BOYD, Mr Brian, Executive Director, Performance Audit Services Group, Australian National Audit Office

HEHIR, Mr Grant, Auditor-General for Australia, Australian National Audit Office

MELLOR, Ms Rona, Deputy Auditor-General, Australian National Audit Office

RAUTER, Ms Lisa, Group Executive Director, Performance Audit Services Group, Australian National Audit Office

WILLMOTT, Ms Amy, Senior Director, Performance Audit Services Group, Australian National Audit Office

Committee met at 16:36

CHAIR ( Senator Chisholm ): I declare open this hearing of the Select Committee on Administration of Sports Grants. We acknowledge the traditional owners of the land on which we meet and pay our respects to elders past, present and emerging. These are public proceedings, and a Hansard transcript is being made. The hearing is also being broadcast via the internet.

I remind all witnesses that, in giving evidence to the committee, they are protected by parliamentary privilege. It is unlawful for anyone to threaten or disadvantage a witness on account of evidence given to a committee, and such action may be treated by the Senate as a contempt. It is also a contempt to give false or misleading evidence to a committee. The committee prefers all evidence to be given in public, although the committee may determine or agree to a request to have evidence heard in private session. If a witness objects to answering a question, the witness should state the ground upon which the objection is taken, and the committee will determine whether it will insist on an answer, having regard to the ground which is claimed. If the committee determines to insist on an answer, a witness may request that the answer is given in camera. Such a request may also be made at any other time. The committee understands that all witnesses appearing today have been provided with information regarding parliamentary privilege and the protection of witnesses. Additional copies of this information can be obtained from the secretariat.

I would like to advise that representatives of the media have requested permission to film and take photographs of the committee's proceedings, and the committee has agreed to this. I remind the media that this permission may be revoked at any time and the media must follow the direction of secretariat staff. If a witness objects to being filmed or photographed, the committee will consider this request. The media are reminded that they are not able to take images of senators' or witnesses' documents or of the audience. Media activity may not occur during suspensions or after the adjournment of proceedings. Copies of Senate resolution 3 concerning the broadcast of committee proceedings are available from the secretariat.

I welcome the Auditor-General for Australia and other representatives from the Australian National Audit Office. Thank you for appearing before the committee today. I now invite you to make a brief opening statement, should you wish to do so, and after that I will invite committee members to ask questions.

Mr Hehir : Good afternoon, Chair and committee members. Thank you for the opportunity to appear before the committee today as part of your inquiry. Grants administration is an important activity for Commonwealth entities, involving payment of billions of dollars of public funds each year. The ANAO undertakes a number of grants audits each year, and findings from audits reveal that grants administration is on a continuum from good to poor.

We commenced this audit in March 2019, and the ANAO invested more than 3,800 hours of effort over a period of 10 months, obtaining and analysing evidence and in the development of the report that was tabled on 15 January 2020. The audit was conducted in accordance with the auditing standards, which require that sufficient and appropriate evidence be obtained to address the audit's objectives and support the audit's findings and conclusions. We concluded that the award of grant funding under the Community Sports Infrastructure program was not informed by an appropriate assessment process and sound advice.

The decision to undertake the audit followed a request from the shadow Attorney-General, the Hon. Mark Dreyfus QC, MP for an audit into the circumstances surrounding the Liberal candidate for Mayo's presentation of a cheque to the Yankalilla Bowling Club for a project that received $127,373 in funding for the second round. The key rationale for undertaking the audit was that, unlike previous grants audits, Sport Australia, as a corporate Commonwealth entity, is not subject to the Commonwealth Grants Rules and Guidelines when administering its grants program.

The objective of the audit was to assess whether the awarded funding under the sports grants program was informed by an appropriate assessment process and sound advice. To form a conclusion against this objective, we followed the following high-level criteria: Was the program well designed? Were applications assessed in accordance with the program guidelines? Were the funding decisions informed by clear advice and consistent with the program guidelines?

For many years the ANAO has been auditing the award of grant funding. Our methodology is well developed. We examine the award of funding against the relevant government framework, which for most entities is the legal framework governing spending of public money, the Public Governance, Performance and Accountability Act, supported by the Commonwealth Grants Rules and Guidelines and guidelines specific to the program. For this audit, the PGPA Act and the Australian Sports Commission Act provided the overarching legal framework against which we audited. Although not subject to the Commonwealth Grants Rules and Guidelines, consistent with better practice Sport Australia had in place a documented grants management framework that is based on the Commonwealth Grants Rules and Guidelines. There were also published program guidelines that had been approved by the minister which outlined the application assessment decision-making processes that potential applicants and other stakeholders were informed would be adopted.

A positive aspect of the program design was that the program guidelines were well structured and included clear assessment criteria with transparent weightings. Overall we concluded that the design of the program was deficient in a number of important areas, including: greater analysis was needed of the likely demand for grant funding and strategies developed for the managing of high-level demand; strategies to manage risk to the quality of the assessment process set out in the Sport Australia grants management framework were not implemented; and conflict-of-interest management arrangements were not to a consistently high standard. A further significant shortcoming was that, while the program guidelines identified that the minister for sport would approve the grants, and despite both the Department of Health and Sport Australia identifying doubts about the minister's legal authority, there are no records evidencing that the minister was advised of the legal basis on which the minister could undertake an approval role, and it is not evident to the ANAO what the legal authority was.

Sport Australia's assessment of applications was largely in accordance with the published program guidelines. Sport Australia assessed each application for eligibility and against the three merit criteria to arrive at an overall assessment score. Scores against the three merit criteria were used to rank the applications, but Sport Australia did so within the three funding streams, which was not consistent with the program guidelines.

In parallel, the minister's office had commenced its own assessment process to identify which applications should be awarded funding. This process drew upon considerations other than those in the assessment criteria—such as the project's location, including coalition marginal electorates and targeted electorates—and also applied considerations that were inconsistent with the published guidelines. It was this assessment process that predominantly informed the minister's funding decisions, rather than the Sport Australia process.

Funding decisions for each of the three rounds were not informed by clear advice and were not consistent with the program guidelines. Key departures were as follows. Board-endorsed recommendations existed for the first round but were not provided to the minister, because the minister's office had used criteria that were not published and, before the panel had met, had informed Sport Australia which applications would be approved. Sport Australia's subsequent written brief to the Minister did not reflect the board-endorsed recommendations. For the second and third rounds, Sport Australia used the results of the assessment work that the panel had supported and the board had endorsed, but the assessment panel and the Sport Australia board did not otherwise play a role in deciding which applications should be recommended in either the second or the third round. For the second round, Sport Australia's written briefing reflected those projects the minister's office had told it would be approved rather than the results of merit assessment work the board had endorsed. Reasons for funding decisions were not clearly documented. There was evidence of distribution bias in the award of grant funding. Overall, statistics indicate that the award of funding was consistent with the population of eligible applications received by states and territories but was not consistent with the assessed merit of applications. The award of funding reflected the approach, documented by the minister's office, of focusing on marginal electorates held by the coalition, as well as those electorates held by other parties or Independent members that were to be targeted by the coalition at the 2019 election.

The report made four recommendations. The first three were to Sport Australia and addressed program design, management of conflicts of interest, and records of assessment work. Sport Australia agreed to each recommendation. The fourth recommendation was made to the Australian government, about extending the advising, decision-making and reporting requirements of the Commonwealth grant rules guidelines applying to situations where a minister approves grant funding for a program being delivered by a corporate Commonwealth entity. The Department of Finance noted the recommendation and advised that it would brief the government on the ANAO's findings and recommendation.

The audit also included some key messages for all Australian government entities, including Sport Australia. These messages included that it is poor practice for entities to be instructed what their advice should recommend rather than providing their own recommendations that are developed through an evidence based approach, and that potential applicants and other stakeholders have a right to expect that program funding decisions will be made in a manner and on a basis consistent with published program guidelines. I'd be happy to answer any questions from the committee.

Senator CANAVAN: Is there possibly a copy of that statement? Could that be tabled? It would be helpful. It looked like you had a written statement there, Mr Hehir. Is it possible for that be tabled for the committee so we could all have a copy?

Mr Hehir : Yes.

CHAIR: Thanks, Mr Hehir. I'll hand to Senator Farrell.

Senator FARRELL: Before handing over to my colleague Senator Gallagher, who is very forensic, I'd just like to thank you for coming along today. I thank the media for the interest that they've shown in this issue, and I indicate that we very much appreciate the work that you've done on behalf of the Australian public in this respect. I particularly thank Mr Boyd and Ms Willmott for their role in all of this. Just to be clear about a few issues, I think you said, Mr Hehir, that this started with a novelty cheque in the seat of Mayo from the former candidate there, Ms Georgina Downer. Is that where the process started?

Mr Hehir : We received correspondence from, as I said, the Hon. Mark Dreyfus MP, requesting that we undertake an audit flowing from that. When I looked at his request, my decision to undertake an audit was more based on the fact that, when we looked at the grant program, it was a program being delivered by a corporate Commonwealth entity and that was something that we hadn't done for some time, particularly in the context of corporate government entities not being subject to the Commonwealth grant rules and guidelines. That was the interest that we had in the program.

Senator FARRELL: Now, I think you said you started the process in March last year. I just want to be clear about how long that took. I know the report was handed down in early January. Was the whole of that period—so, let's say, nine months—the time that you—

Mr Hehir : It was 10 months. By legislation, I'm required to table a report as soon as practical after it's completed, and that's what we did.

Senator FARRELL: So the whole process, from go to whoa, took a period of 10 months?

Mr Hehir : Yes. An average audit for us takes about nine months. This was a little bit longer.

Senator FARRELL: It took a little bit longer. Well, the Christmas period did intervene, I guess. Did that have a material effect on—

Mr Hehir : Not really.

Senator FARRELL: Not really?

Mr Hehir : No. That's only a week, really.

Senator GALLAGHER: Auditors don't have holidays!

Senator FARRELL: No, they work around the clock!

Senator GALLAGHER: I'd like to start on page 12 of your audit, where you note that your audit, as is expected, was provided to Sport Australia and the minister but also to the Department of Health, the Department of Finance—again, as is expected—and an adviser from the Prime Minister's office. The Prime Minister said a number of times that his office didn't have anything to do with the Community Sport Infrastructure Program—that he'd just passed on representations. Why did an adviser to the Prime Minister receive a copy of extracts of the proposed report prior to its tabling?

Mr Hehir : If you look at page 39, footnote 46, we mention a comment with respect to the Prime Minister's office. It's pretty standard practice for us, when we do that, as a matter of natural justice, to give people an opportunity to see what we're publishing.

Senator GALLAGHER: That footnote says:

… representations were received across the three rounds both directly and indirectly—

and that you saw evidence of that—

including through the Prime Minister's Office.

So the audit draws particular attention to the Prime Minister's office.

Mr Hehir : We gave an individual that page of the audit.

Senator GALLAGHER: Which adviser received the report—just their role, if that's a more appropriate way of dealing with this?

Mr Boyd : I don't recall the name.

Senator ABETZ: Chair, can I just say that the tradition has been that we do not gratuitously—

Senator GALLAGHER: I'm not asking for a name.

Senator ABETZ: trawl individual names through the Hansard.

Senator GALLAGHER: Senator Abetz, it's named in the report. I'm asking for the role; I'm not necessarily asking for the name. I'm not seeking that information.

Mr Hehir : Can we take that on notice?

Senator GALLAGHER: Okay. Did you speak to this adviser during the course of the audit?

Mr Boyd : No.

Senator GALLAGHER: So they weren't formally interviewed?

Mr Boyd : No.

Senator GALLAGHER: Did you seek any documents from the adviser, from the office or from the Prime Minister's department?

Mr Boyd : No.

Senator GALLAGHER: On what date was the proposed report provided to this adviser?

Mr Boyd : It was 14 November, which was the date that the section 19 was issued to all recipients.

Senator GALLAGHER: On 14 November?

Mr Boyd : Yes.

Ms Mellor : The draft report, or extracts from it, are issued for a period of 28 days.

Senator GALLAGHER: You said you gave them—was it page 39 that was provided to them?

Mr Boyd : In terms of what we took on notice, the job title was 'senior adviser' and the relevant extract provided is in paragraph 3.20 in the audit report. That's what was provided, along with what are now footnotes 45 and 46 in the audit report.

Senator GALLAGHER: Okay. In footnote 46, it says, 'The evidence available to the ANAO'. Could you explain that a bit further? What form did that evidence take?

Mr Boyd : Principally emails. Part of the process, if you look at the audit methodology as described in the audit report, and it's fairly standard for us, was we obtained email records which showed the process by which the assessment process was conducted as well as the decision-making, since a lot of government business is transacted through emails. That included emails which were going into and out of the minister's office, who were the key people involved in that parallel assessment process and the decision-making process. That included the emails going back and forth between the minister's office and the Prime Minister's office.

Senator GALLAGHER: And over a specific period of time?

Mr Boyd : A period of time, in terms of that. There were three funding rounds, so the period of time for that engagement went from the middle of October until the middle of April. That's when the decision-making process was taking place as to which applications would be approved in each of the three rounds. Obviously, we've looked at each of the rounds as well as overall, but essentially that sort of interaction, if I can put it that way, was between the middle of October 2018 and the middle of April 2019.

Senator GALLAGHER: So there were emails going backwards and forwards that you received as part of the audit?

Mr Boyd : Correct.

Senator GALLAGHER: Under your certificate—was it the section 19 request?—was the adviser able to discuss the contents of what you'd made available, that paragraph, with anybody?

Mr Hehir : No.

Senator GALLAGHER: Was the adviser able to provide comment to you, or feedback?

Mr Hehir : That's the reason why we provide section 19. When we get to the end of an audit we provide a copy of it to anyone involved in the process to make sure that they have an opportunity to comment back with their views of what we've said, and then we're required to include that in the report. It also gives us a final check on accuracy. Sometimes people will come back and say, 'You've got this wrong.' We try to get it as accurate as possible. It has the two purposes: giving us a final assurance over the evidence and also an opportunity for natural justice, for people to say, 'Well, that's not what happened; this happened'—those types of things.

Senator GALLAGHER: Okay. And was any comment provided? I couldn't find any.

Mr Hehir : No. We're required under the act to publish any comments that are provided.

Senator GALLAGHER: I thought so. Just going back, you were saying there was evidence of emails going backwards and forwards around the assessment of eligible applications and decision-making for a period of some six months. How many emails would you have seen as part of the evidence that you gathered?

Mr Boyd : In terms of a precise number, I couldn't tell you, but comfortably dozens. In mid-October the minister started requesting that the size of the program be increased from the $30 million, so that's when the engagement essentially started. The engagement was through the Prime Minister's office, where they were saying, 'We'd like to seek to increase the size of the program.' As we moved through the various rounds the things we saw were things such as—we mentioned in the audit report the spreadsheet used to identify which ones might be approved. There isn't a single spreadsheet; there are dozens of versions of a spreadsheet. For each round there were various iterations indicating on different days, and sometimes different hours of the day, which of the projects the minister's office was going to approve for funding. Some of those iterations were shared through the minister's officers, and then there was also, as we mentioned in the report, the direct and indirect representations, which is either simply passing on where a member of parliament has said, 'We'd like these projects in my electorate to be approved,' or the Prime Minister's office involved in indicating, 'These are the ones we think should be included in the list of approved projects.'

Senator GALLAGHER: So the evidence that you got was the spreadsheet was going back and forth over a period of time, but was also considering the inclusion of other applications for the sports grants—what should be considered. It was sort of a conversational—

Mr Hehir : I'll just be clear here: we didn't do an audit of the representations going on; we were auditing the decision-making process. So while there were many representations coming into the minister's office about the grant funding program, our interest was on the decision-making process for the allocation of funding. The reason we didn't go into the representation process was that I didn't feel it was material to the decision-making process. As you would expect when a grant program is going people would like to get a grant in their electorate funded. For us to see that there was bias or some driver in that, we would have to identify in those representations that there was a correlation between what the representations were and the outcome. We didn't see that type of correlation, so we didn't do a detailed audit of representations.

Senator GALLAGHER: No, not for the purpose of the audit. I guess for the purpose of our job to understand how decisions were being made, I think—

Mr Hehir : The limits of what we can say are based on what we audited. That's all I say that for.

Senator GALLAGHER: Absolutely. Can you tell me how many emails went backward and forward between the PMO and the minister's office?

Mr Boyd : We'd have to take that on notice.

Senator GALLAGHER: Right. I'm not seeking the emails or anything, just the number over that period of time that you've nominated, that six-month period of time. Also, was it the minister's office or the Prime Minister's office that initiated the discussion about increasing the size of the program that you mentioned?

Mr Boyd : It was the minister and her office. That is what the evidence says to us, and that's what is in the audit report.

Senator GALLAGHER: In terms of the minister's involvement—again, I've got some similar questions. It notes that it was provided to the minister's office and to advisers within that. Were they singled out for a particular reason, the advisers in the minister's office that you name—well, you don't name, but you identify on page 12 as 'two key advisers'?

Mr Boyd : The auditing process involves us going through the records and speaking to the entity that's responsible for the program, looking at how the assessment work was conducted, how the decision-making was undertaken and so forth. Those records and our discussions with the Sport Australia people indicated to us, and was confirmed to us, that the then chief of staff and the relevant senior adviser in the minister's office were the two people who were most directly involved in that process of deciding which grant applications would be awarded funding in each round. That's the process we went through in terms of identifying 'these are the two key people'. And obviously, when we interviewed those people, we asked them about their role, which also meant that if there other people that we weren't aware of that we needed to speak to, they could identify those people in that process.

Senator GALLAGHER: So you formally interviewed these advisers?

Mr Boyd : Correct.

Senator GALLAGHER: Did you seek any documents from these advisers?

Mr Boyd : We didn't seek. Then the chief of staff showed us documents in the course of his interview. One of those is included as an appendix to the audit report.

Senator GALLAGHER: Were they still working for the government when the proposed report was provided to them?

Mr Boyd : The chief of staff was by then a former chief of staff so was no longer employed.

Senator GALLAGHER: Did they provide any comment back once they had seen the audit report?

Mr Boyd : The then chief of staff rang us to discuss what he possibly saw as editorial comments, but there were no formal comments. We didn't receive a response from the other adviser.

Senator GALLAGHER: Did you change your report based on these comments?

Mr Boyd : I recall there was a footnote or a rogue letter which was a spelling mistake, which we corrected, but other than that, no.

Senator GALLAGHER: So it wasn't of substance?

Mr Boyd : No.

Senator GALLAGHER: The changes were not of substance?

Mr Boyd : It was a telephone discussion with myself. With some of his comments, we had a discussion about whether we would consider them to be editorials rather than comments of substance. I indicated that some of his other comments we would consider comments of substance, not editorials; therefore we wouldn't make a correction. One was clear. The one that we made was a spelling error in what he gave us, so we corrected the spelling error. The others would have substantively changed what had been tendered to us. That is the opportunity, as the Auditor-General mentioned, through the section 19 process, to offer formal comments, which then can be reflected.

Senator GALLAGHER: So you got formal comments back?

Mr Boyd : No.

Senator GALLAGHER: Just the phone conversation?

Mr Boyd : Just the phone call.

Senator GALLAGHER: And an agreement to disagree?

Mr Boyd : That's probably right.

Mr Hehir : It is relatively normal at that stage for us to get—entities usually give us three things when we give it out. They will give us a formal short response, which is in the front of the report; a detailed response, which is in the back of the report, including their response to recommendations; and then they will give us a number of issues that they think we should correct or change. We will work through that and see whether the changes that they want are supported by evidence. Then I will make a decision whether the changes are made or not. That is what I talked about earlier—the normal process of us getting assurance that the report is accurate.

Senator GALLAGHER: Those comments were provided—I think you said from 14 November, so 28 days. So it was within that window, was it?

Mr Boyd : It was.

Senator GALLAGHER: In footnote 46 you say that there were direct and indirect representations. What do you mean by that? What does that mean specifically?

Mr Boyd : Indirect representations refers to where, for example, the Prime Minister's office is simply passing on an email or advice of a conversation had with a member of parliament or their staff or a candidate like 'These are ones that we would like to see favourably considered in the process'—put it that way.

Mr Hehir : That the member of parliament would like to see.

Mr Boyd : Indeed. The direct representations were more that direct involvement, in terms of, when getting iterations of the spreadsheets, suggestions directly about these ones rather than those ones or passing on lists of applications concerning whether they could be included and those to be approved.

Senator GALLAGHER: When I read that footnote I am also reading that it is members of parliament beyond the Prime Minister's Office. Is that right? When you say 'indirect', it could cover a member of parliament saying, 'I know this application has gone in. I would really like you to consider it.' That would classify as indirect?

Mr Boyd : Given to the Prime Minister's office, who then forwards it on to the minister.

Senator GALLAGHER: It's all contacts through the Prime Minister?

Mr Hehir : 'Indirect' is largely a reference to things that are coming through another party. We would say that if a member of parliament did a representation on behalf of a body in their electorate, that would be direct. That is the classification.

Mr Boyd : Some other members of parliament directly engaged with the minister's office, saying, 'These are the ones I would like to see approved in my electorate.'

Senator GALLAGHER: So in terms of the evidence that you say of email evidence, particularly going between the Prime Minister's office and the minister's office, did that also occur with other members of parliament—the spreadsheet being shared with other—

Mr Boyd : The only evidence we saw of the spreadsheet being shared was between the minister's office and the Prime Minister's office, not with any other members of parliament or any other ministers' offices.

Senator RICE: Thanks, Mr Hehir and others there. Your audit is an audit of the administration of the grants program. So it is clearly looking at Sport Australia, but also how it is being administered by the minister's office?

Mr Hehir : We are looking at the process of the award of funding. As the minister was the decision-maker in the process, then it goes from Sport Australia through to the ministers and their offices' activity in it.

Senator RICE: In your conclusions you say:

Sport Australia's assessment of applications was largely in accordance with the published program guidelines … In parallel, the Minister's Office had commenced its own assessment process to identify which applications should be awarded funding. The Minister's Office drew upon considerations other than those identified in the program guidelines, such as the location of projects, and also applied considerations that were inconsistent with the published guidelines. It was this assessment process that predominantly informed the Minister's funding decisions, rather than Sport Australia’s process. This resulted in the assessment advice to the Minister being inconsistent with the approved program guidelines.

In your assessment of the process, this parallel process that was going on within the minister's office, can you take us through what you could ascertain to be what the criteria were that the minister's office was using in that parallel process?

Mr Boyd : Probably not, Senator. That was one of the challenges for us. It was clearly evident that it wasn't the assessment against the published merit criteria through the established assessment process that was being relied upon. You will see that in the audit report we referenced other factors, which both, in terms of what was documented at the time but also what the then chief of staff told us, in terms of criteria that were being applied instead, which is in that appendix in the audit report. We couldn't actually see, but the evidence from both the chief of staff and the former adviser was that they didn't make records as how they applied those. We attempted to see whether we could apply them. We mentioned some of the considerations. One, for example, was that the evidence to us was that if a project contained some money towards it from elsewhere we wouldn't include it in those to be approved. The problem for us was two-fold in that example. Some of the projects approved had obtained money elsewhere, yet were still approved. Equally, the program guidelines said that obtaining co-funding would be favourably considered, not penalised. So that was at odds with the guidelines.

We couldn't see, for any of the applications approved, what was recorded as to why this one was being approved in lieu of the assessment as per the published program guidelines. The only thing that we could see was that there was a documented approach saying that there was going to be priority given to projects located in a marginal and targeted electorate. We could see through the records of the decision-making process that that was something that was clearly identified in those. There was no identification, for example, of these other considerations as to how they were being taken into account, but we could see those were being recorded. We could see through the analysis of that that, yes, it was given analysis throughout the iterative process that was employed for each round.

Senator RICE: So there was no evidence that Sport Australia's published guidelines were actually being used consistently in the minister's office?

Mr Boyd : The assessment scores were retained in those spreadsheets throughout, but they weren't then being relied upon as the determining factor. This is something that we took evidence on from the two key people involved to actually test. That is what the records told us and their evidence didn't disagree with that. The evidence to us was that other considerations were being taken into account—not that they were recorded at the time, and not when we were told after the event what they may have been, that we could see that that is what had actually happened, or any records at the time to demonstrate how it had been applied. When you are dealing with a body of 1,941 eligible applications assessed as eligible, it's a large body of applications. It is not the sort of thing you can do from memory, if you like.

Senator RICE: So we know that within the minister's office we have the colour coded spreadsheet that assesses projects according to which electorate they are in and whether they are in a targeted or marginal electorate. Your evidence is that that was a criterion, and then you're not sure what the other criteria are. Is that correct?

Mr Hehir : Yes.

Senator RICE: Would that mean that the decision-making is very open to being influenced by representations from elsewhere?

Mr Boyd : As the Auditor-General said, we didn't do an audit of representations. But in the representations that we saw, if this is what you're suggesting, we would not agree that there was a clear causal relationship between local members of parliament saying 'These are the priority projects in my electorate', those inputs to the process and the ones being approved. For example, where a local member would say, 'This is the most important project or these are the most important projects in my electorate that I would like to see funded,' we saw as much evidence of them not being awarded funding ultimately as we did of them being awarded funding.

That got us back to the issue that we had that it is not the assessment against the published merit criteria using the published assessment process that determines success or failure. It is clearly not the case that if a local member said, 'These are the ones that should be approved for funding' that they got approved for funding. Sometimes yes, sometimes no. With the iterative process, sometimes it would start as a yes and end as a no. Sometimes it would start as a no and end as a yes. Particularly for us in a situation where you're seeing—there isn't one spreadsheet. There are dozens and dozens of versions of this spreadsheet. Our tally is there were at least 28 versions across the three rounds where a substantive change was made. Essentially, a substantive change is between a version—sometimes the versions will be within hours on the same day—a project would go from being approved to not approved or not approved to approved without any record as to what has changed. If you have applied separate unpublished criteria to arrive at a result, what changed in that assessment, across days or within a day, to lead to that change? Yes, we saw input from local members. Sometimes that would see a project flagged to be approved and ultimately it wouldn't be approved. Sometimes it was flagged to be not approved and ultimately it was approved. So it went all around the place. The one thing we can say is that there wasn't a record made as to why this application was funded and that application not funded.

Senator RICE: But at the same time as this was going on, with what seemed to be a fairly random assessment, you had dozens of emails going backwards and forwards between the minister's office and the Prime Minister's Office, and the spreadsheets going backwards and forwards and changing.

Mr Boyd : Sometimes the spreadsheets; sometimes simply a communication saying, 'These are the ones that this member of parliament is fighting for.' Sometimes it didn't involve the Prime Minister's Office; a local member or candidate might contact the minister's office and say, 'In my electorate or this electorate where I am running for election, these are the ones that I would like to see approved.' In chapter 1 of the audit report there's a footnote saying, the check work which led to the request for the audit, the candidate for Mayo said, 'Here are the three I would like to see approved.' Two got up, but one didn't.'

Senator RICE: With this spreadsheet going backwards and forwards and the dozens of spreadsheets, the final decisions on which projects were being funded was a final version of the spreadsheet. Did you see that spreadsheet?

Mr Boyd : Yes. In each round. But also bear in mind—figure 4.1 in the report, from round 1, shows that even after the minister has formally recorded her funding decision for round 1, over the course of then a week or two there were some changes made post that formal decision, with the minister's office saying that the minister has changed her mind; this is no longer approved and this is approved. We tracked each and every version of that, and then we could see where it finally ended up. I think that was 21 December. We got a final position for round 1, even though the decision was recorded on the seventh, I think. In any event, it was after the minister had signed the brief saying, 'These are the ones I approve for funding.'

Senator RICE: And then it was changed again?

Mr Boyd : On more than one occasion.

Senator RICE: And you had no indication as to what the representation or the rationale for further changes was?

Mr Boyd : It wasn't recorded. When we went through that process of interviewing the senior adviser, these were some things that we were trying to establish: 'There wasn't a record made then, but can we work through and can you tell us now why this went from being approved to not approved or went from being not approved to approved? What were the considerations there, so we can understand how we ended up with this final population of approved projects rather than alternative ones?'

Senator RICE: What answer did you get from the advisers?

Mr Boyd : Generally that they couldn't recall and there was no record made at the time.

Senator RICE: Despite probing, I am sure, they couldn't recall?

Mr Boyd : No. We even worked through some examples to try and jog their memories, showing some of the examples that we thought might come quickly to memory. For example, the project that scored the highest overall across the whole program, with 98 out of 100, started off in the early iterations of round 1 as being flagged for approval but then stopped being flagged for approval on 27 November and was retained as not approved from then on. For a time it was flagged to be approved, then it stopped being approved, scoring 98 out of 100. That stands out. So we said, 'Can you remember this one and why it changed from approved to not approved?' We tried to run through some—

Senator RICE: And their response to that was?

Mr Boyd : They couldn't recall.

Senator RICE: From my perspective, that doesn't really hold water. Did you interview any advisers in the Prime Minister's office?

Mr Boyd : No.

Senator RICE: Did you request to interview them?

Mr Boyd : No. It was clear to us that the decision-maker for the program was the then Minister for Sport. Yes, there were various inputs to the process, with one of them being the Sport Australia assessment work. Clearly the spreadsheet being used by the minister's office was the one provided to them by Sport Australia on 8 November, and it remained the basis for that spreadsheet throughout, even though Sport Australia did further assessment work. At the very end of round 3, the spreadsheet being used included 1,943 eligible applications, but that population is incorrect. Seven of those applications were withdrawn by the applicant and, on top of that, five new applications came in, but we're still working off an outdated spreadsheet, because the spreadsheet was obtained before Sport Australia had completed its work.

Senator RICE: There were media reports of an email indicating that the Prime Minister's office directed Minister McKenzie's office on how to allocate the funding. Are you aware of that email?

Mr Boyd : I don't know what email you're referring to.

Senator RICE: It was reported. Network Ten quotes an email from McKenzie's office:

We have just been advised by the PM's office that there have been some projects on the list funded under another grants program. We have been asked to make a slight adjustment.

Mr Boyd : Yes, we know of that email. We've seen that email. We've seen other emails similar to that email. That was not, if you like, a particularly unusual email in the context of the program for us. That's what we're saying in terms of footnote 46. Some of them were direct representations, which we would describe—

Senator RICE: But it's a bit different getting that sort of direct representation from the Prime Minister's office rather than just a backbencher who says, 'My local club would like to have a grant.'

Mr Boyd : That's in the category we would describe in the report as a direct representation versus an indirect, simply passing on what some other member has asked for.

Mr Hehir : I'll reiterate what we said before: the evidence before us was that the minister was the decision-maker in the process. If we had identified that someone else was the decision-maker in the process, we would have went down that path. There were representations both indirect and direct, but at the end of the day the evidence in front of us was that the minister made all of the decisions. How do you come to the conclusion? Well, not every representation, either direct or indirect, resulted in the outcome. There was balance on all sides of things.

Senator RICE: Did you have evidence, then, of representations from the Prime Minister's office, in terms of changes to the spreadsheet, that they recommended that then didn't eventuate?

Mr Boyd : Yes.

Mr Hehir : That's part of the evidence for why we came to the conclusion that we did, that the minister was the decision-maker. Again, representations aren't an unusual thing in a process.

Mr Boyd : The question for us, though, is where they come in. The second criterion provided an opportunity for members of parliament and others to provide support for a project. Invariably in a grant program that's where members of parliament provide their support. If there's to be a separate process late in the grant-giving process, such as this—these program guidelines didn't outline that members of parliament would later in the process also have an opportunity to provide this sort of input directly. The guidelines clearly said that letters of support and other things which would help demonstrate community need and how the project would address what the program was looking to achieve could be provided as part of the supporting material for the application. Certainly there were applications where the supporting material included letters of support from federal, state and local government saying, 'This project, from my perspective, has merit and we support it being funded.'

Senator RICE: Did you have evidence of emails which went beyond that representation of just suggesting that a project be considered favourably to any directions from the Prime Minister's office?

Mr Boyd : In terms of directions, as we say it was a matter of representing various sources, be it another member of parliament saying, 'In my electorate I'd like to see these funded,' or: 'Here's a list of projects which the government broadly is looking to support with funding. How many of those can be accommodated from within this program? Can they be included in the approved list?' We say some would be included, some would not, some would be included for a period of time but then be excluded later and some would work the other way. Clearly there was an iterative process there. It was the minister's office and the minister who were in charge of that process receiving input from various sources, including the Prime Minister's office.

Senator RICE: You say that you actually didn't do a thorough analysis of those representations?

Mr Boyd : No, what we said is that we didn't do an audit of representations. For example, there could have been other representations which didn't come into the minister's office through this means, or came into the Prime Minister's office that never came onto the minister's office that we wouldn't be aware of. What we can say is, from the representations we could see, there isn't a clear and direct relationship that says that, if a local member of parliament said that this is the project or these are the projects in my electorate which should be funded, each and every one of them was then funded.

Senator RICE: Did you consider the difference between making representations from the Prime Minister's office versus a backbencher and whether there was more influence from the representation from the Prime Minister's office than other representations?

Mr Boyd : Yes, we did. It wasn't the case that we could see that those which came, if I could say, directly from the Prime Minister's office were necessarily any more successful than those which came from a local member direct to the minister's office rather than through the Prime Minister's office.

Senator RICE: Based on the evidence available to you, what parties did the Prime Minister's office make representations on behalf of?

Mr Boyd : The only ones we saw were coalition.

Senator RICE: Were they are all on behalf of MPs?

Mr Boyd : Some were from candidates, as in people that were hoping to be elected to parliament and weren't yet in parliament.

Senator RICE: How about the Liberal Party, campaign teams or state bodies? Were there representations from those via the PM?

Mr Boyd : I recall at least one where it was the state body who were pulling together the list for that electorate and then providing that to the minister's office. Initially they were called wish lists and then they became what was called 'fighting for'—'These are the projects I'm fighting for.' It wasn't just for this program; it was broadly, 'These are the projects in this electorate that we're looking to secure funding for.' Those were being put together. Some of those were coming through to the minister's office saying, Can this be accommodated within CSIG?' Some of those would be an existing application. Some of them were not an application and never became an application.

Senator RICE: Were there representations other than from coalition aligned members of parliament, the Liberal Party or their campaign bodies?

Mr Boyd : If there were, they weren't in the records.

Senator ABETZ: There's a lot of emphasis on footnote 46. In relation to footnote 46 we are told:

The Minister's Office recorded on 20 November 2018 that it had:

…   …   …

taken into account representations received from a number of senators and members …

And then there's a reference to footnote 46.

Mr Boyd : That's correct.

Senator ABETZ: As a result of which the evidence available et cetera relates that footnote about directly and indirectly making representations is in relation to senators and members only?

Mr Boyd : Yes.

Senator ABETZ: Thank you. I just wanted to clarify that. The next issue I seek to clarify: you found that no ineligible project or application was funded?

Mr Boyd : No, that's not what we found. To go to the start of chapter 3, which is the chapter on assessment, the finding there was:

Ineligible applications were identified and no applications assessed as ineligible were awarded grant funding.

That's the Sport Australia eligibility assessment process. What then happened was that late applications were taken on board, which were ineligible under the guidelines; amendments were made for existing applications, which were ineligible under the guidelines, and they were funded. But at the time, to say this relates to the Sport Australia assessment process, Sport Australia removed from its list those it assessed as ineligible—that's what that finding is. Subsequent letters say there were the five new applications and the four amended applications. Then, because things took longer, because you were now running two rounds rather than three and funding agreements were in place, you had eight projects where, according to the details provided by the proponent, the project had been completed before the funding grant was signed. They're ineligible under the program. There were 270-something where the project had started before the funding agreement was in place, which is also ineligible under the program. We get to around 43 per cent of those which were awarded funding which by the time the funding agreement was signed were ineligible.

Senator GALLAGHER: How many was that?

Mr Boyd : Forty-three per cent.

Mr Hehir : Paragraphs 4.32 and 4.33. It was 272.

Senator CANAVAN: Page 9, paragraph 16 of the report—the summary—says:

Ineligible applications were identified and no applications assessed as ineligible were awarded grant funding.

Mr Boyd : That's correct.

Senator CANAVAN: I'm struggling to—

Mr Boyd : That's the Sport Australia assessment of ineligibility. A couple of things happened after Sport Australia had finished its assessment work. Five new applications were taken in March 2019. Sport Australia finished its eligibility checking of the applications received by the closing date in November 2018. So in March 2019 there were five new applications. There were also four amended applications in March 2019. Then they were signing funding agreements into calendar 2019. The guidelines eligibility requirements don't end just when you have lodged your application. This is common across many grant programs. If you have completed your work or, in some cases such as this one, you've even started your work before a funding agreement is signed, you're not eligible to receive funding.

Senator ABETZ: Under this program other factors could be taken into account. That was always up there in lights, wasn't it?

Senator CANAVAN: That's a slightly different point. Let's take it through step by step. I think you mentioned five new applications that came in March 2019? Were they assessed as ineligible by Sport Australia?

Mr Boyd : No. But Sport Australia raised the minister's office at the time—

Senator CANAVAN: But they weren't assessed as ineligible.

Mr Boyd : No, because it finished its assessment.

Senator CANAVAN: I get that.

Senator GALLAGHER: They got the money.

Senator CANAVAN: Did those five projects get funded?

Mr Boyd : Yes.

Senator CANAVAN: But they weren't assessed as ineligible.

Mr Boyd : No, they weren't assessed as ineligible.

Senator CANAVAN: Right.

Senator ABETZ: Thank you. That was my question.

Senator CANAVAN: I'm still trying to go back to Senator Abetz's original question. Was there a project that received funding that was assessed as ineligible by Sport Australia?

Mr Boyd : No, but the question was—

Senator ABETZ: Can I then move on to ministerial approval. That was always part of the process that was put out to the public? The minister—

Mr Boyd : It was what was put to the public, yes. It wasn't always part of the process. Sport Australia originally designed a program on the basis that it would be the decision-maker as a corporate Commonwealth entity, and that's how its framework is based, but it was through the development of the program guidelines and engaging with the Department of Health and the minister's office that they were told the minister wished to be the approver rather than Sport Australia. But the published guidelines only ever had the minister as approver.

Senator ABETZ: Yes, the publicly released guidelines clearly stated that the minister was the final decision-maker. Section 8.1, 'Final Approval', starts off:

The Minister for Sport will provide final approval. In addition to the application and supporting material, other factors may be considered when deciding which projects to fund.

That was up there in lights as part of the application process.

Mr Boyd : It was part of the program guidelines, yes.

Senator ABETZ: Thank you for that.

Then you expressed some concern that the legal authority for the minister was not evident to approve these projects. Did you seek any legal advice to put yourselves out of the misery of knowing or not knowing whether the minister had this capacity?

Mr Hehir : What we identified during the audit was that the Department of Health and Sport Australia had raised issues internally about the minister's legal authority to undertake the approval process. That's set out in the audit report. We asked them whether they had sought any legal advice to ascertain that, and they hadn't done so after raising those concerns. We also looked at the legislation that applies with respect to Sport Australia. That's the Sport Australia act. Sport Australia is a corporate Commonwealth entity separate from the Crown and which makes decisions in its own right. It also includes a ministerial direction process. Those are some of the concerns raised in Sport Australia and the Department of Health. On the basis of that, it wasn't clear to me where that authority came from. Did I seek any legal advice? No, because it was the responsibility, in my view, of the department and Sport Australia to be very clear about that once they are raising those concerns. It's also their responsibility to inform the minister if they have such concerns and not put the minister in a situation where they may not have legal authority. That's what my report points to.

I don't think it's the Audit Office's responsibility to determine the legal obligations of ministers or others. It's up to the entities to assure themselves of their authority. So that's why we didn't undertake legal advice. We put it in the draft report. We questioned the department about whether they had satisfied themselves. They said they hadn't.

Senator ABETZ: But the minister was told that the legal capacity was there.

Mr Hehir : I don't understand that there was any advice to the minister with respect to the legal capacity.

Senator ABETZ: Part 8.1, which I read out before, says the minister is the final decision maker. That was drafted by the department.

Mr Hehir : It was drafted by Sport Australia.

Senator ABETZ: Sorry, Sport Australia. That's what I meant. What would alert the minister or anybody else to the fact that there might be some questions raised about that?

Mr Boyd : That was part of our criticism of Sport Australia and the Department of Health.

Senator ABETZ: yes, but for the minister. I can understand the criticism in relation to Sport Australia, but that criticism, I would suggest to you, should not flow over to the minister.

Mr Hehir : I think the primary criticism that we put in the report is to Sport Australia and the Department of Health for not clarifying those things. It's certainly my view that that's a primary role of departments and authorities: to make sure that ministers are aware of their legal authority.

Mr Boyd : One of the key messages at the end of the report summary is that these things need to be addressed. An important element in designing a robust governance framework for a grant program—

Senator ABETZ: There is no dispute there. I was just wondering where the buck stops on that one, and clearly it's with Sport Australia, from your report.

Mr Boyd : And the Department of Health.

Senator ABETZ: Yes. Sorry—with the bureaucracy. Let's use that terminology. Senator Canavan has a follow-up.

Senator CANAVAN: To clarify: there was no evidence before you through this inquiry that the minister lacked legal authority to make decisions on this program?

Mr Hehir : The evidence to us was that Sport Australia expressed a view during the audit they didn't believe that the minister had the authority, that they were the decision-making body as a corporate Commonwealth entity and that the Department of Health raised concerns and said that they should get legal advice.

Senator CANAVAN: I will repeat the question. It's a yes-or-no question. There was no legal advice before you to indicate that the minister lacked legal authority to make the decision?

Mr Hehir : No.

Senator CANAVAN: Thanks.

Senator ABETZ: In relation to legal requirements, under this scheme, right, wrong or indifferent, there is no legal requirement for the reasons to be documented? That's correct?

Mr Hehir : That's correct. That's why we put in the recommendation.

Senator ABETZ: You are critical of that, but, as the situation stands, as of today, there was no legal requirement?

Senator RICE: That's really dodgy.

Mr Boyd : Correct. The Commonwealth Grants Rules and Guidelines don't apply to this program. Sport Australia grants—

Senator ABETZ: I'm reading paragraph 23, page 11 of your report: 'there is no legal requirement for the reasons to be documented.'

Mr Hehir : Yes.

Senator ABETZ: I just wanted that confirmed on the Hansard record. Thank you for that.

There's been some concern about target seats. I go to Page 56, paragraph 4.36. It is the first dot point last paragraph:

'Target' projects that were located in electorates held by the Australian Labor Party received a similar amount to what they would have received had funding been awarded on the basis of assessed merit.

That's correct?

Mr Hehir : That's correct.

Senator ABETZ: So that is the undisputed fact. We can try to spin things politically, but your finding is the target projects within Labor-held electorates would have received the same funding awarded on the basis of assessed merit.

Senator GREEN: Targeted by the coalition? Is that what 'targeted' means?

Mr Hehir : That's what 'targeted' means.

Senator GREEN: Okay.

Senator ABETZ: We had that before. That's the clear evidence. Whether the seat was targeted or not as an assessment or based on merit—

Senator GREEN: What they targeted—

Senator ABETZ: Excuse me—we listened to your nonsensical questions in silence. Please allow us to ask our questions, which are a lot more robust, in silence.

Senator GALLAGHER: Nonsensical? Come on! Eric, you're having a bad day!

Senator ABETZ: In relation to these targeted seats, the evidence is that if it were only based on the assessed merit—we can get to the robustness of the assessed merit later—they got the same amount of money irrespective of whether it would have been done solely on the assessed merit or because they were targeted?

Mr Boyd : Yes. The amounts are similar, as we say.

Senator ABETZ: The amounts are similar. Your report refers to the people charged with making the assessments having quite a diversity of approach in their assessments. For example, where two people were assessing the same project, you had a diversion of up to 30 points between the two assessors.

Mr Boyd : Thirty per cent.

Senator ABETZ: Sorry, 30 per cent. Well, it was out of 100, so it was 30 or 30 per cent. Same difference; we're both right. That's correct, is it?

Mr Boyd : We talk about that in the audit report, yes.

Senator ABETZ: So with two people making these assessments on merit, one could have given it 100 per cent and somebody else 70 per cent. That's a 30 per cent diversion. So one of them would have allowed it to go right through—sail through—and the other one would have been below that magic figure of 74 and would not have been allowed on merit assessment? It's not a very robust and objective system, is it?

Mr Boyd : Except that's only one part of the system. Following that assessment process, which is the Sport Australia assessment team, there was then an assessment panel, which was chaired by a Sport Australia person, but included the deputy chair of the Sport Australia board, a representative from the ACT government and a representative from the Department of Health. They themselves examined all of the assessment work to make sure that they were satisfied—above the work of the assessment team—that the assessment results were robust and could be relied upon. Then all of that work separately went to the Sport Australia board—which, again, has a diversity of experience and expertise on it—so that they themselves could see all of the assessment work and the results and satisfy themselves. Demonstrating that it wasn't just a tick and flick, the assessment panel said, 'There are actually four—which, based on their assessment work the assessors say should be supported—that we don't agree with.' And they said, 'There are eight others where we looked at the assessment work and we think they should be supported.' So they were added in. So there were four off and eight on. It went to the board. The board was fully satisfied, it would seem, with all of the assessment work and they endorsed that position. So that was stage 4. Stage 3 was the panel, stage 2 was the merit assessment by the team and stage 1 was eligibility checking.

Senator ABETZ: We can go through eligibility as well. Some projects were initially determined to be eligible and then determined to be ineligible. And some were the other way around, where ineligible then became eligible. Most of those assessments were made by just one individual—by one person. Is that correct?

Mr Boyd : Yes, but at three points—an individual at three points.

Senator ABETZ: No, no. Step by step. By one person—

Senator Rice interjecting—

Senator ABETZ: Senator Rice, can you just hold it? We paid you the courtesy. So, one person made that decision. What qualifications and what experience did they have to make these assessments? Did you make any comments about that.

Mr Boyd : Yes. They were people with experience in the sport funding area. They were all program employees. They weren't contractors or outside Sport Australia. They were within the area responsible for designing and implementing this grant program.

Senator ABETZ: Wait a minute. Not the program itself. You're saying they had all this experience, but you have made quite a few findings, have you not, about difficulties in the design of the program. Is that correct?

Mr Boyd : Yes. We make observations. For example, we say the eligibility criteria in places could have been clearer. One of the things we observed was that there were four applications funded for electronic scoreboards, which were assessed as eligible, but others were assessed as ineligible because they were electronic scoreboards. So, either there were another four ineligible applications funded, or there were others who were denied the opportunity to compete for funding.

Senator ABETZ: Can I just take you to paragraph 2.23 of your own report. The second sentence says, 'No formal training was provided to the assessors.'

Mr Boyd : That's correct.

Senator GALLAGHER: Was any training provided to Senator McKenzie?

Senator ABETZ: Chair, can you please control your own? That is your task and your role.

CHAIR: We're running out of time.

Senator ABETZ: The reason we're running out of time is the interjections from your side. We have been exceptionally well disciplined. So you accept that those making these assessments had no formal training to undertake the assessments?

Mr Boyd : I wouldn't say 'we accepted'. It's what we found. One of the questions we asked was: were they formally trained?

Senator ABETZ: Alright: you 'found' they had no formal training.

CHAIR: Senator Abetz, excuse me. Let the witness give his full testimony, rather than—

Senator ABETZ: Thank you for your intervention, Chair. I now expect it with interjections from your side. But I accept your point of order.

Mr Boyd : Yes, Senator, that's what we found: that they hadn't been—

Senator ABETZ: Thank you.

Mr Boyd : Because that was one of the questions we asked: had they been formally trained?

Senator ABETZ: So if they had no formal qualifications, there's no speciality there then, is there?

Mr Boyd : If you go on to the remainder of that paragraph, in the absence of formal training we then put it to Sport Australia: what else did you do to ensure the quality of the assessment work? We looked at the fact they were involved in the development of the guidelines and the development of assessment methodology. We looked at whether as a team—okay, you hadn't received formal training—did you actually meet collectively to discuss and make sure, 'We're doing things in a consistent way of an appropriate standard.' We looked whether there was any other material to support how you go about assessing their applications, which there was. We looked at the way they designed the assessment forms—if I can put it that way—within their online system to make sure: were you working through each element of the program guidelines which said it would be taken into account here, and how you recorded what you considered in reaching a view as to how would you score each application against each sub criteria?

Senator ABETZ: Yes, but on some occasions, where two individuals assessed the same application, there was a deviation of 30 per cent or 30 points.

Mr Boyd : Yes, there was.

Senator ABETZ: So, with the objectivity of it, if you were sitting an exam, and two examiners were marking your paper and one of them thought that you were worth 70 per cent you'd be pretty happy with that, but the other one's saying you're worth only 40 per cent. It could be devastating to your future academic career. Similarly with these projects, we had assessors that were coming to substantially different conclusions, at least at the initial merit assessment?

Mr Boyd : Yes. That's correct. And the reason—

Senator Gallagher interjecting—

Senator ABETZ: Chair, excuse me. Did you hear my comment before? Would you mind closing down your side when we're asking questions.

CHAIR: Mr Boyd?

Mr Boyd : That's correct, Senator.

Senator ABETZ: Thank you.

Mr Boyd : In a way, as soon as you have a process which has more than one assessor, there is always that risk. That's why it is important that we see that that possibility be planned for and addressed in the assessment process, because it's not a mathematical equation here. Judgement is being applied. So it was important for us to see how did you then go about addressing those differences. There are always likely to be differences when you're applying judgement to assessing applications against merit criteria. So: how did you address that in the assessment team? But perhaps as importantly, if not more importantly, what then happens after that to see there are processes outside that core assessment team, so that other people, who are independent to that process, apply their minds as well? As I said, the third stage was the assessment panel and then the fourth stage was the board.

Senator ABETZ: Yes. But the third—

CHAIR: Thanks Senator Abetz, we'll close there for a short break. The committee will now suspend for a short break.

Proceedings suspended from 17:48 to 17 : 59

CHAIR: We will resume this hearing. Senator Green?

Senator GREEN: Can I just go back to the conversation we were having earlier around direct and indirect representations. You mentioned that there were some representations—in the report you refer to members and senators, but you've told us today that there were representations made by various sources, so I just would really like to understand exactly who those various sources were. You mentioned one state body of the coalition.

Mr Boyd : The report also mentions—if you go to footnote 5 on page 17—that there is one instance of a candidate. Footnote 46, which comes off paragraph 3.20, talks about senators and members. As the Auditor-General said earlier, this wasn't an audit of representations. The thing for us to understand was: what was the assessment and decision-making process for the award of funding? It was in response to that record of 20 November saying that this was one thing being considered; the evidence we took under oath from people saying, 'Yes, these were taken into consideration;' then for us to try to see: to what extent were these representations being provided, and what impact were they having on the award of funding?

Senator GREEN: I understand; I'm not asking you about an audit of representations. I'm seeking to understand that question as well. All of the changes that were made to the spreadsheets, the various versions that you're referring to—I just want to know when those representations were made and who they were made by. You have referred to a state body—is it the Liberal Party, the National Party? You said a state body.

Mr Boyd : In some cases the sitting member isn't a member of the current government, and so in terms of what's in the list of projects which—

CHAIR: Are you talking about a candidate?

Mr Boyd : In some cases a candidate hadn't yet been appointed. For example, I can recall one electorate where the minister's office was coordinating: 'What would be the likely list of projects we'd be looking to support in that electorate when a candidate is appointed?' Bear in mind: the funding rounds ran from September 2018, which is when applications closed, right through to April 2019, so it's a long period of time there. Candidates, as we understood it, weren't always in place from the beginning of the process when this grant program was being run.

Senator GREEN: So, when a candidate wasn't in place, the representations were being made by the state body of the parliament?

Mr Boyd : I just said I could recall in one instance, yes, it was the state body of the relevant political party that was saying, 'I'm pulling together the list of projects which we want to support in this electorate.'

Senator GREEN: Which party and which state was it?

Mr Boyd : That was in Queensland, is my recollection.

Senator GREEN: The Queensland Liberal National Party?

Mr Boyd : I think it's the LNP in that state.

Senator GREEN: And they were the ones making the representations?

Mr Boyd : Well, they were pulling together a list of 'projects we'd like to support in this electorate' to provide into the minister's office as a process saying, 'Here are the ones we're looking for in this electorate. Which ones can be supported through this program?'

Senator GREEN: Yes. Do you recall whether that was a marginal or target seat?

Mr Boyd : I recall it was a marginal seat by the AEC, but that doesn't necessarily mean it was a marginal seat in the spreadsheet, if you understand the distinction I'm drawing.

Senator GREEN: I do.

Mr Hehir : I think the answer to the question is: no—

Senator GREEN: I do know the difference.

Mr Hehir : no, he doesn't recall about the marginal in the spreadsheet.

Senator GREEN: Was it held by the coalition or another party?

Mr Boyd : By Labor.

Senator GREEN: The state LNP office sent a wish list of projects in a Labor-held seat?

Mr Boyd : I believe it was called a 'fighting for' list.

Senator GREEN: A 'fighting for' list—okay. Do you know what seat it was?

Mr Boyd : Yes.

Senator GREEN: Would you like to tell me?

Mr Boyd : Longman.

Senator GREEN: Did you get similar representations in regard to other seats in Queensland?

Mr Boyd : I can't recall another one in Queensland. Obviously, I can recall other ones in other states. The report mentions Mayo.

Senator GREEN: When you say 'various sources', we've spoken a lot about local members making representations—members of parliament—in regard to their own electorate. Did senators make representations on behalf of non-held seats?

Mr Boyd : As in like the duty senator type arrangement?

Senator GREEN: Yes. I guess that would be how—

Mr Boyd : As I say, I don't recall one of that nature, no.

Senator GREEN: If senators were making representations, what seats were they making representations for?

Mr Boyd : For example, Indi would be one seat. But, in that case, as I mentioned, the minister's office—well, she's a senator—was pulling together the list for Indi because at that point in time the candidate had yet to be selected. But, as I say, I don't recall other senators—what we understand being the duty senator arrangement—coordinating the 'fighting for' list for other electorates where it wasn't a sitting coalition member.

Senator GREEN: Was it always called 'fighting for'? Is that a uniform—

Mr Boyd : On the records we saw, it was initially called 'wish list' but then it became called 'fighting for'. I appreciate your response, but it's simply the case that this wasn't an audit of representation, so what we've seen are the inputs that were being provided into the minister's office as being part of the award funding under the three rounds, some of which were of that nature, but there were others as well including the results of Sport Australia assessment process.

Senator GREEN: Can I ask you about some of the evidence that you received. Obviously this has gotten a lot of media attention, and I just wanted to ask, with all the evidence that you collected during the audit and evidence that might have been reported publicly since then, are you satisfied that you've received all the relevant evidence?

Mr Hehir : Under the standards what we try to do is collect sufficient evidence to assure ourselves we can draw a conclusion. The processes we put in place led us to the view that we have collected sufficient evidence for that. We're pretty diligent in getting information together. I can't say that there isn't something that wasn't collected in our evidence-gathering process, of course, but—

Senator GREEN: Is there any evidence that you sought and didn't receive?

Mr Hehir : No.

Senator GREEN: Were there any witnesses that you wanted to interview that didn't make themselves available or were less than forthcoming in their interviews?

Mr Hehir : The parliament has given us very extensive powers with respect to the collection of evidence, so we didn't have a situation where we were denied access to information that we asked for. I can't say on all occasions that everyone was happy to be involved in the process but—

Senator GREEN: Sure. There's a difference, though, when you have to invoke those powers. Did you have to invoke those powers to compel witnesses?

Mr Hehir : We invoked our powers for interview processes in this audit. I decided to do that not so much because witnesses said they wouldn't make themselves available. When we created all of the evidence together, which is presented in the report, I wanted to get representations, in this case, from ministerial staff that gave us some assurance that we weren't missing something within the evidence base that we'd pulled together. I decided that the best way to get evidence from an interview which could stand up against documentary evidence was to take that evidence under oath under compulsion rather than a voluntary process because evidence under oath lifts up the standard that I think you can take the evidence as being robust under. So we used our compulsion powers in this instance just to get the level of evidence from an interview to a standard which, if it did challenge our documentary evidence, we could balance it that way more effectively. So I didn't do it to force someone to do something they didn't want to. It never really got to that stage in first place.

Senator GREEN: Okay.

Senator GALLAGHER: Can I follow just up there. When you say 'never really got to that stage', what do you mean by that?

Mr Hehir : I decided that the standard of evidence I wanted was something that should be done under oath, which requires the compulsion powers, rather than asking the person to come along and do an interview. I wanted to lift up the level of evidence.

Senator GALLAGHER: So you issued a notice that you were wanting to interview people—is that right?

Mr Hehir : No, I made a decision that we should interview people and that that should be done under oath, so I issued a notice under—

Senator GALLAGHER: So that was at the beginning of the process?

Mr Hehir : No, this was at the end of the process when we had collected all of the documentary evidence and gone through all of that. We wanted to test that documentary evidence against—

Senator GALLAGHER: So you didn't have any witnesses who refused to be interviewed?

Mr Hehir : No. Well, when you go down the compulsion path, they can't refuse.

Senator GALLAGHER: I'm asking about before that?

Mr Hehir : No, I don't think so.

Mr Boyd : No, we hadn't approached those people beforehand.

Senator GALLAGHER: Did you interview the Minister for Sport?

Mr Hehir : No.

Senator GREEN: I want to go back to the evidence that you received—the spreadsheet that has gone back and forth between the Prime Minister's office, the minister's office and, presumably, Sport Australia. Can you explain to me a little bit about that spreadsheet—you've said that there are various versions of the spreadsheet—and what information the spreadsheet had?

Mr Boyd : Yes. I think it's important to be clear that not every version was sent back or forth with the Prime Minister's office or back and forth with Sport Australia. Some of it was simply being worked over within the minister's office. Forgive me if I'm talking at the wrong level, but spreadsheets have more than one sheet in them. There's one sheet which listed each of the 1,943 applications which were being considered, and so that would have key aspects around those applications. It's not everything about the application. It would have, for example, which stream you'd applied for; the unique identifier, which each application was given when it was lodged through the online grant system, which is nothing unusual; the score awarded through the merit assessment process; who the applicant was; the title of the project; the amount of money they were seeking; the total value of the project because, invariably, the Commonwealth was not being asked to fully fund the project—there's a total project value that we were being asked to contribute towards—the electorate; the party; a flag column as to whether they were going to be successful or not at that point in time; the state; the electorate status we mentioned earlier—

Senator GREEN: The electorate status had 'marginal'—

Mr Boyd : It had 'marginal', 'targeted' and blank.

Senator GREEN: Those were the three classifications?

Mr Boyd : Yes. There was also a brief description of the project. That was in one sheet, which is, if you like, the one you've referred to as the colour coded sheet. There's then a second sheet in the spreadsheet which essentially has four tables in it. One is the summary table—the total number of projects expected to be successful and the amount of project funding. That gets updated as projects are flagged as to whether or not they're going to be approved. There's a table by state as to the applications received, the dollars and the success rates. There's another table aggregating them by political party, and there's a fourth table which, for each individual electorate, lists the applications received, the dollars, the amount at that point in time, the proposal to be approved, and the dollars proposing to be approved for the one or more applications proposed to be approved in that electorate with a success rate calculated. So there are essentially those two sheets to the spreadsheet.

Senator GREEN: Yes, I understand.

Mr Boyd : So what I'm saying is that the spreadsheet is more than one sheet, if that makes sense?

Senator GREEN: Yes, that does.

Senator GALLAGHER: The original request from the minister was made quite early, as it was prior to the final assessment of the project. She asked for a list of all of the—

Mr Boyd : She didn't; her office did.

Senator GALLAGHER: Her office asked for a list. That came across from Sport Australia in spreadsheet form—is that right?

Mr Boyd : The first request was made on 26 September 2019. Sport Australia, the first couple of times, gave very aggregate information because they hadn't progressed the assessment process very far. Because what they were providing hadn't met the needs of what the minister's office was seeking, 8 November was when they started providing the first spreadsheet, which listed each individual application that was still on the table at that point. As I mentioned, the 8 November spreadsheet, which was used as the basis throughout all the rounds, had 1,943 applications assessed as eligible. Senator Abetz has questions there. The eligibility assessment went back and forth a bit. There were actually seven of those which weren't reassessed as ineligible but were applications that the applicant later withdrew, so that brought the population down to, effectively, 1,936. But, as we said, things were moving in terms of eligibility and so forth, so the true application population at that should have been 1,941.

Senator GALLAGHER: Were you able to, from the evidence, understand when the columns 'targeted', 'marginal' and 'other' appeared in the spreadsheet?

Mr Boyd : Yes.

Senator GALLAGHER: Were they done at Sport Australia?

Mr Boyd : No, they were done in the minister's office. Sport Australia never saw those columns.

Senator GALLAGHER: So they didn't go back and forth to the agency?

Mr Boyd : It did at points in time. In what went back from the minister's office to Sport Australia, those columns weren't included.

Senator GALLAGHER: So they took it out when it was going back and forth? So, if it was being sent back to Sport Australia, those columns weren't in the documents?

Mr Boyd : That's correct.

Senator GALLAGHER: Those three columns?

Mr Boyd : No, the 'electorate' and 'party' columns were in the spreadsheet that Sport Australia offered up. What happened was the minister's office colour coded those, but those columns were always there and those columns with the colour-coding stayed in when the minister's office would send back spreadsheets at a point in time saying, 'These are the ones that are being approved.' Those columns with the colour-coding stayed in, but the column added which said 'electorate status' wasn't included.

Senator GALLAGHER: So that was included by the minister's office at some point in time?

Mr Boyd : Yes.

Senator GALLAGHER: After 8 November?

Mr Boyd : We can see, looking at the versions, at which point in time it came in. For example, the 20 November 2018 version has it in there.

Senator GALLAGHER: So Sport Australia included the electorate and who held the seat in their original advice to the minister?

Mr Boyd : No, the original advice was at a more broad level. But, when they were providing the information at an individual project level, they were specifically asked to include that information.

Senator GALLAGHER: By who?

Mr Boyd : The minister's office.

Senator GALLAGHER: I'm conscious of time, but I've got a couple of questions over any involvement that you may have had, Mr Hehir, with the Gaetjens report—whether you were advised that the Gaetjens report was being commissioned. How did you become aware of it

Mr Hehir : I think I became aware of it when it was announced. That's my recollection.

Senator GALLAGHER: So in public commentary?

Mr Hehir : Yes. I think it was around 28 January.

Senator GALLAGHER: You weren't advised ahead of time that—

Mr Hehir : No. I had some conversations with Mr Gaetjens, and the office had some other conversations where we tried to assist them to source, where they could source, some of the evidence—

Senator GALLAGHER: You weren't asked to provide evidence to them?

Mr Hehir : My act, under section 36, doesn't allow me to provide audit evidence to anyone except in the course of an audit. The audit's finished, so I can't provide it. But what we did provide was that we basically said that the information we referred to in the report is on this server.

Senator GALLAGHER: On this server?

Mr Hehir : The Health server.

Senator GALLAGHER: Oh, right.

Mr Hehir : It wasn't very specific. It was, 'This is where we got it from in order to'—

Senator GALLAGHER: So you directed him to where he might be able to find that report?

Mr Hehir : Yes.

Senator GALLAGHER: You said you had a couple of conversations with him. Was that—

Mr Hehir : That was the conversation prior to the release of the report. I had one conversation afterwards, I think.

Senator GALLAGHER: We don't know what's in the Gaetjens report. I presume you haven't seen it either?

Mr Hehir : No.

Senator GALLAGHER: All we know are comments where the Prime Minister quotes from the report. On 2 February the Prime Minister said, 'Mr Gaetjens'—he refers to him as 'he'—'did not find evidence that this process was unduly influenced by reference to marginal or targeted electorates.' I'm just wondering how that lines up with your comment in the report which says that you did find distribution bias in the application of the grants.

Mr Hehir : I'm not aware of the terms of reference for the review, how the analysis was undertaken or the evidence that they used. And, like you, I haven't seen the report, so I can't really comment on that commentary.

CHAIR: Would you say it is contradictory, though, to your audit report?

Mr Hehir : I wouldn't make any commentary on it, because I'd be speculating about it, and that's not what we do. For it to be contradictory, I'd need to see it and make an assessment of it. So I wouldn't like to make any comment on that.

CHAIR: Whether the comment from the Prime Minister is contradictory to the audit report?

Mr Hehir : Again, the Prime Minister's comments, from what I understand, relate to the report prepared by Mr Gaetjens. As I haven't seen the report, the analysis underpinning it or the questions that it asked, I wouldn't know whether it's contradictory or not. So I don't think I'm in a position to answer that question.

Senator CANAVAN: Chair, I raise a point of order. We had agreed, I thought, 20-minute blocks, and I think we've had had 20 minutes since resumption.

Senator GALLAGHER: I'm about 19 minutes in.

CHAIR: One more.

Senator GALLAGHER: I've just got one more issue. In relation to the documents which we have been talking about today—in particular, the spreadsheet of 8 November in various forms—are you in a position to table the information for the use of the committee?

Mr Hehir : I'd like to take that on notice. I believe that the Senate has requested the production of that document, and that's being considered by the government. I didn't consider, in my audit, the necessity to publish that information in order to produce the report. As I've talked about previously, what we do with the report is that we put all the information in it and then give it to the relevant people so they can make an assessment about it, both in terms of whether they agree with the evidence but it also gives them an opportunity to argue whether it should be made public or not. I haven't done that process. For me to provide you with that information, I believe that I'd need to go through that process as I would have done if it had been an audit report. So I'd prefer to take that on notice and adopt such a process and see how the government answers the question.

Senator GALLAGHER: Fair enough.

CHAIR: Thanks, Senator Gallagher. Senator Rice.

Senator RICE: Thanks, Chair—

Senator CANAVAN: Chair, Senator Rice has already had 20 minutes. Are we going to allocate a third of the time to Labor, a third to the Greens and a third to the coalition? Is that your decision?

CHAIR: As we agreed at the start.

Senator ABETZ: No, that was not agreed.

Senator CANAVAN: No, that was not agreed. We agreed to 20-minute blocks; we did not agree to that proportion. I want to put on the record then that Senator Rice will be receiving a third of the time, despite representing only a fifth of this committee. That's not reflective of the Senate's decision to establish a committee that has four-fifths of its members as government or Labor senators. So I don't think this is fair; it's a reflection of the bias and skewed process for this inquiry, which is not about getting to the details but is all about running a political process for the Australian Labor Party and the Australian Greens.

CHAIR: Do you know what else wasn't fair? The distribution of the sports rorts money.

Senator GREEN: That's right.

Senator CANAVAN: Well, we're trying to establish that. We can establish that you are not running a fair process here.

Senator RICE: Not many level playing fields here.

Senator ABETZ: We now no longer need to have a hearing, because the Chair has already made up his mind, on the public record. What a disgrace!

CHAIR: Senator Rice.

Senator RICE: I'll recap the process for allocating the grants in the minister's office. Beyond the location and the spreadsheet with the columns about the status of the electorate, you couldn't determine what criteria were being used to make the final decisions, and the minister's advisers that you spoke to, in many instances, couldn't recall what the criteria were.

Mr Boyd : As I read out a short time ago in terms of the contents of that spreadsheet, which is a decision-making spreadsheet, the Sport Australia merit assessment score was included. Obviously, that was something on the table throughout each version of the spreadsheet. The electorate status column was included, as was the other information about the political party that held a relevant electorate. There was some summary information as to the applications, but the minister's office and the minister never saw the actual applications. There was nothing else in there that indicated what other criteria might be being applied in that consideration process.

Senator RICE: It wasn't documented?

Mr Hehir : The exception, as set out in appendix 5, is evidence provided to us by the chief of staff about what he believed the criteria were.

Mr Boyd : Yes, that was evidence given to us when we took testimony from him after the event and not at the time.

Senator RICE: That wasn't documented at the time?

Mr Boyd : No.

Senator RICE: That was post—

Mr Boyd : As you will see in chapter 4 of the report, we tried, with some of those, to work through and say, 'Can we see how that actually worked in practice?'

Senator RICE: What you said in your evidence just before was that you felt the minister was being the final decision-maker; given that her staff couldn't recall, it was the minister who was making those final decisions.

Mr Boyd : That is what all the evidence says, including the testimony, and there's no evidence to a contrary position.

Senator RICE: But you didn't interview Minister McKenzie?

Mr Boyd : When we were provided with the proposed report we made an offer—if she wished to meet and discuss the report.

Senator RICE: Would you have liked to have interviewed Minister McKenzie?

Mr Hehir : If we'd wanted to interview her, we would have. We felt we had sufficient evidence to come to the conclusion that we did, and we gave the minister the required amount of opportunity to provide us with any contrary view with respect to the evidence that we put out in the report, so I was comfortable with the process.

Senator RICE: Okay. Having been given the draft report, she didn't request to put her position?

Mr Hehir : She didn't provide a response to the section 19 draft report that was provided to her.

Senator RICE: When the minister's office requested a copy of the blank form on 4 March, what was your understanding of the purpose behind that request?

Mr Boyd : The background to that was: in the period before that, the Prime Minister's office had indicated to the minister's office that there were some projects which had missed the application cut-off deadline and that wished to be submitted to be considered under the program. So, on the basis of that, the minister's office sought to obtain from Sport Australia application forms so that those people could then complete an application which could then be assessed by Sport Australia against the published criteria.

Senator RICE: Would you say that's fairly unusual given that the applications had already closed?

Mr Boyd : It's certainly not consistent with what the guidelines said would happen.

Senator RICE: In appendix 4, paragraph 17, you reference six extra projects that had already been identified by 4 March. Were any of these six extra projects included in the group of those four submitted and the five new applications provided by the minister's office on 20 March?

Mr Boyd : Sorry, I missed your reference there.

Senator RICE: Appendix 4, paragraph 17, says there are six extra projects that had been identified by 4 March.

Mr Boyd : Yes.

Senator RICE: So they were included in that group of nine new projects?

Mr Boyd : Yes.

Senator RICE: Were any of those projects—those six extra, which were included in those nine new and resubmitted applications—funded?

Mr Boyd : Each of the nine was funded.

Senator RICE: Can you tell us which projects they are?

Mr Boyd : I think that probably goes to the broader question around the spreadsheet.

Mr Hehir : We'll take that on notice.

Senator RICE: Okay. Can you say whether one of those projects was the $500,000 grant for the Hawthorn-Malvern hockey centre, announced on 26 April last year?

Mr Boyd : If you bear with me for a second, Senator.

Mr Hehir : We'll take that on notice, I think. I don't want to give a false thing. With us running through spreadsheets and doing it on the run, I'd be concerned that we might not give you the correct answer. So I'd prefer to take that on notice.

Senator RICE: Okay. Paragraph 4.17 of your report refers to finalising a list for round 1 between 10 and 20 December 2018. Was there a more specific date on which you could say the list was finalised?

Mr Boyd : No. If you look at figure 4.1 in that chapter you'll see that the list was amended and adjusted at different dates in that period, which is why we say 'over the period' rather than at a single point in time.

Senator RICE: So were there projects that were confirmed before 20 December 2018?

Mr Hehir : Yes. The movements were at the margin, if I can put it that way.

Senator RICE: So before 20 December 2018. Was there any involvement from any other minister's office in decision-making on this list between the 10th and the 20th?

Mr Boyd : Not that we saw.

Senator RICE: So were there representations from the Prime Minister's office?

Mr Boyd : The representations particularly related to rounds 2 and 3 and most particularly to round 3.

Senator RICE: It was of note that Christopher Pyne announced a grant on 18 December 2018. You weren't aware of any representation from people that were then making such announcements, from Minister Pyne's—

Mr Boyd : The last section of chapter 4 of the report talks about the announcement process, including looking at whether announcements were made, the timing in which people were informed that grants had been approved and then the announcements that ran with that.

Senator RICE: I want to go back to the spreadsheet—or the multiple spreadsheets, as you say. You've talked about having many representations from many different people—all of whom, however, are coalition related MPs, candidates or entities. I just want to confirm, again, that the spreadsheets only went backwards and forwards between Sport Australia, the minister's office and the Prime Minister's office.

Mr Boyd : Correct. But, as I say, we didn't audit representations, so if the Prime Minister's office, for example, had gone anywhere other than to the minister's office, we wouldn't be aware of or privy to that.

Senator RICE: I'm sorry—I missed that.

Mr Boyd : Our approach was we were looking at—the decision-making here, as you say, was taken by the then Minister for Sport and within her office, and we're looking at what was coming in and out of there to impact upon that decision-making process. If what had come out of that office and gone elsewhere had then gone to other entities that we weren't auditing, we wouldn't be aware of that.

Senator RICE: Right, but you weren't aware of the spreadsheet going elsewhere?

Mr Boyd : No. Certainly not out of the minister's office—no.

Mr Hehir : The evidence that we had related to communications from the minister's office, not elsewhere, so our evidence only goes to that point.

Senator RICE: Okay. So, given the spreadsheet was in the Prime Minister's office, it could have gone elsewhere from there?

Mr Hehir : We didn't undertake an audit of that, so we can't speculate on it. We can't make any comment.

Senator RICE: What I wanted to confirm, though, was about the changes that were made to that spreadsheet. There was the initial spreadsheet that Sport Australia gave the minister's office. Were you aware of further changes from Sport Australia to that spreadsheet beyond when they initially handed it over to the minister's office?

Mr Boyd : There were changes within their systems, in terms of when they finally completed their assessment work. But the actual—

Senator RICE: The decisions on which projects were going to be recommended for funding—

Mr Boyd : But that work wasn't reflected in it. As we say, with the spreadsheet being worked on, right to the end of round 3, the starting point was still that 8 November spreadsheet. So, for example, the five new applications were only appended very late at the very bottom, without the same amount of information as the others, because at no point did we get an updated spreadsheet of what we're finally left with as a fully assessed population.

Senator RICE: But did those five new applications go through any Sport Australia process?

Mr Boyd : Yes. They were assessed against the eligibility and merit criteria by Sport Australia.

Senator RICE: Right, and then they were just appended to the spreadsheet. In terms of which projects were being recommended for funding, with the version of the spreadsheet coming from the Prime Minister's office back to the minister's office, were they making changes to what was being recommended for funding?

Mr Boyd : Not in the evidence we saw. The spreadsheet would go out, and, to the extent there was then input, it would come back in email form talking about individual projects, not as, 'Here's a revised spreadsheet.'

Senator RICE: So the spreadsheet would go out, and then you'd get emails that would come back from the Prime Minister's office—

Mr Boyd : Yes.

Senator RICE: saying, 'We want to make special representations about these projects.'

Mr Boyd : That's not the language they were using.

Senator RICE: And then sometimes that would be reflected in the next version of the spreadsheet, but other times it wouldn't be?

Mr Boyd : Yes.

Senator RICE: In my final couple of minutes I'd like to go back to the Gaetjens report and the difference between your evidence just previously and what the Prime Minister said. The Prime Minister quoted from the Gaetjens report and said, 'I found no basis for the suggestion that political considerations were the primary determined factor.' Would you agree with that conclusion of the Prime Minister?

Mr Hehir : As I said before, my understanding is the Prime Minister is quoting from a report that I haven't seen. I haven't seen the criteria that it was prepared under and the information that it's based upon, so I'm not going to make any comment on that, because I'd be just speculating, and that's not what auditors do. It's not my role to speculate about things.

Senator RICE: I note that your office spent nine months with five dedicated staff at a cost of over $600,000. Do you stand by the findings of your report, given those contrasting findings of the Gaetjens report?

Mr Hehir : Nothing's come to my attention which would lead me to change the report, but we haven't done any audit work since that time because the audit's completed. So—

Senator RICE: I wanted to go to the 290 projects noted at paragraph 432, which I think, in the conversation with Senator Abetz before about the projects which were ineligible, they were eligible because they were either commenced or completed by the time the funding agreements were executed. You can confirm that that's the case?

Mr Boyd : Yes.

Senator RICE: So that was why they were in—

Mr Boyd : That was what the terms of the funding agreements indicated.

Senator RICE: So it wasn't that there was a big problem with their assessment; it was essentially that as time went on they became ineligible?

Mr Boyd : Correct. They'd signed a funding agreement, which included information which said the project was either underway or had been completed.

Senator RICE: Thank you. I will leave it there.

Senator CANAVAN: Thank you, Chair. I've been waiting in anticipation. Mr Hehir, I want to start with the 74 figure. In the audit snapshot in the front of your report you identify 74 out of 100 as a cut-off. Can you explain where that figure comes from?

Mr Boyd : If you go to paragraph 3.12 of the report, we've gone through and looked at the amount of funding available for each of the rounds with the scores allocated, and worked our way down allocating the funding until it ran out for each round—which is reset through there. So, in the first round if you'd funded the top 137 applications, you'd have used up all the money available with scores between 83 and 98. Then, for the next round when $30.3 million became available, you could have funded another 151 working down, so between 78 and 83. Then, for the third round with what became available, which was $42½ million, you could have funded another 165, working your way down from 78 to 74.

Senator CANAVAN: So the 74 figure is your figure?

Mr Boyd : Yes.

Senator CANAVAN: So the 74 figure is not something that Sport Australia identified as some kind of cut-off or legitimate—

Mr Boyd : That's correct.

Senator CANAVAN: So there was no notion that anything ranked below 74 should not receive funding from Sport Australia itself?

Mr Boyd : Sport Australia did not provide a recommendation that nothing below 74 should—

Senator CANAVAN: A certain level, or—Sport Australia provided no threshold then, did they, below which they thought funding shouldn't be provided?

Mr Boyd : No; they did provide advice at points in time as to saying, 'We consider anything that scored below a certain level simply is not supportable for funding.'

Senator CANAVAN: But there's no magic in the 74 figure itself? It is just a pure, arithmetic calculation.

Mr Hehir : The magic in it is that a normal process for decision-making on grants where you've got a merit assessment is that you undertake assessments, you rank and you fund according to rank.

Senator CANAVAN: Sure. So, I want to come to that point now. The 74 is your figure. In terms of the process that was done, the first question I've got is: did Sport Australia provide their rationale for the scoring to the minister or the minister's office?

Mr Boyd : No, they did not.

Senator CANAVAN: Right. So, all the minister's office saw was a ranking with scores, like a scoreboard, basically?

Mr Boyd : With some information about each project, as I read out earlier—the applicant, the project title, a brief description of the project, how much money was being sought, the total value of the project, where it was located—

Senator CANAVAN: But they didn't have—

Senator ABETZ: Did they have an assessment report column or something like that on their sheet?

Mr Boyd : No, they did not. The score was the only output of the assessment process they had.

Senator CANAVAN: So that's all they saw.

Mr Boyd : If you look at the recommendation there, that's one of the recommendations we make. It's often called a snapshot, a one-pager, that goes with the assessment recommendations saying for each project, 'Here's why we've scored it against each of the criteria like this,' in summary form.

Senator CANAVAN: So, it was a score done by Sport Australia. There was a scoreboard provided but no rationale for that. I now wanted to go page 31, I think, of your report. You raised that there was an issue within Sport Australia around a conflict of interest. You say, in footnote 33 on page 31:

Sport Australia's analysis … was that this sport was 'one of the most organised sports to apply for CSI funding' and had been particularly successful in round one.

Which sport was that?

Mr Boyd : That was tennis.

Senator CANAVAN: So tennis was very organised, apparently, and it was very successful. That footnote goes on to say:

Sport Australia recorded that this was a result of the sport 'having a national strategic approach to funding opportunities.'

What does 'a national strategic approach' mean?

Mr Boyd : This is us quoting advice that Sport Australia recorded, so it's not our view. It's a question you'd need to ask of them.

Senator CANAVAN: Okay. We'll have them in later to follow that up. Apart from the quote there, did you have any more information before you about what that meant? When you say 'national strategic approach', did you know whether—

Mr Boyd : We examined the applications that related to that sport to see how they were assessed versus other applications and how they were approved for funding compared to other applications.

Senator CANAVAN: Did tennis as a group or as an organisation coordinate their applications, in your assessment?

Mr Boyd : Applications were only eligible to be lodged by local sporting groups.

Senator CANAVAN: I know that. Obviously they were lodged by an individual sporting club or association, but was there coordination done behind the scenes before that lodgement by a coordinating body of some kind in the case of tennis?

Mr Boyd : We wouldn't know if that had happened. The most common type—

Senator CANAVAN: You didn't ask that question?

Mr Boyd : If I can, the projects we're talking about—there were a range of projects across the nation for a thing called 'Book a Court'. There is that, in the sense that they are very similar projects in terms of the title but also it was the same sort of thing repeatedly by many individual clubs lodging applications.

Senator CANAVAN: So there were similar applications across tennis.

Mr Boyd : Yes. The amount would vary and so forth, but—

Senator CANAVAN: Given that you had found out from Sport Australia that there was a national strategic approach in this sport, tennis, you didn't then ask Sport Australia what that meant? Was there coordination or—

Mr Boyd : We engaged with them in terms of what, if any, additional opportunities that sport was given, and we were satisfied that things we were looking at were, if you like, information which should have remained confidential to the Commonwealth—such as drafts of the program guidelines might have been what was shared— but it wasn't at the stage of when decisions were being made and assessments undertaken.

Senator CANAVAN: I'll just stop you there. You're saying drafts of guidelines were provided to tennis officials?

Mr Boyd : That was one of the concerns we had, yes.

Senator CANAVAN: That was a concern you had, but did it happen?

Mr Boyd : Yes, it did.

Senator CANAVAN: Who was provided with those drafts of guidelines?

Mr Boyd : An employee within Tennis Australia.

Senator CANAVAN: So they got a rails run, or a head start, through this process?

Mr Boyd : That was our concern.

Senator CANAVAN: Sorry; I didn't ask you if it was your concern. You are saying they were provided information that other sports did not have.

Mr Boyd : Yes. That's what we say in the report. The risk here was that it provided a competitive advantage.

Senator CANAVAN: So someone in Sport Australia had provided a particular sport with an advantage over other organisations. In your view then, that must have potentially skewed the outcome of the ranking system, so to speak, by Sport Australia?

Mr Boyd : The concern here was—this was in the design stage of the program; what then follows that is, once the design is finished, the guidelines are published, and the assessments process—

Senator CANAVAN: That's right, but, if they had had some special information that allowed them to produce potentially high-quality applications—and you basically imply that, or Sport Australia imply that, because they were very 'organised', in their words, quoted in your report. Surely then that at least raised the question that the resulting scores were biased because of that early information provided?

Mr Boyd : No, because the advantage they gained, if you like, was a timing advantage, so they didn't get information which was above and beyond what ended up being in the program guidelines, but they got it before—

Senator CANAVAN: But they had more time. They had more time to put their applications in. I mean, they would have been—

CHAIR: Senator Canavan, just be careful to let him finish answering.

Senator CANAVAN: Okay. I am also very mindful, Chair, that I've got very limited time, thanks to the skewed allocation of time by yourself in this committee.

CHAIR: You're wasting it by complaining.

Senator CANAVAN: So I've got to go through it quickly, Mr Boyd, I'm sorry. So they're competing against mum-and-dad sporting associations who are trying to do these applications after they've put their kids to bed or something, and you've got tennis out there who have an early start and have got more information. Surely they are going to potentially do better because of that bias?

Mr Boyd : Part of the process we worked through is with Sport Australia raising the issue and then trying to understand what Tennis Australia did with that information. The assurances we were provided were that they worked with Tennis Australia to be assured themselves that the drafts of the guidelines didn't—because Tennis Australia isn't an eligible applicant.

Senator CANAVAN: Yes, that's right.

Mr Boyd : The information in those early drafts didn't go out to the constituency who would be preparing the applications. The guidelines didn't go out to the constituents who would be preparing the information. That stayed within the national body.

Senator CANAVAN: In terms of results, how many projects involving tennis were funded?

Mr Boyd : We can take that on notice.

Senator CANAVAN: I would be very interested if that number. I would also, on notice, then, like to know other sports and their funding, and, then, also, the proportion of success relative to applications in different—

Mr Boyd : It starts to become a challenge, and part of this was in the design of the program. It was meant to be looking to fund, as far as possible, infrastructure which would support multiple sports.

Senator CANAVAN: I get that. So there'll be some that are multiple sports.

Mr Boyd : Yes.

Senator CANAVAN: I get that. And then there'll be some devoted to individual sports. But it'd be very interesting, I think, to see those numbers compared to how many were actually provided.

Mr Boyd : I think Sport Australia is probably best because that's sort of day to day—

Senator GALLAGHER: Maybe, if we got the spreadsheet, we'd all be able to tell.

Senator CANAVAN: If you could take that on notice as well because, presumably—

Mr Hehir : Senator, could I just clarify what we're taking on notice? You'd like us to give you information about the success of individual sports—

Senator CANAVAN: Yes.

Mr Hehir : and the success of multisport—

Senator CANAVAN: Yes.

Mr Hehir : but not including the individual sports that are in multisport.

Senator CANAVAN: That's right. That's exactly the question now.

Senator GALLAGHER: Could I just ask this of the chair, and I'm not trying to steal your time: wouldn't those questions be better directed at Sport Australia than at the Audit Office?

Senator CANAVAN: I'm sorry, Senator, I can ask questions.

Senator GALLAGHER: I know. I'm just interested in his point of view.

Senator CANAVAN: If they don't have the information—

Senator GALLAGHER: They're not in charge of the grants program though.

Senator CANAVAN: If the Auditor-General does not have the information, they can provide that; they can say that. But I would have thought, given the issues raised here—

Senator GALLAGHER: They did an audit into it.

Senator CANAVAN: that those would have been some questions they would have assessed and they would probably have that information. But they've taken it on notice, so they'll come back to us. Now I want to move on to your conclusions. Going back to your conclusions based on the assessment process that was done in the minister's office, your conclusion that that was in some sense inadequate was because it didn't meet the merit assessment down by Sport Australia; is that correct?

Mr Boyd : I don't know what you mean by 'didn't meet'.

Senator CANAVAN: I'll quote it to you. On your audit snapshot you say:

The successful applications were not those that had been assessed as the most meritorious in terms of the published program guidelines.

Mr Boyd : Yes. A set of published guidelines said, 'This is how this grant program will be delivered and operated. Each eligible application will be assessed against three published merit assessment criteria and scored with the weightings disclosed.' What we're saying, and we set it out in the report, is—

Senator CANAVAN: Yes, but I'm not sure how you could've reached that conclusion, with all respect, because we've established here tonight that the assessment process from Sport Australia was done by people who weren't formally trained, was often done—in 47 per cent of cases—by just one assessor, was done with great deviance in result, sometimes of as much as 30 per cent, and we had a process riddled with conflicts of interest. How could that in any way—

CHAIR: Riddled? Come on!

Senator CANAVAN: be a standard that is assessed against the actual funding outcomes?

Mr Boyd : As I said, Senator, the assessment process wasn't where the conflict of interest was involved. As I also said earlier, the merit assessment process by Sport Australia was the second stage in a four-stage assessment process. It was followed by the assessment panel process, which brought in people from outside Sport Australia, as well as the deputy chair of the Sport Australia board, to go through all of this to satisfy themselves. And, as I said, they made some changes, and that was then followed by the fourth stage in the assessment process, which was the Sport Australia board looking at all of this and providing its endorsement or otherwise, and that was the process in the published guidelines that the minister had approved to be conducted to inform her decision-making.

Senator CANAVAN: With all due respect, effectively what you're saying is that, if someone gets a 10-metre head start in a 100-metre sprint, the finish line's the same, therefore there's no advantage. Tennis organisations had a head start. They had a bias towards them through this process, so I don't quite understand how you could say that this was a meritorious process. It clearly wasn't.

Mr Boyd : But that's not what the evidence said, Senator. As I said, the disclosure of confidential information was from a Sport Australia employee to the national body for one sport. The question then was: that national body is not an eligible applicant and did not submit applications for funding—

Senator CANAVAN: But they got an advantage against mum-and-dad organisations who didn't have that.

Mr Boyd : Well, the question is, as I said: was that information—

Senator CANAVAN: I do want to move on.

CHAIR: Just let him finish his answers.

Senator CANAVAN: I'm sorry. Given the limited time, I'm very sorry. I would not normally do this, but I now have about 10 minutes—maybe less.

Senator GALLAGHER: Five.

Senator CANAVAN: Five—right. So I've got to be very quick. I want to move on. In your opinion—and it seems to be the case in your conclusions—if the minister made decisions based on the electoral status of a seat, whether Labor or Liberal, is there something incorrect about that or something not right?

Mr Hehir : What we're looking at is that we're assessing starting from the guidelines and the merit criteria which are set out in the guidelines. It's hard to reconcile geographic decision-making based upon any of the elements of the guidelines.

Senator CANAVAN: So there's something inadequate about using electorate status as a decision-making—

Mr Hehir : No, there is nothing, if it's within the framework that's being applied.

Senator GALLAGHER: Be up-front about it. Put it in the guidelines.

Senator CANAVAN: Sure, but I wonder here—because I've read a lot of your reports over the years, and they're very high quality—about the consistency across these reports and what precedent values are put on other reports. I'll take you to an audit report done in 2010-11—presumably under a previous Auditor-General, but it still holds weight. It is audit report No. 3 of that year. It was into the Regional and Local Community Infrastructure Program, which was administered by Minister Albanese at the time. That report found on page 24 that projects located in electorates held by the Australian Labor Party and Independents were more successful at being awarded funding than those located in electorates held by coalition parties, and that report was quite critical of that skew towards Labor-held seats. Given those previous findings, why wouldn't it be appropriate for a minister to look at the political spread of allocation of funding, in response, almost, to previous findings of the Auditor-General? What is the problem with that?

Mr Boyd : I think that, if you look at that audit report, you will see we criticised that approach then in the context of that program.

Senator CANAVAN: But you criticised it because it was too skewed towards ALP seats, so of course, then, subsequent ministers have to, on the basis of those findings, look at the political spread of allocation of funding. Wouldn't they have to?

Senator GALLAGHER: I see where you're going.

Mr Boyd : We looked at that program in the context that it was a global financial crisis stimulus program, which had certain objectives set for it. We looked at what were the criteria set for that program to be delivered against, and there weren't any criteria. The criteria that were said to have been applied were recorded after the event. We looked at whether there were assessments recorded against those criteria, and there weren't, so we couldn't satisfy ourselves as to how and to what extent those criteria were applied. But what we did look at—

Senator CANAVAN: We might take this up at another time, because I don't have time, but I think there has to be a question of consistency across your reports, because you have highlighted this. I have reams of quotes from similar or different reports, where you've criticised the allocation of funding based on a skew towards a particular political party.

Mr Hehir : And there are reports—

Senator CANAVAN: So I would have thought that that then becomes an essential requirement for the minister subsequent to those reports to make sure that there's some—

Mr Hehir : And we've also published reports where there is a skew in the result and we say that that is reasonable given the criteria that are applied. So we don't start from that basis. We start from the basis of the criteria that are being applied and work from there.

Senator CANAVAN: Earlier tonight we did establish, though, that the criteria and the guidelines did allow the minister to take into account other factors. That was clear.

Mr Hehir : In assessing the criteria.

Senator CANAVAN: Yes, clearly. I want to just draw out: what weight, then, did you put on the evidence provided by the minister's office that they did have criteria?

Senator GALLAGHER: It was to ignore it.

Senator CANAVAN: It was allowed for under the guidelines.

Senator GALLAGHER: By ignoring it.

Senator CANAVAN: So what was the issue with that? Is there a potential issue with ministers applying their own assessment and differing from advice provided by an agency or a department?

Mr Boyd : What the guidelines say is:

In addition to the application and supporting material, other factors may be considered when deciding which projects to fund.

But that's in applying the published merit criteria, not developing and applying unpublished merit criteria. We've seen this clause in plenty of grant program guidelines, including the RJIP program I mentioned, which we tabled a report on last year. What that means is that, in terms of ministers exercising their discretion to make a decision, it's still in the context of the published criteria, but, when assessing people against those criteria, you don't have to consider only the application and supporting material; it can be other inputs. But it is in the framework of the published merit criteria, not that you can apply unpublished merit criteria which no-one's been told about.

Senator CANAVAN: Senator Abetz, do you want to ask about this?

Senator ABETZ: Thank you. It says:

In addition to the application and supporting material, other factors may be considered when deciding which projects to fund.

It doesn't limit it to the three criteria, does it?

Mr Boyd : What this talks about—we have read to each other the same phrase.

Senator ABETZ: Yes, but where's this limiting to it the three criteria? Not in it, is it?

Mr Boyd : Well, it is. If you actually go to the section around the merit criteria it says, 'Eligible applications will be assessed against three selection criteria: community participation, community need and project design and delivery.' It doesn't say 'and other criteria we have not yet told you about'.

Senator CANAVAN: Hang on, this is a very important point.

CHAIR: No, time is up.

Senator CANAVAN: This is the way you want to run it? You're going to shut down a line of questioning because it is uncomfortable to the Labor Party and the Greens? That is how you're running this show. Let's just put that on the record. You're shutting down questioning because you are comfortable with where it's going.

Senator GALLAGHER: Senator Canavan, we have just had 20 minutes of you. You got a fair share.

Senator CANAVAN: You did not apply a rigorous or robust 20-minute rule for other senators, and I'm fine with that, but let's just put on the record that you've done that to the coalition, because it is uncomfortable to your political purposes.

Senator ABETZ: Exactly.

Senator GALLAGHER: Just to get on the record a conversation we had in the private briefing: of the 151 seats in the House of Representatives, how many were identified as marginal under the criteria used within the decision-making framework?

Mr Boyd : Thirty.

Senator GALLAGHER: That was for marginal—and then, for targeted?

Mr Boyd : Seventeen.

Senator GALLAGHER: How many seats didn't have any application?

Mr Boyd : Three.

Senator GALLAGHER: The rest, once we do the maths quickly, would have fallen into the 'other' criteria?

Mr Boyd : Yes.

Senator GALLAGHER: And so, in terms of the applications for, I think, approval—is it?—or applications that were approved, of the 705, 32 per cent fell within that marginal or targeted criteria?

Mr Boyd : There was 705 applications identified as being in a targeted or marginal electorate. Of those, 228 were approved for funding across the three rounds, which is a 32.3 per cent success rate. Of the other electorates, there were 1,236 applications in the population assessed as eligible, of which 456 were approved for funding, at a success rate of 36.9 per cent.

Senator GALLAGHER: So, 32 per cent was 408. Does that equal—no, sorry.

Mr Boyd : It is 228 out of 705.

Senator GALLAGHER: I will come back to that another at another time when we have you back. For your appearance today, Mr Hehir, were you approached by anyone in the government in relation to documents that relate to this audit?

Mr Hehir : No.

Senator GALLAGHER: You, or anyone else in your office, hadn't had any discussion with senior public servants around your appearance today?

Mr Hehir : No, and I don't think I would.

Senator GALLAGHER: I was just checking. Footnote 56, back on page 46, goes to the issue of the minister's request for information from 19 September and receiving some information from Sport Australia on 26 September, which was being provided for the first time with the full list of 2,054 applications. The footnote says:

The Minister's Office had provided Sport Australia with a list obtained in relation to another grant program, outlining the type of information it was seeking.

Can you inform the committee what 'another grant program' was?

Mr Boyd : I can't recall the name. It was in the agriculture portfolio.

Senator GALLAGHER: Could you take that on notice for the committee.

Mr Boyd : We can take that on notice.

Senator GALLAGHER: I'm not sure we have been quite specific about the information that you're going to take on notice about providing documents to the committee, because there are many versions of the spreadsheet, as you have explained to the committee, so I'm wondering if you could take on notice whether or not you can provide the full list of 2,054 applications that had been received, and also, I think, probably the spreadsheet, as it related to round 3 of the grants round. Those are perhaps the two pieces of information that would assist the committee, accepting that you need to take advice on that.

Mr Hehir : Yes.

Senator GALLAGHER: What's your process in terms of now making a decision about that? You have the formal request from the committee. What's the next step?

Mr Hehir : When I get a formal request from the committee, I begin consideration of it, which—

Senator GALLAGHER: You want something more formal than we have done? You have taken it on notice?

Mr Hehir : I will take it on notice. I will look at the information you have requested, go to the owner of the information and see whether they have any concerns with respect to the provision of the document to you, then make a decision.

Senator GALLAGHER: We know there will be concerns.

Senator ABETZ: Is it seven o'clock or not? You stopped me right on the knocker of six.

Senator GALLAGHER: It won't be based solely on whether concerns are raised. It is ultimately a decision for you under your act.

Mr Hehir : It is under the powers that the Senate has, largely, but I will take into account if there is a public interest claim. I take that quite seriously in my consideration. I don't believe it is my job to release things that executive government form a view shouldn't be released. I am not certain that is the role that the audit should take, because, if we become the back door for the provision of information that the government doesn't want, I believe it undermines our ability to do our work.

Senator GALLAGHER: Fair enough. We will get back to this another day. I think taking into consideration the interests of the majority of the Senate would be an important consideration for you as well.

Mr Hehir : Absolutely.

CHAIR: That concludes today's hearing. On behalf of the committee, thank you for your evidence today. The committee will report to the Senate on 24 March 2020. If questions have been taken on notice, the committee requests that answers to questions taken on notice be provided to the committee secretariat by close of business 21 February 2020. Thank you to broadcasting, Hansard and secretariat staff for their assistance today.

Committee adjourned at 19 : 02