In June 2022 we discussed the Independent Commission Against Corruption (ICAC) forum's examination into the legality and ethics of pork barrelling in politics. A year later, the NSW Government has passed the Government Sector Finance Amendment (Grants) Bill 2023 (NSW) (GSFA Bill), designed to strengthen government accountability in the use of public funds by Ministers and government staff.
Below we outline the outcome of the ICAC forum, the amendments made by the GSFA Bill and the impact of these changes on NSW Ministers, government employees and agencies.
The ICAC findings
Following the forum, ICAC published a report known as Operation Jersey which outlined its views on pork barrelling and found that although under existing law pork barrelling could amount to corrupt conduct, there is a need to better regulate and prevent the practice.
ICAC examined existing mechanisms regulating the use of government grants, including the Government Sector Finance Act 2018 (NSW) (GSF Act) which sets out values guiding the exercise of financial management functions by a government officer or GSF agency. A key finding in this respect was that the GSF Act contained no direct reference to "value for money", a probity principle frequently breached by pork barrelling. In response to this, ICAC recommended that an equivalent to section 71 of the Public Governance, Performance and Accountability 2013 (Cth), which regulates proposed expenditure of a Commonwealth Minister, be legislated in NSW.
GSFA Bill 2023
The GSFA Bill was passed by both houses on 25 May 2023 and will commence on 1 July 2023.
The Bill responds to the ICAC recommendation by inserting a requirement into the GSF Act that government Ministers do not approve grants unless they are satisfied that the grant is "an efficient, effective, economical and ethical use of money" and will achieve "value for money".
Furthermore, the Bill effectively codifies the seven key principles of Grants Administration currently set out in the Grants Administration Guide. While the GSF Act currently prevents Ministers, ministerial staff and government sector agency employees from "knowingly" breaching a requirement contained in the Guide, the Bill creates a positive duty for these individuals to consider the Grants Administration principles when approving or declining an applicable grant.
A person approving or declining a grant must now have regard to:
- robust planning and design in the grants process
- collaboration and partnership with all relevant stakeholders
- proportionality according to the value and complexity of the grant and the associated risks
- achieving outcomes and benefits consistent with government objectives
- achieving value with the relevant money
- governance and accountability
- probity and transparency.
In addition to these tighter controls on the making of government grants, the Bill contains two key changes designed to increase the overall transparency in the grants administration process.
The Bill amends the Government Information (Public Access) Act 2009 (NSW) (GIPA Act) and the Government Information (Public Access) Regulation 2018 (NSW) (GIPA Regulations) to prescribe certain information relating to government grants as "open access information", which is to be made publicly available free of charge unless there is an overriding public interest against disclosure.
The Bill also amends the GIPA Act and GIPA Regulations to require publication of this information on the New South Wales Government grants and funding finder website.
What these changes mean for Ministers, government employees and agencies
The changes to the GSF Act apply not just to NSW government Ministers, but to any person "approving or declining a grant to which the Grants Administration Guide applies" including:
- Ministers
- officials, being government sector employees within the meaning of the Government Sector Employment Act 2013 (NSW), excluding employees of State Owned Corporations (SOCs)
- ministerial staff.
To ensure their decisions are not open to administrative law challenge, Ministers, officials and ministerial staff must now specifically consider the seven key principles of Grants Administration when approving or declining an applicable grant. Moreover, when approving grants, Ministers must now ensure they address the new requirement that grants are "an efficient, effective, economical and ethical use of money", and that will achieve "value for money".
The amendments to the GIPA Act and GIPA Regulations also means that NSW government agencies will need to adapt their existing disclosure and publication practices as necessary to bring them into line with the new requirements.
This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.