By Scott Alden, Partner

The new Commonwealth Grant Rules and Principles (CGRPs) are now effective (from 1 October 2024) and apply to both new grant opportunities and grant rounds that are in progress as at 1 October 2024.

The CGRPs replace the Commonwealth Grants Rules and Guidelines 2017 (CGRGs).  The reason for the change in the name is stated as being reflective of the fact that the GGRPs include both ‘rules’ (mandatory requirements) as well as principles which allow for a degree of flexibility.  It also helps to distinguish between the contents of the document and other guidance materials that the Department has developed to assist with the implementation of the CGRPs.

The CGRPs retain a lot of the content of the CGRGs but with some important additions and changes, particularly around improvements to integrity, accountability and transparency in grants administration.  A number of the amendments are in response to findings of the ANAO around the effectiveness of grants programs and their administration (ANAO Grants Administration, updated 1 October 2024).

A summary of the more important changes is set out below:

Disclose and Record Material Personal Interests

The CGRPs contain a new paragraph 3.12 which requires Ministerial staff to disclose and take reasonable steps to avoid any conflicts of interest.  Whilst this paragraph is new, it replicates obligations contained in the Act and Rule, the Code of Conduct under the Public Service Act 1999 and the Ministerial Staff Code of Conduct.

Official’s Advice to Ministers (para 4.7)

The CGRPs include additional and changed requirements for officials when briefing a minister who is the decision maker for the opportunity.  They state that the official must:

• Provide advice on the extent to which applications meet the selection criteria
• Indicate which of the applications can be supported within the available funding; and
• Recommend that applications that do not meet any of the selection criteria be rejected.

Officials may include rankings if appropriate and should include any other specific recommendations about the grant applications (for example recommendations based on other factors that may be taken into account as set out in the grant opportunity guidelines).

Obligations for Ministers

In addition to the existing obligations in the CGRGs which state that ministers must not approve a grant without receiving advice from officials, and record in writing the basis for approvals (addressing both merit and value for money), ministers must also:

• Record in writing the basis for not approving a grant that has been recommended
• Report any own-electorate grants to the Minister for Finance as soon as practicable
• Record in writing any grants that are approved that were recommended for rejection, and report the decision to the Minister for Finance as soon as practicable; and
• Record in writing and declare any conflicts of interest relating to a grant.

(paras 4.10 to 4.12)

Finally, the Minister for Finance must table a copy of a report from a Minister in each House of Parliament as soon as practicable after the end of each quarter, as well as it being recorded on GrantConnect, with a summary of the basis of the approval (para 4.13).

Publishing of Grant Opportunities

The exemption from publishing grant opportunity guidelines on GrantConnect for one-off ad hoc grants has been removed (para 5.2).

Forecast Opportunities

The CGRGs did not refer to publication of forecasted grant opportunities.  The CGRPs encourage the development of forecast opportunities, and these must be published on GrantConnect.

Reporting of Variations

The CGRGs did not include specific requirements for grant agreement variations or reporting.  The CGRPs provide guidance on when grant variations may be used, and  reinforce that grant variations should not be used as an alternative to planning a new grant opportunity (paras 4.13 to 4.16).  In addition, material variations must be reported on GrantConnect (which include substantial additional payments, significant extensions of time (e.g. into a new financial year) or changes to organisation details (para 5.4).

New Key Principles

The CGRGs contained 7 key principles that officials must have regard to in grants administration.  The CGRPs include two additional key principles, being:

• Merit based processes (section 11); and
• Consistency with grant guidelines and established processes (section 13).

Documenting Appropriate Skills of Officials

The CGRGs did not address documenting the appropriate skills and training of officials.  The CGRPs state that entities should document the appropriate skills and/or training of officials involved in each phase of the grants lifecycle (para 14.5).

Obligations for Third Parties Involved in Grants Administration

The CGRPs provide a definition of ‘third party’ as any person or entity involved in the grants administration process that is not a minister, accountable authority or official.  This includes:

• External committees
• Parliamentarians
• Sub-contractors
• Other grantees
• Non-Government Organisations; and
• Corporate Commonwealth Entities.

The CGRPs specify that such third parties are required to adhere to the key principles and applicable requirements of the CGRPs and published grant opportunity guidelines when undertaking any grants administration process on behalf of government.

The new CGRPs are certainly an improvement to the previous CGRGs and will result in improvements to integrity, accountability and transparency in the administration of grants by the Commonwealth.  Particularly important changes that respond to previous criticism and failings in grant administration are:

• The explicit inclusion of reporting conflicts of interest
• The requirement to publish all grant opportunities, including ad hoc grants
• The addition of merit based processes, and consistency with guidelines throughout as additional principles; and
• The additional requirements that ministerial reports to the Finance Minister also be tabled in Parliament.