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NSW Government Grants Guide 2022 Part 2 Key Principles

By April 14, 2023No Comments

This is the second article in a series about the NSW Government Grants Guide 2022. The first article covers legislative context and can found here NSW Government Grants Guide 2022 Part 1 Legislative Context.

Background

In November 2021, Department of Premier and Cabinet (DPC) announced a review of grants administration in NSW led by the Department of Premier and Cabinet (DPC) in partnership with the NSW Productivity Commissioner. The Review was tasked with delivering an updated Good Practice Guide to Grants Administration and recommendations to ensure that NSW Government grants:

  • deliver value for public money in achieving their stated purpose or purposes
  • are robust in their planning and design
  • adopt key principles of transparency, accountability, and probity
  • deliver a high-quality customer experience.

The Commissioner’s report was delivered in April 2022. The first recommendation was:

Issue the draft Grants Administration Guide at Appendix A, which:

  • provides guidance based on the principles set out in the Commonwealth Grants Rules and Guidelines (2017) and reflects the government sector core values of integrity, trust, service, and accountability.
  • includes mandatory requirements for officials, Ministers, and ministerial staff.

Definition of Grant

The Guide provides a definition of “grant” in Section 4:

 a ‘grant’ is an arrangement for the provision of financial assistance by the NSW Government (or on behalf of the NSW Government) whereby money:

  • is paid to a grantee other than the NSW Government
  • is intended to help address one or more of the NSW Government’s policy outcomes
  • is intended to assist the grantee to achieve its objectives
  • does not result in the return of goods or services by the grantee of an equivalent value to the NSW Government (i.e. it is a non-reciprocal exchange).

The Guide specifically excludes a number of things including:

  • procurements or tenders, including engaging another party to carry out work on behalf of the NSW Government
  • gifts of public property
  • ex gratia payments, act of grace payments and payments to a person of a benefit or an entitlement established by legislation
  • transfer of funds and/or assets between NSW Government entities or SOCs
  • tax concessions or offsets
  • loans
  • payments of remuneration, compensation or damages
  • payments from the Commonwealth where the NSW Government is used as an intermediary to distribute funds
  • scholarships and sponsorship arrangements

The Guide applies to all payments that meet the above definition, including payments made:

  • as a result of a selection process, regardless of whether that process is open, closed, targeted, competitive or non-competitive
  • where particular criteria are satisfied
  • on a one-off or ad hoc basis.

Key Principles

The Guide adopts a principles-based approach. The key principles are:

  1. robust planning and design – a core element in ensuring a probity rich environment is you must have a plan and you must be seen to be following that plan. Effective planning ensures fair, effective and transparent administration that meet identified needs and deliver value for money. Planning provides an opportunity to consider the objectives and determine whether a grant is the best mechanism for achieving those objectives.
  2. collaboration and partnership – effective grants administration includes collaboration and partnership with government and non-government stakeholders. The Guide emphasises consultation and cooperation throughout the grant lifecycle.
  3. proportionality – the Guide acknowledges that scale and complexity vary between grants which requires flexible design and implementation approaches. Administration of specific grants should be tailored to the scale and complexity of the grant. A risk based approach should be used when developing the grant administration framework. You should consider areas like capabilities of grant applicants, policy goals, grant value and the level of risk. The grant management framework should then be balanced against and in proportion to these factors.
  4. outcomes orientation – ‘Grants administration should be designed and implemented with a focus on achieving outcomes and benefits consistent with government objectives’. The Guide references TPP 18-06 NSW Government Business Case Guidelines and its recommendations for documenting objectives. The Guide also encourages close working with with grantees to ensure there is a common understanding of grant goals
  5. achieving value for money – ‘Determining value for money in grants administration requires an assessment of the lifetime benefits of a grant opportunity against its lifetime costs’. This is a core probity element and a key consideration throughout the grant’s lifecycle. The Guide provides recommendations on how officials can ensure their grants deliver value and refers to existing guidance in TPP 17-03 NSW Government Guide to Cost-Benefit Analysis.
  6. governance and accountability – ‘Good grants administration is underpinned by solid governance structures and clear accountabilities. Ministers, officials, agencies and grantees should all be accountable for their roles in grants administration’. A core probity element is accountability and governance. The Guide makes clear that ministers, officials, agencies and grantees all need to be accountable for their role in the administration of any grants. ‘Officials should ensure that grant agreements are well drafted, easy to understand and fit for purpose, as this will contribute to good governance and accountability.’
  7. probity and transparency – ‘Grants administration must be conducted honestly, impartially and with integrity and accountability’. A core probity element is transparency. The Guide stresses the importance of keeping adequate records and ensuring these are easily accessible and understood. These records must be able to “join-the-dots” to show the decision-making process and the justification for the outcome. It should be assumed that grant records will become public and will become subject to scrutiny by the public, the media, regulatory and audit authorities, and legal agencies including ICAC.

In addition to the administration of Grants using a Principles based approach, some key (mandatory) requirements from the Guide include:

  • Officials must demonstrate at the planning and design stage how a grant opportunity will deliver value for money
  • Officials must identify and manage risks for all grants, in accordance with agencies’ responsibilities under the GSF Act
  • Officials must develop and implement fraud controls that are proportionate to the value and risk of the grant.
  • Officials must seek probity advice (whether external or internal) for all grant opportunities that are complex, high-risk or high-value (consistent with the agency’s expenditure and risk management frameworks), to support the design, application, assessment and decision-making phases
  • When designing the assessment process, officials must consider and develop a plan for managing any conflicts of interest that might arise
  • Where a method other than a competitive merit-based selection process is to be used, officials must document why that method will be used and outline the risk mitigation strategies. This must be approved by the relevant Minister (or head of agency or delegate)
  • Officials must prepare clear, consistent grant guidelines that contain information about a grant, including the details set out below at 6.1 Planning and designing the grant opportunity
  • Where it is anticipated that a grant opportunity will involve input from MPs or other stakeholders, officials must ensure that the grant guidelines clearly outline the role of stakeholders and the engagement process, and that all stakeholder input is documented, including how it was considered in the assessment process
  • Where significant changes are made in relation to a grant opportunity, officials must revise the grant guidelines accordingly
  • Officials must ensure that information about grant opportunities, including the grant guidelines and any revised versions, is published on the NSW Government Grants and Funding Find
  • Where grants are provided on a one-off or ad hoc basis, the grant guidelines are not required to be published. However, officials must ensure that information about the grant is made available on the NSW Government Grants and Funding Finder.
  • In limited circumstances where eligibility criteria are to be waived, officials must ensure the reasons are documented and the waiver must be approved by the decision-maker.
  • Where the Minister is the decision-maker, officials must provide written advice.
  • An official who approves or declines a grant must record the decision in writing, including the reasons for the decision (and any departure from the recommendation of the assessment team) and manage these records in accordance with the requirements of the State Records
  • Officials must ensure that (where relevant) all decisions in the assessment process are documented.
  • Officials must ensure that grantees are subject to clear and specific written terms and conditions for a grant. This should be by way of a funding agreement, unless not practicable
  • Officials must ensure that information on the decisions made in relation to grants awarded is published on the NSW Government Grants and Funding Finder)
  • Where there is a legal obligation to maintain confidentiality over certain grant information, officials must publish as much information as is permitted and the reasons for not publishing the information fully must be documented by officials

The key mandatory requirements are summarised in Section 3 of the Guide.