ICAC finds pork barrelling could be corrupt, recommends grant funding guidelines be subject to statutory regulation

Monday, 1 August 2022

The NSW Independent Commission Against Corruption (ICAC) has found that pork-barrelling could constitute corrupt conduct in certain circumstances, while recommending that any whole–of–government guidelines concerning grants funding be issued pursuant to a statutory regulation.

The Commission released its Report on investigation into pork barrelling in NSW (Operation Jersey), today, in which it defines pork barrelling as “the allocation of public funds and resources to targeted electors for partisan political purposes”. In the report, the Commission finds that while individual matters should always be assessed on a case-by-case basis, a minister, for example, may engage in corrupt conduct involving pork barrelling, within the meaning of section 8 of the Independent Commission Against Corruption Act 1988, if the minister:

  • influences a public servant to exercise decision-making powers vested in the public servant, or to fulfil an official function, such as providing an assessment of the merits of grants, in a dishonest or partial way
  • applies downward pressure to influence a public servant to exercise decision-making powers vested in the public servant, or to fulfil an official function, such as providing an assessment of the merits of grants, in a manner which knowingly involves the public servant in a breach of public trust
  • conducts a merit-based grants scheme in such a way as to dishonestly favour political and private advantage over merit, undermining public confidence in public administration, and benefiting political donors and/or family members
  • deliberately exercises a power to approve grants in a manner that favours family members, party donors or party interests in electorates, contrary to the guidelines of a grant program which state that the grants are to be made on merit according to criteria
  • exercises a power to make grants in favour of marginal electorates, when this is contrary to the purpose for which the power was given.

The report notes that those who exercise public or official powers in a manner inconsistent with the public purpose for which the powers were conferred betray public trust and so misconduct themselves. The Commission also finds that pork barrelling could satisfy section 9 of the ICAC Act. It may do so, for example, by conduct amounting to a substantial breach of the Ministerial Code of Conduct, or the Members’ Code of Conduct, or conduct constituting or involving the common law offence of misconduct in public office.

The Commission notes that in issuing this report, it intends to make it clear that ministers and their advisers “do not have an unfettered discretion to distribute public funds. The exercise of ministerial discretion is subject to the rule of law, which ensures that it must accord with public trust and accountability principles.”

Altogether, the Commission makes 21 recommendations to help prevent or better regulate pork barrelling. These also include that:

  • the Government Sector Finance Act 2018 be amended to mirror section 71 of the Commonwealth Public Governance, Performance and Accountability Act 2013 by including obligations that a minister must not approve expenditure of money unless satisfied that the expenditure would be an efficient, effective, economical and ethical use of the money and that the expenditure represents value for money

  • the grant funding framework, or equivalent requirements, apply to the local government sector. This should include situations where local councils are both grantees and grantors

  • clause 6 of the Ministerial Code of Conduct be amended to read, “A Minister, in the exercise or performance of their official functions, must not act dishonestly, must act in the public interest, and must not act improperly for their private benefit or for the private benefit of any other person”.

The Commission’s report follows an investigation it commenced in May 2020 into the NSW Government’s Stronger Community’s Fund. Following an inquiry by the NSW Legislative Council’s Public Accountability Committee, a performance audit by the NSW Auditor-General, an assessment by the State Archives and Records Authority and a review into grants administration in NSW (led by the Department of Premier and Cabinet in partnership with the NSW Productivity Commissioner), the Commission revised its investigation scope. It determined that it was in the public interest to examine and report on the circumstances where, it had concluded, pork barrelling could involve serious breaches of public trust and conduct that could amount to corrupt conduct.

To assist its investigation, the Commission engaged a number of experts to prepare papers and participate in a public forum held on 3 June 2022. The report represents the view of the Commission but draws on the analysis of these experts. The report is available on the Commission’s website.