The Albanese government has axed a controversial $18m grant to a leadership foundation that the governor general, David Hurley, personally lobbied the Morrison government to back.
The decision late on Wednesday follows senior government officials suggesting the Australian Future Leaders Program was under review as part of the October budget process.
Guardian Australia understands a decision has already been made to axe the program. Concerns were raised due to it being established with a one-off grant without a competitive tender.
On Thursday, the treasurer, Jim Chalmers, confirmed the government had concluded the $18m initial grant and $4m a year of ongoing funding “didn’t pass muster” and did not represent “value for money”.
“There have been some funds committed which will not be proceeding, and that’s an example of that,” he told ABC radio. “And there will be other examples, too, which you will see in the budget.”
Asked about a possible inquiry and the role of the governor general, Chalmers said the government was not contemplating an inquiry and did not “see this in personal terms”. “I’m not into the personalities of it, I’m into the economics of it.”
Earlier on Wednesday, the prime minister, Anthony Albanese, was asked whether he had concerns about the grant.
“Watch the budget,” he replied. “We’re going through line by line, looking for areas of savings in the budget. All of the former government’s expenditure is under review.”
The government was under pressure from the Greens and the Jacqui Lambie Network who gave notice they intended in the Senate to disallow a regulation for the $18m grant.
Announced in the 2022 budget, the $18m to establish the Australian Future Leaders Program was probed by Labor in opposition due to concerns the foundation was not operational before the grant was announced.
According to the explanatory statement for the regulation, the Department of the Prime Minister and Cabinet confirmed it would undertake a “closed and non-competitive selection grant process to enter into a four-year grant agreement” with the foundation.
The regulation states that “merits review” of the grant decision would not be appropriate because it was of a “one-off” nature.
The prime minister’s department has previously said due diligence was carried out before the funding was awarded.
In April 2022, the ABC reported that a spokesperson for Hurley confirmed there had been “several conversations” between him and Scott Morrison dating back to 2020 in relation to the program.
“Ultimately public funding is a decision for the government,” the spokesperson said. “The governor general will continue to advocate for the program and support it once it is launched.”
On Wednesday, the Greens justice spokesman, David Shoebridge, said the cancellation of the grant was “a win for scrutiny and transparency and an important step in restoring integrity to the parliament”.
“There were so many of these backroom deals with mates under the Coalition it shows how much work we need to do to change the culture of this place,” Shoebridge said.
“Now we need some answers about how it was allocated in the first place, because this didn’t happen by accident, it took serious concerted efforts from many corners.
“Reversing this grant is good, what it shows though is the need for binding rules to ensure these secretive grants are a thing of the past.”
In the House of Representatives, independent MP Monique Ryan and independent Andrew Wilkie had previously moved a disallowance to axe the grant.
“There is insufficient evidence supporting this peculiar grant,” Ryan said. “It must be disallowed and reviewed with rigour.”
