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Who does this affect?

Any Australian Government departments or agencies subject to the Financial Management and Accountability Act 1997, their officials and Ministers.

What do you need to do?

Ensure that departmental policies and procedures in relation to all aspects of grants programs comply with the CGGs and take appropriate and timely steps to advise Ministers on CGG requirements (when the Minister is exercising the role of financial approver).

Author
Stephen Masterman  
Solicitor
Stephen Jaggers  
Partner
T +61 2 6217 6061
Adam Bartlett  
Partner
T +61 2 6217 6051

Canberra
David Briggs  

Commonwealth Grant Guidelines now apply to funding programs - 7 July 2009

The Minister for Finance and Deregulation has released the Commonwealth Grant Guidelines (CGGs), which include new mandatory requirements as well as practical guidance for Australian Government departments and agencies and their officials in implementing, administering and reporting on funding programs.

The CGGs, which took effect on 1 July 2009, establish an overall framework for the administration of grants, yet allow Government departments and agencies (Agencies) to determine their own procedures and practices within that framework. A new Regulation 7A in the Financial Management and Accountability Regulations 1997 (FMA Regulations) requires any official performing duties in relation to the administration of grants to act in accordance with the CGGs.

What are the key practical implications of the CGGs for Agencies?

Agencies will need to review their internal procedures to ensure they are consistent with the CGGs.

A key feature of the CGGs is the concept that grant administration should be suited to the particular context of each grant program - that is, “fit for purpose” having regard to the scale, nature, complexity and risks involved. Within the framework, Agencies retain considerable scope in developing their own grant administration practices. Internal grants policies and practice manuals should be drafted with enough flexibility to allow for relevant differences in various grants programs or recipients, or alternatively, to allow for exceptions to the policy when appropriate.

The CGGs are designed to ensure that grants are awarded and administered in a transparent and ethical way and are “outcomes orientated”. While Agencies are likely to already have in place policies and chief executive instructions (CEIs) in relation to declaring and managing conflicts, they may wish to review these policies in light of the new CGGs. Further, under the CGGs, Agencies are responsible for advising Ministers on the CGGs. Given recent media interest in the behaviour of parliamentarians and public servants, Agencies may find themselves under increased scrutiny should there be any perceived failings by officials or Ministers in this area.

Mandatory requirements

There are mandatory requirements for Agencies to:

  • take appropriate and timely steps to advise Ministers on CGG requirements (when the Minister is exercising the role of financial approver)
  • develop grant guidelines for new grant programs, and make them available wherever applicants are able to apply for the program
  • ensure that the grant guidelines developed by the Agency are in accordance with the CGGs, and
  • publish on its website information on each grant awarded within seven days of the funding agreement taking effect. Where publishing the details would breach the Privacy Act, another law, or the terms of the funding agreement, the Agency must endeavour to publish as much of the information as legally possible. Reasons for not reporting must be documented.

The CGGs also include measures designed to promote transparency and accountability in Ministerial decision-making. The CGGs state that Ministers will not approve grants without first receiving advice from the Agency, and will report to the Finance Minister annually on all cases where the Minister has approved a grant contrary to the Agency’s advice. Further, a Minister (who is a member of the House of Representatives) will be required to advise the Finance Minister in writing whenever the Minister approves a grant in respect of his or her own electorate.

Guidance principles

Most of the CGGs provide guidance in relation to the administration of grant programs. This guidance is directed towards seven key areas:

  • planning and design
  • focussing on achieving government outcomes
  • ensuring the administration of the grants program is appropriate to the nature, complexity and risks of the grant program
  • fostering collaboration with and co-operation with grant recipients
  • maintaining good governance practices and accountability in administrative arrangements
  • transparency and probity in the administration of programs, and
  • achieving value for money.

While not mandatory, this guidance presents what the Government considers is sound practice to which Agencies should have regard.

Further information

The Department of Finance and Deregulation has published further information to guide Agencies administering grants programs. Click here to access it, or to obtain a copy of the CGGs, from the Department’s website.

This publication is only a general outline. It is not legal advice. You should seek professional advice before taking any action based on its contents.