A $2 billion Morrison government health and hospitals funding program was “ineffective and fell short of ethical requirements”, according to a withering review by the Australian National Audit Office.
The audit office report, released late on Monday, examined the Community Health and Hospitals Program (CHHP), set up in December 2018 before the 2019 election.
The peak audit agency found grants were awarded to health projects despite being inconsistent with the rules for awarding Commonwealth funds and nearly half of all the projects that were funded – 45 per cent – were in marginal seats.
The program was designed to fund projects across the country that would support patient care and reduce demands on hospitals, with the auditor identifying 171 programs including 108 administered as grants and 63 projects that were national partnership agreements with state and territory governments.
Of those 63 projects, 34 were funded even though they did not have a supporting expression-of-interest proposal and despite the fact they had not been assessed by the Health Department against the eligibility criteria, while another six projects were described in the department’s assessment records as being misaligned with program objectives – but were funded regardless.
Between February and April 2019 – in the lead up to the May election – the Health Department was reduced to monitoring the media to keep track of which projects had been selected for funding by the former Coalition government.
Independent MP Helen Haines said the “report shows an appalling abuse of public trust. I am shocked that even our healthcare could be pork barrelled”.
“This could be sports rorts for hospitals,” she said, referring to a $100 million sports funding program the audit office issued a scathing review of in 2020.
The audit office report found the Health Department’s administration of the funding arrangements was undermined by deliberate breaches of the Commonwealth Grants Rules and Guidelines and the “failure to advise government where there was no legislative authority for grant expenditure”.
“Executive oversight, risk and fraud management were deficient. Health did not seek to advise the government whether national partnership agreement project selection was aligned to CHHP objectives,” the report stated.
“Projects funded under grant agreements … were designed, assessed, established and managed in a manner that was largely inconsistent with the Commonwealth Grants Rules and Guidelines.”
The report also found that despite a warning from the Australian Government Solicitor there was no legislation that could be relied on to authorise the expenditure, the Health Department told then-minister Greg Hunt it would proceed to execute the grants anyway.
“Health noted in its advice that this approach may attract adverse commentary from the ANAO and any parties opposed to the expenditure,” the report stated.
Hunt and the opposition’s health spokeswoman, Anne Ruston, have been contacted for comment.
Health Minister Mark Butler said the report showed the former government had ridden roughshod over cabinet processes, departments and the Australian people.
“The Morrison government announced billions of dollars of taxpayers’ money for health projects around the time of the 2019 election, with no regard to proper process or good governance,” Butler said.
“This program exemplifies the Morrison government’s time in office – one plagued with waste and rorts. A government that was all announcement and no delivery.”
Butler pointed out that funding had been so poorly allocated that just over $1 billion of the total $2 billion in funding had actually been spent over the past four years.
“I’ve directed my department to run the ruler over the remaining projects that have stalled to ensure that Australians get value for money.”
Funding highlighted as problematic by the report included a $4 million grant to the Esther Foundation, which provided counselling services and is now in voluntary administration, a $5 million grant to the Lord Somers Camp, a sporting organisation in Victoria, and a $25 million project to expand the Peel Health Campus in Western Australia in Liberal MP Andrew Hastie’s seat.
A 2022 report by the audit office into the former government’s Building Better Regions fund found that almost two-thirds of the money in a $1.15 billion regional grants scheme run by a series of Nationals ministers went to projects that did not have the most merit.
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