The regional development minister, Catherine King, has confirmed discretionary grants awarded by the Morrison government are on the chopping block in the October budget as Labor attempts to prune spending it characterises as “rorts and waste”.
In an interview with Guardian Australia’s politics podcast, King said she will not be cancelling contracts. But she confirmed uncontracted funding has faced heavy pre-budget scrutiny “so we can close the community development grants program in particular, and sort of move on and try to make sure that we’ve got some better processes going forward”.
The community development grants program was established by the Coalition in 2013 to fund their election commitments. The closed, noncompetitive fund had just over $3.2bn in funding as of March 2022, with 1,366 projects contracted, 300 under way and 102 not yet commenced. The package of grants under revision would return about $116m to the budget bottom line.
King said some of the uncontracted funding allocated by the Coalition under the grants program dates back to 2016. She said there had been commitments “to private, not-for-profit interests that I can’t in good conscience proceed with”.
“I’ve got this mess left where there’s 120 of those [commitments] not contracted,” King said. “Some of them had no money attached to them either.
“But I’ve got communities across the country who think that they’ve been awarded these grants. So again, I’m trying to clean those up and that’ll be part of the budget process.”
She said the government’s process of auditing the grants and drawing a line under them in the run-up to the first budget on 25 October meant some recipients would be given an opportunity “to get the grants started and actually deliver”.
But if that wasn’t possible “then I do want to return that money back into the pool so that other communities have opportunities”.
King said she had not made a decision about grants allocated in round six of the building better regions program. “But I think based on the audit report and many of the things that I’ve said publicly, I think it’d be fair to say it’s going to be difficult for me,” she said.
An assessment of the program by the Australian National Audit Office (ANAO) found Liberal-held seats received twice as many grants as Labor electorates. In four of the five rounds of funding assessed by the ANAO, Nationals seats got more funding than they would have under a purely merit-based process.
King said some projects supported by the grant programs were important for regional communities so she was attempting to be “considerate and thoughtful” in assessing their merits “at the same time as really saying, look, this hasn’t actually been fair for lots of other communities who’ve not even had an opportunity to have a go at this, and they are just as deserving as any other”.
“We need a better process,” the minister said.
“So really the October budget is trying to get [grants] back on to a stable footing, and we’ll be notifying people about these decisions as quickly as we possibly can.”
King, who is also transport and infrastructure minister, said the October budget would reprioritise funding for major projects after consultation with state governments. She said those conversations had focused on nominating what was urgent and deliverable, given capacity constraints and supply chain disruptions.
The Albanese government has signalled the budget will contain modest spending cuts in an effort to gradually reduce some of the debt and deficit accumulated during the Covid pandemic.
In the countdown to budget day, the treasurer, Jim Chalmers, has pointed to the desirability of rebuilding Australia’s fiscal buffers given the potential for major economies to slide into their third major economic downturn in 15 years.
Listen to Katharine Murphy’s full interview with Catherine King on Saturday’s episode of the Australian Politics podcast.
