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The minister outraged Sport Australia’s board, bypassing the agency to direct $2.5 million to Netball Australia with few strings attached. By Karen Middleton.

Exclusive: McKenzie propped up Netball Australia with ‘special’ grant

Nationals deputy leader Senator Bridget McKenzie.
Credit: AAP Image / Mick Tsikas

Former Sport minister Bridget McKenzie authorised a $2.5 million bailout grant for Netball Australia in 2018, bypassing the board of federal funding agency Sport Australia and enraging its chairman.

The Saturday Paper has confirmed that McKenzie, an avowed netball fan and co-chair of the Parliamentary Friends of Netball, authorised the one-off payment to be made through the Health Department at a time when netball’s peak national body was struggling financially.

The grant application was not made through Sport Australia – then known as the Australian Sports Commission – and it played no role.

Through its chairman, John Wylie, Sport Australia’s board blasted Health Department officials over their reasons for the special grant, which was made with few specified conditions.

Wylie argued the officials described the ordinary business challenges that all sporting bodies faced, rather than justification for a special payment. It contrasted with other organisations in similar circumstances – including the Paralympic Committee and Cycling Australia – which had been offered only repayable loans.

McKenzie authorised the grant after Netball Australia complained that the broadcast deal for its Super Netball series had not proved as lucrative as it had hoped.

The Saturday Paper has been told Wylie’s response was, effectively: “Too bad.” But he did not have the authority to block it.

Backed by his board, the furious chairman later dispatched the Sport Australia auditors to undertake a governance review of Netball Australia.

It is understood Sport Australia later applied reporting requirements to the grant.

The Health Department first confirmed the existence of the $2.5 million grant, and the fact that it did not involve Sport Australia, during a senate estimates committee hearing in 2018.

The Saturday Paper obtained further details this week, as Prime Minister Scott Morrison wrestled with the fate of his embattled minister over the so-called sports rorts affair.

McKenzie has been under pressure to resign since it was revealed she overrode Sport Australia’s official grants process and skewed a separate pre-election sports infrastructure program to favour the Coalition.

A year after the 2018 netball grant, and a week before the federal election, Morrison and McKenzie, who by then was Regional Services minister, announced that a re-elected Coalition government would award Netball Australia a further $30 million – also with no input from Sport Australia and no public detail about conditions.

That announcement followed a $20 million campaign promise from Labor.

A Health Department spokesperson confirmed on Thursday that the $30 million was part of the government’s $70 million Sport 2030 plan and is being paid over four years to fund a new high-performance Netball Australia centre in Melbourne and support young athletes playing the sport.

The first instalment, $2 million for a digital transformation project, was transferred in December 2019.

There is no further detail available on what the remaining $28 million will fund.

On the $2.5 million 2018 grant, Netball Australia told The Saturday Paper it originally approached then Sport minister Greg Hunt and then minister for Women Michaelia Cash about extra funding in 2017 and transferred the request to their successors, Bridget McKenzie and Kelly O’Dwyer, after a portfolio reshuffle.

The organisation declined to comment further this week.

According to Sport Australia’s website, the netball body received a total of $2.94 million in yearly funding from Sport Australia in the 2018-19 financial year – in addition to the $2.5 million grant.

Although the department has confirmed that the special one-off grant was transferred via Sport Australia, it does not appear on the funding list because it was a ministerial decision.

In the current financial year, Netball Australia has been awarded $3.81 million in yearly funding.

It received another $500,000 across the two financial years under Sport Australia’s Move It AUS – Participation Program.

That ran alongside the Move It AUS – Community Sport Infrastructure grant program that was the subject of a damning January 15 report by the Australian National Audit Office (ANAO), which found McKenzie had overridden Sport Australia’s merit-based assessment of grant applicants and run a separate and biased process aimed at winning seats in the upcoming election.

The report said there was no evident legal basis for the minister’s decisions.

Labor has called for McKenzie to quit or be sacked.

“Every day that Bridget McKenzie stays as a cabinet minister, it undermines faith in our democracy,” Opposition Leader Anthony Albanese said on Wednesday. “Because anyone who looks at this knows that this is just a complete rort. It’s a scandal of massive proportions.”

Scott Morrison has been waiting for a review he commissioned two weeks ago from the secretary of his department, Phil Gaetjens, into whether McKenzie breached ministerial standards, before deciding if she should remain in the ministry.

“I have full confidence that the secretary will undertake those responsibilities, as you would all expect him to, and that will lead him to his recommendations and I’ll deal with those,” Morrison said on Wednesday.

The Labor opposition and senate crossbench are planning to establish a senate inquiry when parliament resumes next week.

Late this week, they had not decided whether they would proceed if McKenzie resigned in the meantime.

The government now also faces a decision on the future of Sport Australia itself, after a not-yet-released review of the agency’s operations delivered scathing findings on its general governance.

Former Liberal senator Rod Kemp, who served as Sport minister from 2001 to 2007, was tasked with examining the sports body. What some assumed would be a perfunctory study – especially given the reviewer’s political pedigree – is understood to have produced a scorching assessment.

Whether the report, recently delivered to McKenzie’s successor as Sport minister, Senator Richard Colbeck, deals directly with the agency’s relationship with McKenzie is not clear.

A spokesman for Colbeck said functional and efficiency reviews were a regular part of government and that this one was to ensure Sport Australia was equipped to manage the national sport plan, Sport 2030.

Kemp’s findings have now become entangled with deliberations over McKenzie’s political future.

Cabinet is due to discuss the report on Monday.

The picture emerging from the assorted controversies is marked by dysfunctional relationships – between the former minister, her department and Sport Australia, and within the agency itself.

The surprise netball grant is understood to have fuelled tension between Wylie and Sport Australia’s then chief executive, Kate Palmer, who was formerly Netball Australia’s chief executive.

Palmer left the organisation this week after her three-year contract was not renewed.

Wylie and Palmer issued a statement late last year saying Palmer had not sought to renew her contract. A spokesman for Sport Australia said this week that Palmer had nothing to add to her original statement.

Also retiring at the end of the month is Health Department secretary Glenys Beauchamp, whose department includes the government’s Office for Sport. It will also oversee a new statutory body, Sport Integrity Australia, which is due to be established midyear, pending the passage of legislation.

“It is solely related to her 65th birthday,” a departmental spokesperson said of Beauchamp’s retirement. “It is quite normal for a person to retire at that time.”

As Health Department secretary, Beauchamp is also an ex-officio member of Sport Australia’s board.

The board lost another member, cycling enthusiast and former Liberal Party pollster Mark Textor, in 2018, when he quit after less than seven months, having donated his board fees to charity.

Textor, who had chaired cycling’s Amy Gillett Foundation, declined to answer questions on why he left Sport Australia. But he told others that he found McKenzie’s office arrogant and that he had problems with the chief executive.

It is understood Textor backed the concerns raised by some members of the board about the agency’s spending priorities, including a multimillion-dollar advertising campaign for the Move It programs. The Saturday Paper has been told the campaign included paying to have the steps of Melbourne’s Southern Cross Station – regularly used as a billboard – painted with the Move It logo, for just a few days.

Beyond the boardroom, there has been a string of staff and executive departures over the past year as a result of both financial pressures and clashes over direction.

One of those was the unnamed official mentioned in the ANAO report as having had an undisclosed conflict of interest through ongoing ties to a particular sport.

The Saturday Paper has confirmed the executive is Robin O’Neill, whose links to tennis were known to the agency but, the audit found, not well managed.

O’Neill was also the author of a letter to Bridget McKenzie while she was Sport minister, protesting at her politicised handling of the infrastructure grants. As director of sport partnerships, O’Neill oversaw the grants program but was not involved in assessing the applications.

The Saturday Paper does not suggest he influenced the funding decisions. He has now left the agency.

Sport Australia has its own financial challenges, with some other sports administrators strongly criticising its priorities.

The Saturday Paper has learnt that even before the Kemp review was completed, Sport Minister Richard Colbeck had begun pressing the agency to better manage its money.

Some critics say conflicts of interest remain a problem because senior figures in the organisation have close links to particular sports. Some allege that sports that should have healthy independent funding streams through broadcast deals – including Australian rules football and cricket – are receiving disproportionate funding. Netball Australia is understood to be currently renegotiating its broadcast deal with Channel Nine.

Critics also highlight the travel costs for executives living away from Canberra – where the agency and staff are based – and flying in for a few days a week.

One insider said: “I don’t think, as an agency, that they for the last two years have remembered that they were part of government.”

Sport Australia now awaits cabinet’s decision on Rod Kemp’s report.

The Saturday Paper has been told it dissects the full range of issues affecting agency operations, including the curious structure that has split off the Australian Institute of Sport and set up duelling chief executives, as well as the fallout from bitter personal clashes.

In political circles, some speculate the report may be used to deflect the attack on McKenzie and try to shift the blame.

This week, the prime minister continued to defend McKenzie’s approach, declaring ministers superior to officials in choosing grant recipients.

“At the end of the day, politicians, members of parliament, are elected,” he said. “We face our electors. We are part of our communities.”

Addressing the National Press Club on Wednesday, Morrison suggested the government may fund overlooked projects.

“There are many, many, many more worthy projects in this area,” he said. “… And I will work with the treasurer to see how we can better support even more projects in the future.”

With the Australian Government Solicitor’s advice on the legality of the grants program imminent, that may be an attempt to head off some kind of class action.

Either way, it will certainly cost a lot more money.

This article was first published in the print edition of The Saturday Paper on Jan 31, 2020 as "Exclusive: McKenzie propped up Netball Australia with ‘special’ grant".

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Karen Middleton
is The Saturday Paper’s chief political correspondent.

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