolstered by the bill today. The , issued in September 2022, contains overarching principles that apply to all government grants and imposes specific requirements that must be complied with when administering grants. The guide is issued under a Premier's memorandum, making it legally enforceable and binding on Ministers and officials. Compliance with the mandatory requirements of the guide is necessary by law under the Government Sector Finance Act 2018.

The bill will not replace the framework for the regulation of government grants in New South Wales. That framework and its definitions will continue. However, the bill will make amendments that bolster the existing framework, strengthening the integrity of government grants. On behalf of the Government, I place on record the appreciation we have for the careful work of the Auditor-General, Margaret Crawford, and her team. They have done outstanding work in this area, in particular the work they did by examining the administration of the Bushfire Local Economic Recovery program, which led to the report that was released in February this year. The Auditor‑General's report found that the fast‑tracking stream of the Bushfire Local Economic Recovery Program was not effectively administered. It stated:

The administration process lacked integrity ... and the assessment process for projects lacked transparency and consistency.

Further, it found that the then Deputy Premier's office set a threshold that resulted in the exclusion of all shortlisted projects located in Labor Party electorates. No-one could deny that the issues of transparency and integrity in public officials were key parts of the recent New South Wales election and, indeed, last year's Federal election. They are matters of genuine concern to the public. The former Premier infamously took a very relaxed attitude to the historic levels of pork-barrelling her Government engaged in, saying it was just something everyone expected. The people said otherwise at those State and Federal elections.

The public did not expect that bushfire recovery grants would be calibrated in the Deputy Premier's office—one of the highest offices in our State—to exclude electorates not held by the government of the day. The public did not expect that a skydiving park would receive $11 million in those grants while an entire local government area of the Blue Mountains—half of which was burnt by those devastating bushfires—would receive nothing. Other areas in the Central Coast, and Tenterfield in the Lismore electorate, also received nothing, despite the fact that the Central Coast local government area suffered more than $163 million in economic impact. The public does not expect that to occur and was rightly horrified by it. That is partly why those issues were so prominent in the two most recent elections. During a disaster the Government should be asking people how it can help, not who they voted for.

I could not introduce the bill without referring to the long debates that were had in the last term of Parliament on the Stronger Communities Fund, 96 per cent of which went to Coalition electorates. When the Parliament chased the approvals paperwork it was told not only that the paperwork was not there in the first place but also that it had been destroyed. It was the good work of the committees of the Parliament that discovered the documents were shredded and that the electronic backups were deleted. That is the only reason why that approvals paperwork was not available. That is the history that we move away from today as this bill comes before the Parliament.

It is a serious matter for all members, whatever side of politics we are on, when the administration of funds erodes people's faith in government. That loss of faith has a flow-on effect across society that is bad for all of us. It weakens community ties and increases the susceptibility to fringe views. I call on all members of the House to back this improvement and back the changes that were made by the former Government and are being strengthened by this Government. One thing we can do to turn the tide on that cynicism is to support the provisions of the bill.

I turn to the specifics of the bill. The bill will make two amendments to the Government Sector Finance Act. The first amendment, new section 10.3A (2), will require that a Minister must not approve a grant unless satisfied that the expenditure would be an efficient, effective, economic and ethical use of money, and that it achieves value for money. That will import into the Government Sector Finance Act a modified version of section 71 of the Commonwealth Public Governance, Performance and Accountability Act 2013, applying specifically to grants expenditure. That provision aligns with the key principles in the guide relating to accountability, transparency and value for money.

Grants Administration Guide

In relation to grants expenditure specifically, the amendment will also implement recommendation No. 2 of the Independent Commission Against Corruption report on its investigation into pork-barrelling in New South Wales, known as Operation Jersey. In that report ICAC recommended that the amendment of the Government Sector Finance Act include a provision that reflects section 71 of the Public Governance, Performance and Accountability Act and also that consideration be given to whether the expenditure represents value for money. The second amendment to the Government Sector Finance Act, new section 10.3A (3), will require the decision‑maker for a grant, in approving or declining a grant, to have regard to the key principles for administering grants set out in the .

The guide specifies the seven principles to be applied in administering grants as robust planning and design, collaboration and partnership, proportionality, an outcomes orientation, achieving value with relevant money, governance and accountability and probity and transparency. Those principles reflect the government sector's core values and provide a strong foundation for grants administration. In making this amendment, the bill will reinforce the centrality of those concepts and ensure that they guide key grant decisions. The procedural aspects of grants administration, which are more susceptible to change, will remain in the guide. They should remain in the guide so that they are flexible and able to change as we learn more about what is required. That will retain the flexibility of the current settings relating to process and procedure.

Grants Administration Guide

The bill will also transfer the existing duty to comply with the —currently in schedule 1 to the Government Sector Finance Act—to new section 10.3A (1) and make other consequential amendments to the Government Sector Finance Act. In addition to amending the Government Sector Finance Act, the bill will also amend both the Government Information (Public Access) Act 2009 and the Government Information (Public Access) Regulation 2018 to make certain grants information "open access information". The object of the Government Information (Public Access) Act is stated in section 3 of that Act as being to "open government information to the public" through various mechanisms. One of those mechanisms is by specifying that "open access information", under section 6 of the Act, must be made "publicly available unless there is an overriding public interest against disclosure of the information".

Grants Administration Guide

Part 3 of the Act lists the government information that is "open access information" for the purposes of section 6, including, under section 18 (g), "such other government information as may be prescribed by the regulations as open access information". The bill will amend the Government Information (Public Access) Regulation to include certain grants information as open access information. The grants information that is specified in the bill as open access information includes the information that must be published in accordance with the requirements of the . It mirrors those provisions but lifts them up into legislation.

The bill will also amend the Government Information (Public Access) Act and the Government Information (Public Access) Regulation to require publication of this information on the New South Wales Government grants and funding finder website, which is specified in the guide. Of course, one of the key things we can do is make this information more public and bring more sunlight to the process. Those amendments will work to reinforce the importance of transparency in grants administration and are consistent with the existing publication requirements under the guide. I note the bill provides that the amendments will commence on 1 July 2023. That will allow sufficient lead time for agencies to adapt their existing grants administration practices as necessary to bring them into line with the new requirements. They are significant changes and agencies need time to adjust their processes. It is an important culture change across the public service.

The amendments in the bill will deliver on the Government's commitment to strengthen the regulation of grants administered in our State. But we are not done there. The bill is part of a suite of reforms to improve transparency and integrity in government. We committed that if we formed government we would ensure that all major natural disaster relief packages would be automatically referred to the Auditor-General. All grants would be forwarded for review within three months and fast-track grants would also be subject to performance reviews. That was a key recommendation of the ICAC. It is informed by the previous bad behaviour in relation to some of those grant programs, which I referred to earlier. It is informed by the good analysis previously done by the Auditor‑General. We made that commitment and we will carry it out. The former Premier issued Premier's memorandums on integrity matters but the community expects the recommendations to be made law. We do that today. We look forward to further improving the regulatory framework to ensure that the expenditure of grants in New South Wales is money spent well and fairly. I commend the bill to the House.

Second Reading Debate

Mr MARK COURE (Oatley) (10:34:16):Grants Administration Guide

The Opposition does not oppose the Government Sector Finance Amendment (Grants) Bill 2023. Clause 31 of schedule 1 to the Government Sector Finance Act 2018 was inserted into that Act by the Treasury Legislation Amendment (Miscellaneous) Act 2022, which commenced on 1 July 2022. That provision requires those making decisions on grants, including Ministers, to comply with all mandatory requirements contained in the . The current guide was issued on 19 September last year by the previous Coalition Government.

Ms Lynda Voltz:

Far too late.

Mr MARK COURE:

The member for Auburn will have her chance to speak. It was one of the many measures undertaken by former Premier Perrottet to strengthen and safeguard integrity in public administration.

Ms Kate Washington:

After a decade of pork-barrelling.

Ms Anna Watson:

You don't know what integrity is.

Mr MARK COURE:

Order!

Ms Kate Washington:

You are not in the chair.

Mr MARK COURE:

Mr Assistant Speaker—

The ASSISTANT SPEAKER (Mr Jason Li):

I was momentarily distracted. The Chamber seems to have quietened down.

Mr MARK COURE:

Section 1.3 of the guide states:

mustmust not

The Guide provides best practice guidance and includes some mandatory requirements. Where a requirement is mandatory, this is indicated by the use of the word '' or the words '' in relation to that requirement.

Section 3 of the guide summarises the mandatory requirements for Ministers, including that they:

… must administer the grant in accordance with the grant guidelines

… must not approve or decline a grant without first receiving written advice from officials on the merits of the proposed grant or group of grants.

… must record the decision in writing, including the reasons for the decision (and any departure from the recommendation of officials), having regard to the grant guidelines and the key principle of achieving value for money.

Those requirements apply to one-off or ad hoc grants as well as to competitive grants. The bill, as well as transferring the existing provisions in clause 31 of schedule 1 to the Act to new section 10.3A, adds two additional provisions, which are outlined in new section 10.3A (2) and (3). I will deal with new section 10.3A (3) first. It states:

When approving or declining a grant to which the Grants Administration Guide applies, a person must have regard to the key principles of grants administration specified in the Guide.

It does not appear to introduce any additional legal obligation on grant decision‑making whatsoever, as it is already a mandatory requirement in the guide that "the key principles … set out in the guide must be met for all grants". New section 10.3A (2) provides:

A Minister must not approve a grant to which the Grants Administration Guide applies unless satisfied that the grant—

(a)is an efficient, effective, economical and ethical use of money, and

(b)achieves value for money.

Grants Administration Guide

The phrase used in paragraph (a) of that provision is lifted from section 71 of the Commonwealth's Public Governance, Performance and Accountability Act 2013 and is essentially a more verbose way of expressing what is put more succinctly in paragraph (b) as "value for money". This provision does not seem to impose any new obligation on Ministers as long as it is understood in the light of the concurrent obligation to comply with all the mandatory requirements of the . It is worth noting that the guide has an extensive section 5.5 on "Achieving value for money". It makes significant observations about the range of matters that ought to be considered under that key principle of grant decision-making, stating:

This should include consideration of all benefits and costs – economic, social, cultural and environmental – both monetary and non‑monetary.

The new provision directing Ministers' attention to achieving "value for money" must be understood from that broad perspective. In discussing how to achieve value for money, the guide outlines a range of approaches, depending on the total cost of a grant program or of an individual grant. For those over a certain value set in the relevant Treasury policies and guidelines—currently $10 million or higher—a business case, including a cost‑benefit analysis, is required.

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