Australia

Remember sports rorts? Here's why we mustn't forget that shameful episode

Before the Morrison government starts the hard sell of its budget, it's worth recalling a recent episode it would rather the community forget. The sports rorts affair shows us that the public service is becoming a political service, that the Morrison ministry is adept at using public money for private benefits, that it is content to ignore unlawful activity, and that misleading Parliament and public is a matter of no moment.

These are the lessons of the abuse of the $100 million Community Sports Infrastructure grants program. The program offers a prism illuminating all that is wrong with the government.

Illustration: Simon Letch

Illustration: Simon LetchCredit:

People might wonder why – amid a pandemic, a recession and the most challenging budget since World War II – we should hark back to sports rorts, but here's why: from the entrails of this shameful chapter emerge glaring examples of appalling governance that will need to be avoided as we confront the extraordinary hurdles ahead.

The National Audit Office report on the program, released in January, had two major findings: grants were made by the then sports minister, Bridget McKenzie, without evident legal capacity; and grants were influenced by applicants' electorate locations. The Prime Minister added a third issue by claiming that neither he nor his office was involved in selecting successful applicants when evidence showed they were major players.

We know the government trashed the sports grants program by replacing 300 applicants selected by the Sports Commission. We know the government's choices were aimed at marginal and targeted seats. We know ministers used public money to advance their political prospects in the 2019 election.

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It is more worrying that many government agencies enabled this travesty. This includes the Australian Sports Commission and the Departments of Health and of the Prime Minister and Cabinet. To add flavour, our Attorney-General, Christian Porter, played his usual political part, and the Australian Federal Police abetted it all by doing nothing.

To allocate responsibility, we start with finding who decided the grants. The Prime Minister says "the decision-maker … was the sports minister [McKenzie]". The program guidelines said she would be the decision-maker. And McKenzie resigned from the ministry because she made a grant to a sports body with which she had an undisclosed relationship.

But many, including the Audit Office, find that McKenzie had no evident legal power to make any grant decision. Senior lawyers told the Senate select committee examining the matter that the power to make grants was vested solely in the Sports Commission. No lawyer provided contrary evidence.

The Sports Commission has a muddled view. It firstly told the Senate committee that McKenzie was always to be the decision-maker; the commission merely provided its assessments to her. The commission subsequently offered to provide a confidential summary of a legal opinion. It separately advised the Senate committee that the commission "exercised its own powers under section 8 of the [Sports Commission] Act to make grants and enter into contracts".

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The commission thus admits it chose to replace applicants it had selected with those nominated by McKenzie because it was open to the commission "to take account of the minister's approval". Of course, the commission did more than take the minister's choices into account: it abdicated responsibility by unlawfully adopting the government's selections. (About 43 per cent of these were judged by the Audit Office to be ineligible for any grant.)

Morrison was wrong to say McKenzie was the lawful decision-maker. The funding of the program came from appropriations Parliament made to the independent Sports Commission. The commission used its powers to award grants. The commission was the decision-maker. This is why Beechworth Lawn Tennis Club, one of those taken off the successful list, is suing the commission.

The 13 members of the Sports Commission include several who have been awarded Australian honours, a couple of Liberal Party enthusiasts, a sprinkling of investment and merchant bankers and former sportspeople active in sport management. Commission evidence to the Senate committee shows that commission members failed their first duty: to protect the commission. They further failed by not resigning; they wrongly believe they did a good job, or prefer the privileges of their appointments.

The secretary of the Department of Health is an ex-officio member of the commission. This commonly used provision allows the responsible minister an insider's view of an independent agency. The arrangement can, however, cause conflicts of interest: the ex-officio member has a responsibility both to advance the minister's and the commission's sometimes conflicting interests.

We know little about the contribution of the then health secretary, Gladys Beauchamp, while the commission and her minister were selecting different applicants: Beauchamp did not make an opening statement to the Senate committee and on eight occasions she was unable to recollect events. She did advise the committee that, in anticipation of her retirement, she had destroyed all her notebooks. Beauchamp said she saw no conflicts of interest in this grants matter and she did not recuse herself from relevant board meetings.

But we know from McKenzie's evidence that the department and the commission failed to inform the minister that she could not lawfully be the decision-maker for the sports grants.

Phil Gaetjens also has a role worth examining. Gaetjens was chief of staff in Morrison's office from 2015 to 2018. From August 2018, he worked for Morrison as head of Treasury. In 2019 he was appointed secretary to the Department of the Prime Minister and Cabinet. In light of the Audit Office report on sports grants, Morrison instructed Gaetjens to investigate any breaches of the Statement of Ministerial Standards by McKenzie. The government has not released Gaetjens' report, but he advised the Senate committee that "Senator McKenzie acted within the remit of the guidelines".

Gaetjens concluded that McKenzie breached the standards by failing to declare membership of two organisations and she had an actual conflict of interest when awarding funding to one of these. Gaetjens perfectly accommodated the government's political problems. The uproar following the Audit report meant McKenzie could not remain in the ministry. But her failings had to be personal; they could not reveal governmental failures. And the role played by Morrison and his office had to be quarantined.

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Against these criteria, the Gaetjens' report is faultless: Senator McKenzie resigned from the ministry because of a personal error that did not involve the Prime Minister, and Gaetjens avoided material implicating the Prime Minister.

Against other criteria, the report fails. One weakness is that Gaetjens is not an independent investigator.
Gaetjens' precis of his report shows he failed to examine the first of the Ministerial Standards he was meant to consider, whether McKenzie had any power to be the decision-maker. When asked whether McKenzie could lawfully be the decision-maker, Gaetjens said that was a matter for others – he was not a lawyer. Perhaps not, but Gaetjens didn't seek to find out. Knowledge weighs heavily on the heads of advisers.

Unlike the Auditor-General, Gaetjens found no bias in the grants made by McKenzie. This finding, he explained, was the result of arithmetic. But as a member of the Senate committee observed, Gaetjens examined only grants made, not grants discarded.

As Gaetjens says, he is no lawyer. He seems also to be no mathematician. Lawyers defending O. J. Simpson against a charge of murdering his wife told the jury that Simpson's assaults on his wife was irrelevant because few assaulting husbands killed their wives. The better result is found by asking the right question: how many murdered wives were killed by their husbands? As the Auditor-General, Grant Hehir, observed, Gaetjens' arithmetic did not persuade him to change his finding.

What then of Christian Porter, the Attorney-General, who swore an oath to uphold the law? It seems the need of politics was greater than the need of law. Porter seems unperturbed that the government has no constitutional power to fund change rooms or toilets for sporting groups. And he shows no concern over McKenzie's decision-making.

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Morrison, with Porter at his side, suggested – mumbled is the better term – that he had legal advice that McKenzie could be the decision-maker. Gaetjens confirmed that Porter gave an opinion. But that is worrisome: attorneys-general typically provide legal advice when real lawyers will not provide the "right" advice.

It is also possible that Porter did not give a formal opinion. If such advice exists, the Senate committee has not seen it. Even Gaetjens had not seen it when he prepared his report.

Central to this matter is the role of the then sports minister, Bridget McKenzie. She orchestrated the grant process through to the eve of the election. She selected applicants whether or not they met the published guidelines. McKenzie's criteria meant that one project which the Sports Commission scored at 98 points failed while another, with four points, was funded. Even Gaetjens observed "there were some significant shortcomings with respect to the Minister's decision-making role".

McKenzie, with no evident authority, directed funds that had been provided to the independent Sports Commission. This is not an arcane matter: Parliament creates independent statutory bodies in part to insulate their work from political manipulation.

McKenzie has advanced the defence of ignorance. Last May, she told the ABC: "If there was any issue around the legality of how this program was going to be run, then my expectation of the Australian public service is that they would've raised it with me."

McKenzie was not advised by the Sports Office in her department or by the Sports Commission that she had no power to make grants. The Department of the Prime Minister and Cabinet offered her no protection. The Department of Finance, which monitors these programs, raised no problems with the minister's public role of decision-maker.

This failure to provide legal advice adds to other examples of departments bowing to political pressure: departments failed to advise ministers that robodebt was unlawful; the Agriculture Department failed to tell its minister when the export of live sheep was contrary to law; departments changed staffing decisions to respond to ministers' pressure; departments increasingly provide draft advice to the government in case it is unwanted.

The public service is failing to give ministers advice that is politically unpalatable. This failure was encouraged when the government urged public servants to concentrate on advancing the government's agenda.

McKenzie's actions might allow a common-law claim of misfeasance in office. The Federal Court recently found that Senator Joe Ludwig, former agriculture minister, committed misfeasance in 2011 when he acted unlawfully in prohibiting the export of live animals to the detriment of graziers. The court ordered the government to compensate affected parties. Sport applicants who unfairly lost grants would similarly have cause to sue for compensation.

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Misfeasance is a civil matter, but if it is also an abuse of public office it can lead to criminal prosecution under the Criminal Code Act 1995.

McKenzie raised the possibility of another crime under that act when she claimed her signed and dated determination of grantees was altered without her knowledge. The Senate committee found email evidence that these substituted grantees had been selected in the Prime Minister's office.

This brings us to the role of Scott Morrison and his office. Morrison has advanced two responses to charges that he and his office played a key role in undermining the sports grants program.

In the first version, given in January at the National Press Club, Morrison said: "All we did was provide information based on the representations made to us." The evidence in the many messages between Morrison's and McKenzie's offices belies this. And recent evidence to the Senate committee shows that the two offices wanted to increase the funding of the program so that more applicants from marginal and targeted seats could be selected.

Morrison now says that neither he nor his office was decision-makers. But in this matter, those who signed the documents and those who guided the elbow of the signer are equally implicated.

Who is going to resolve this mess? We cannot rely on a federal anti-corruption commission because Porter has failed to establish one. We cannot rely on the Australian Federal Police because, as AFP Commissioner Reece Kershaw recently told the National Press Club, matters of corruption need to be referred. That leaves the Senate, the National Audit Office and the media.

Tony Harris is a former NSW auditor-general and senior Commonwealth officer.

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