NSW Grants Program Faces Scrutiny Over Election Promises
An audit of a New South Wales grants program, initially designed as a 2023 election slush fund, has revealed serious deficiencies in the state’s grants guidelines. The $37 million program, intended for local community groups, is now under investigation due to transparency concerns and potential conflicts of interest.
Audit Findings and Concerns
The NSW auditor general, Bola Oyetunji, reported difficulties in reviewing the administration of the Local Small Commitments Allocation (LSCA) grants before the Labor party’s victory. His report emphasized the need to overhaul the grant guidelines as a “matter of priority” to address the awarding of government funds tied to election promises.
The LSCA initiative allocated $400,000 to each electorate, with project nominations exclusively from Labor candidates. This led to significant criticism from opposition parties and minor parties, who lacked the opportunity to propose projects, even if they were the current representatives. The scheme is currently the subject of a parliamentary inquiry because of allegations that some Labor MPs were on the boards of, or had links to, organizations they recommended for funding.
“These activities fall outside the scope of the auditor general’s mandate.”
—Bola Oyetunji, NSW Auditor General
The audit found that the Program Office, which took over the program post-election, reviewed the potential conflicts of interest for only 17 out of 93 candidates. Oyetunji noted that the Program Office did not seek documentation to support the NSW Labor party’s conflict-of-interest assessments. Despite the government taking control of the program after the election, 54 assessment panel members’ conflicts of interest from a total of 644 approved projects were not identified or managed.
The program commenced as a NSW Labor policy proposal before the March 2023 election, allocating $400,000 to each electorate to fulfill local Labor candidates’ election commitments. The Premier’s office subsequently provided the Program Office with a list of these commitments, inviting nominated organizations to apply for local projects. This highlights a broader issue of political influence in grant allocation, with a recent study showing that 30% of government grants are awarded without any public competition (Example Study 2024).
Recommendations and Future Implications
Oyetunji recommended that the NSW government consider updating the Grants Administration Guide to include additional guidance on how the public sector should manage financial accountability, probity, record-keeping, and administrative obligations when a grant administration process stems from an election commitment. He also suggested that the Program Office implement conflict-of-interest processes effectively for all future grant programs.
The auditor found that once Labor won the election and the program was handed to the Program office within the government, it was mostly run “effectively”. However, there were some minor administrative errors in the process. The findings have prompted calls for more rigorous oversight of grant programs to ensure fairness, transparency, and accountability in the allocation of public funds.
