ANALYSIS
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The ultimate primary school dream is one of largesse. So many lollies that you can hand them out, a sack here, a sack there, and enough sacks left over for yourself that you will never want for lollies again. It's a daydream of beneficence, power and greed. You could view government special-project funding pots in a similar light.
With no real way to solve the problems of Australia's farming communities in an era of climate change, and the death of small towns in an era of big cities, governments have made a habit of distributing grants instead.
There's a bewildering array of them and just last week still more grants, loans and hand-outs were added to the mix with the latest drought assistance. The problem with distributing hundreds of millions of dollars in small packets of money to thousands of community groups, farmers, local councils and suppliers is controlling how it is spent - and the more vague the criteria, the more difficult that becomes.
This week, Auditor-General Grant Hehir delivered a scathing report into the Regional Jobs and Investment Packages program.
He detailed a dog's breakfast of a process - one grant that didn't even meet the eligibility criteria, and four approved despite not offering the required one-for-one matched funding. Decisions were overturned by ministers who substituted their own decisions without the projects being re-scored, conflicts of interest were not properly managed, projects were not properly assessed against the guidelines, and the contractors doing the initial assessments weren't all properly trained.
All this lax process does nothing to allay fears of pork-barrelling or perceptions that it might be a good idea to have the ear of the minister if you want to get your project noticed.
This program was set up to diversify regional economies, especially those that had lost industries, and would, it was promised create "thousands of jobs". But the jobs claims from individual projects were taken at face value, the audit found.
Notwithstanding the messy process for deciding who would get grants, the department is monitoring how it is spent - and only handing out money when projects meet milestones.
While last week, Deputy Prime Minister Michael McCormack was still asserting that thousands of jobs were being created, the department says by the end of October, 353 long-term jobs had been created, with another 506 jobs created "during the project".
Sixty-five of the 233 projects have been completed, although it is not clear how many have submitted their final reports. Fourteen had either not taken up the money or had been "mutually terminated", the department said.
The audit came after Labor MP Mike Kelly complained that the then-Liberal-held seat of Gilmore had been treated favourably. He said while $18.5 million had gone Gilmore, just $1.5 million to his seat of Eden-Monaro.
Mr Hehir found that Gilmore did get the lion's share of NSW South Coast projects, but roughly in proportion to the number of applications, so there was no obvious skew.
But he also found that two Gilmore projects were among the 68 nationwide that were approved by the panel of Coalition ministers despite the department recommending against them. Those projects have not been divulged. Nor has the government divulged the seven projects in Gilmore and Eden-Monaro that were recommended by the department but rejected by the ministers.
The ministerial panel for the NSW South Coast was chaired by Infrastructure Minister Darren Chester, and included Michaelia Cash, Michael McCormack and James McGrath.
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In Gilmore, 23 projects were funded, many involving the expansion of existing businesses, and more than a few involving the installation of automated and robotic equipment, an intriguing plan in the context of job creation. The grants are diverse.
Among the biggest was a $2.8 million grant to the Cottee Jersey Group to install an automated milk processing plant a Japanese tea house and a museum dedicated to the history of the Cottee family at Bomaderry. It appears this company, though, has long since left Cottee family control. Attempts to reach the firm last week were unsuccessful, with the contact number on its website apparently defunct, but company records show the owners are Chinese-born Hao Huang, Huang Chunguang, Mingjen Chen, and Yajun Chen. The Cottee family has just one 10th of the shares.
Another grant went to Off Road Camping Accessories, which was awarded $760,000 last year. It planned to build a "lightweight entry level compact camper" that could be assembled at speed. But before the year was out the company was in liquidation. Liquidator Tim Heesh said the company didn't have the capital to match the federal grant as required and took up little or none of the funding before it went under. The Bay Post reported last year that it had been given $20,000. The balance has been awarded to Eagle Outdoors group which took over the business late in 2018. Eagle's David Rodgers said the grant - about half of which had been drawn down - had enabled him to employ about four extra staff and buy new equipment to stay competitive with cheap imported campers. The support was nothing short of critical to companies in remote areas, he said.
Other grants went to projects as small as $75,000 to Canberra-registered Property Works, a company that does building inspections and termite treatment on the coast and wants to develop an app. And as ambitious as $1.5 million for 10 new luxury guest suites and other facilities at Cupitt's, Ulladulla. Climax Air Conditioning in South Nowra got $158,000 to employ more service staff.
The extent to which these projects provide lasting employment, diversification and stimulus to their local economies is yet to be tested. But at their heart, grants to businesses - like interest-free loans for farmers - risk distorting and obscuring business decisions. In some cases, grants that prop up businesses, communities or towns might last only as long as the money. In other cases, grants are going to businesses that are already sizeable.
The auditor highlighted the Wide Bay Burnett region around Gympie and Bundaberg, where 13 projects were funded. Not one of the top-ranked projects - the ones that got the highest scores in the assessments against criteria - survived the ministers' red pen. Those eight were scored 81 points or higher. One project was funded despite coming 56th out of 61 applications, and scoring just 58. The details have not been released.
Among the biggest grants in that region were $5 million to Nolan Meats to expand its meat processing plant in Gympie, $4.7 million for Bundaberg Macadamia Processing and $1.75 million for Suncoast Gold Macadamias, $2.5 million for a sugar mill railway project, and $1.2 million for the Last Pastoral Company's revamped saleyards. The three electorates in this area of Queensland are held by Nationals Ken O'Dowd and Llew O'Brien and Liberal Keith Pitt.
These kinds of problems are seemingly endemic in government grants programs, which by definition are making favourites of certain groups or regions. In October, when the government diverted $4 billion from a fund for education infrastructure to disaster relief, it set the stage for more of the same. That money will go to disasters including drought, and to local projects to prepare, such as sea walls and fire breaks. But it is clear that the government is determined to deal itself into decision-making on those grants, and is yet to develop the rules that will determine how it is spent.
To date, drought packages have come with remarkably vague and broad sets of requirements - projects are required provide jobs, or "stimulate local community spending", use local suppliers and resources and provide lasting benefits. In October, McCormack visited the Weddin Shire Council to welcome its drought spending on projects that included upgrading the rugby oval and the town hall, and building horse stables.
The latest drought announcement will draw on the $850 million Building Better Regions Fund, which has already distributed three rounds of grants aimed at creating jobs in the regions. These, as with the Regional Jobs and Investment Program have gone to a broad and bewildering array of projects - as disparate as the second circuit at the Mount Panorama car racing track (two grants, $10 million grant and $2.5 million), a childcare centre on Norfolk Island ($900,000) and gun clubs - the Richmond River Gun Club in Lismore ($20,000) and the Mackay Sporting Shooters Association ($150,000).
Separately, an audit in 2018 into the $1 billion Community Development Grants Program found that the department had taken claims about the benefits of projects at face value, simply repeating the claims made by applicants rather than checking and assessing them.
The political reality is that the urge to throw money at the country will only intensify as climate change and the modern economy makes it ever harder to forge a life outside the major cities. Voters are making their frustration and anger heard, and Labor while the Coalition dispenses buckets of money, Labor will be spending no small amount of the next two years working out ways to soothe and woo the same cohort. Labor's election review last week was blunt in its assessment of the extent to which low income, low-economic security blue-collar workers in the regions had turned against the party. And it said the party must find a way to win them back if it wants a path to government.
The challenge for Labor is to find a way to do that without falling into the Coalition's trap of dispensing short-term largesse.