Defence Minister Peter Dutton approved a higher proportion of community safety grants to Coalition electorates, and was more likely to hand-pick some of the funds in Coalition-held seats, the auditor-general has found.
On Monday the Australian National Audit Office (ANAO) released its audit into the $180 million Safer Communities Fund, set up to tackle crime in local government areas across the nation.
The grant scheme has funded community safety programs through local councils and community groups since 2016, with five separate funding rounds.
The audit was triggered following an investigation by 7.30 last year into the administration of round three of the Safer Communities Fund, which at the time was overseen by Mr Dutton, who was then home affairs minister.
Mr Dutton personally slashed millions in grant funding from organisations that were strongly recommended by his department to improve community safety, and used the funds to support his own hand-picked list that did not follow his department's merit-based rankings.
Mr Dutton also used the funds to support grants for two councils — in the lead-up to a by-election in a highly marginal seat — that his department recommended should not be funded at all.
Under the grant guidelines for round three of the Safer Communities program, the home affairs minister must take into account the assessment of each project, but they can effectively overrule their department's own merit-based assessments.
Mr Dutton has previously denied that projects were funded on anything other than merit. He told parliament last year that the projects were broken down fairly and that: "The split between Coalition and Labor seats under that program — wait for this startling number — is 51.45 per cent to Coalition seats and 48.55 per cent to Labor seats."
The audit found that across most rounds of funding there was no clear electoral bias.
But the audit singled out round three of the program — overseen by Mr Dutton in the lead-up to the 2019 election — for distributing funds in a way that favoured Coalition electorates.
"Projects located solely in a Coalition-held marginal electorate and, to a lesser extent, Coalition-held fairly safe electorates, represented a higher proportion of approved applications (in both numerical and dollar terms) than they represented as a proportion of the application population," the audit found.
"The funding awarded to projects located in safe electorates and fairly safe electorates held by the ALP was lower in comparison to the proportion of the application population they represented."
Funding reduced for some projects in Labor seats
The audit report also confirmed that Mr Dutton was more likely to partially fund some projects in Labor electorates that were on his hand-picked list.
"The most significant trend was in Round 3 where the full recommended funding was more likely to be awarded to applicants in Coalition-held fairly safe or marginal electorates, and partial funding was more likely to be awarded to applicants in an ALP-held fairly safe or marginal electorates," the audit found.
Mr Dutton had hand-picked a list of lower-ranked projects from a "reserve list" with the funds he had cut from the highest-scoring projects, including two projects in his own electorate. The audit found that he was more likely to favour Coalition seats in this hand-picked list.
"Projects in Coalition electorates were more likely to be more highly ranked in the reserve list than those ranked in ALP electorates," the audit report said.
In response to questions from 7.30 about the report's findings, a spokeswoman for Mr Dutton said: "I would refer you to the Minister's previous publicly available comments."
Mr Dutton has previously told 7.30: "The suggestion that the Government has done anything other than support projects worthy of support is nonsense.
"I am proud of the support the Safer Communities Fund has provided to organisations such as The Scout Association, Salvation Army Trust and St Vincent de Paul who have made Australia a safer place.
"Australians expect the Government to act to make the communities we live in safer. That is exactly what the Government has done through the Safer Communities Fund."
In a later round of funding — when Mr Dutton was not the decision-maker — the audit identified a safe Coalition seat that received more funding than it had applied for. In another round of funding, there was a significant increase in funding to marginal ALP electorates.
Operation of fund 'partly effective', audit finds
The audit found that overall, more than $112 million in government grant funding was awarded by different government ministers without properly documenting those funding decisions.
It described the operation of the fund as "partly effective" and "partly consistent" with Commonwealth grant rules, while identifying a series of shortcomings.
A number of the problems identified involved the decision-making role played by ministers in allocating funds under the scheme.
Round four of the fund was overseen by Assistant Home Affairs Minister Jason Wood, who approved a series of grants against the recommendations of his department.
In his reasons for approving some of these projects, Mr Wood relied on representations made by a number of MPs and senators.
The ANAO noted that: "The records of decisions did not set out how information collected during ministerial visits to certain applicants and representations from parliamentarians was being relied upon to inform an assessment against the grant opportunity guidelines."
The audit warned that there were probity risks around parliamentarians lobbying in this manner.
"As the risks that arise in these circumstances are similar to those that would arise in a procurement if some tenderers were able to engage directly with the decision-maker, there would be benefits in the [grant rules] explicitly addressing whether applicants should be able to interact with decision-makers prior to grant funding decisions being taken and, if so, how risks to the principles of equity, transparency and probity are to be managed," the audit report said.
7.30 contacted each of the ministers involved in awarding funding or approving guidelines under the Safer Communities Fund, including Mr Dutton, Alex Hawke and Mr Wood, in relation to the ANAO's findings.
Mr Wood told 7.30 in a statement: "While the ANAO found there was room to improve the level of detail in Departmental briefings and how funding decisions were recorded, all grants funded by the Safer Communities Fund under the eight selection processes examined by the ANAO were found to be authorised under the Commonwealth Grants Rules and Guidelines.
"Under the guidelines, the Assistant Minister was able to make decisions on the award of grants. Importantly, the majority of his decisions, worth more than $3,600,000, were for projects in Labor-held electorates such as Gellibrand, Cooper, Bean, Isaacs, Fenner.
"The ANAO found no instances of non-compliance with the mandatory reporting requirements in the CGRGs where Ministers approved grants and where grants were not recommended by the Department."
The only round of funding where the ANAO identified there was a clear basis for funding decisions made was round one, which was overseen by former justice minister Michael Keenan, who is no longer in parliament.
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