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EXCLUSIVE
The $5.5 million grant NSW Premier Dominic Perrottet awarded to a regional NSW gun club was illegal, with the project failing to meet any of the funding requirements under the legislation, investigations reveal.
The grant to the Australian Clay Target Association (ACTA) in Wagga Wagga is at the heart of the scandal that saw Gladys Berejiklian resign as NSW Premier and is the focus of an ongoing probe by the NSW Independent Commission Against Corruption (ICAC).
The Klaxon previously exclusively revealed it was Perrottet – as NSW Treasurer – who personally approved the highly controversial $5.5m grant, which has been the central focus of the ICAC’s public hearings.
It can now be exclusively revealed that Perrottet approved the grant despite the gun club development failing to meet legal requirements.
Perrottet made the grant, for ACTA to build a new club house and function centre, from the Restart NSW Fund.
That was after earlier plans to have the funding come from the NSW Office of Sport were rejected by that department.
The Restart NSW Fund was created in 2011 to house funds from the NSW Government’s sale of “poles and wires” electricity infrastructure.
It is governed by the Restart NSW Fund Act 2011, which expressly stipulates the types of infrastructure projects that fund money can legally be used for.
Allowable projects include transport and roads infrastructure, health and public services infrastructure, infrastructure in areas “affected by mining operations” and infrastructure “required for the economic competitiveness of the State”.
The gun club development: meets none of the legal requirements for funding under the Restart NSW Fund Act . Source: Supplied.
The Australian Clay Targets Association’s “large clubhouse/ conference facility” development on the outskirts of Wagga Wagga NSW meets none of them.
Perrottet has not denied the $5.5m grant was illegal.
He has pointed The Klaxon to Infrastructure NSW for “recommending” he approve the grant.
Yet the law shows it was entirely Perrottet’s responsibility, as NSW Treasurer, for ensuring legislative requirements were met and that the grant was for a legally allowed purpose.
The explosive revelations come as Perrottet is mired in scandal, including over former NSW Deputy Premier John Barilaro having been appointed to a plum taxpayer-funded job in New York City with a $500,000-plus annual salary.
Payments from the Restart NSW Fund are the responsibility of the NSW Treasurer. Source: Restart NSW Fund Act
The Restart NSW Fund Act states: “The purpose of the Fund is to improve economic growth and productivity in the State”.
It is to fund major infrastructure projects, or other infrastructure projects, provided thay meet certain criteria.
Major infrastructure projects are defined as those that have a “capital value of more than $100 million” or are “nominated by the Premier as a special project” requiring extra oversight.
The gun club development did not have a capital value of more than $100m and was not nominated a “special project” by any NSW Premier.
The other types of infrastructure projects that can be legally funded are set out in the Act under “Purpose of Restart NSW Fund”.
They are projects that improve:
– Public transport;
– Roads;
– Infrastructure required for the economic competitiveness of the State (including the movement of freight, inter-modal facilities and access to water);
– Local infrastructure in regional areas that are “affected by mining operations”;
– “Infrastructure projects that will improve “hospital and other health facilities and services”; and
– Infrastructure projects that will improve “workplaces for law and justice officers, teachers, nurses and other staff providing services to the public”
The gun club development was “for the development of a large clubhouse/ conference facility and associated infrastructure at the existing Australian Clay Target Association (ACTA) facility in Wagga Wagga, NSW”.
It was not related to public transport or roads, and is not related to health facilities or infrastructure to improve workplaces for public servants, teachers and nurses.
Wagga Wagga is not an area “affected by mining operations” – the town is not even in a broader mining region.
Map of NSW mines. Source: NSW Mining
Fund money can be used to finance “infrastructure required for the economic competitiveness of the State”, with examples: “the movement of freight, inter-modal facilities and access to water”.
The ACTA club house and “convention centre” meets none of these.
The development was not, and is not, required for the economic competitiveness of the state.
That the project fails also to meet this criteria is emphasised by the fact is has nothing even closely related to the examples provided. (Inter-modal facilities are facilities connected to container transport, typically shipping containers).
Purposes for which Restart NSW Fund money can be legally used. Source: Restart NSW Fund Act
The Klaxon asked Perrottet that, if he considered the $5.5m grant was legal, then which of the “infrastructure project” categories did he consider it fell under.
The NSW Premier and his office did not answer the question.
The Klaxon asked Perrottet why he had signed off on the $5.5m grant “despite it not meeting the legal requirements” of the Restart NSW Fund Act.
Perrottet and his office did not provide an on-the-record answer.
But in a “background” statement said it was the role of Infrastructure NSW (the NSW department of infrastructure) to assess grant proposals and make recommendations on whether to grant funds.
Yet the Restart NSW Fund Act makes clear it is the NSW Treasurer who is, at all times, the person responsible.
The Act states that Infrastructure NSW makes a “recommendation” but all payments from the fund must be “approved by the (Treasurer)” who must be satisfied payments are for a purpose that “promotes a purpose of the Fund”.
(The “responsible minister” is the NSW Treasurer, the Act states.)
It states: “There is payable from the Fund…any money approved by the Minister on the recommendation of Infrastructure NSW to fund all or any part of the cost of any project that the Minister is satisfied promotes a purpose of the Fund”.
The law means it is the NSW Treasurer, not a public servant, who is solely responsible for all money that leaves the multi-billion fund.
To date, over $35 billion has been put into the Restart NSW Fund.
The NSW Government has created numerous “funding programs” linked to the Restart NSW Fund, including “Fixing Country Roads”, “Fixing Country Rail” and “Safe and Secure Water”.
The $5.5m gun club grant was paid under one of those funding programs, called “Regional Growth – Environment and Tourism Fund”.
The funding programs have their own stated “criteria”, but given they are all funded with money from the Restart NSW Fund, all grants made through them must be for infrastructure projects of the kind legally allowed under the Restart NSW Fund Act.
The Klaxon’s questions to NSW Premier Dominic Perrottet.
“Benefit Cost Ratio”
The main focus of Infrastructure NSW in assessing grant proposals is economic – the process is set out on its website.
Infrastructure NSW decides whether or not to recommend a project based on its “benefit cost ratio”, which is whether or not it delivers a net public benefit.
A benefit cost ratio above 1 means the estimated benefits of a project to the public outweighs its cost.
“Infrastructure NSW uses a project’s Benefit Cost Ratio (BCR) to assess this: a project’s benefits must exceed the cost of its delivery, as demonstrated by having a BCR greater than 1,” Infrastructure NSW states.
It’s the NSW Treasurer’s job to ensure grants “promote a purpose of the fund” and to approve or reject projects.
“Projects can only be funded if we have recommended them and they are approved by the Treasurer,” Infrastructure NSW states.
“Projects can only be funded if we have recommended them and they are approved by the Treasurer”
The ICAC is investigating the conduct of Maguire and former NSW Premier Gladys Berejiklian, who was in a secret relationship with Maguire at the time the gun club grant was approved.
The ACTA, through Maguire, had been repeatedly knocked-back for grants until 2017.
In December 2016 Berejiklian, then NSW Treasurer, took the proposal to the NSW Expenditure Review Committee, which she chaired.
That was despite NSW Treasury – her own department – formally advising against the project, which it said was “very unlikely” to deliver a net-benefit to taxpayers.
How The Klaxon broke the story. Source: The Klaxon
Regardless, the grant passed through the ERC on December 14, with the $5.5m to be “set aside”, subject to a series of conditions.
One condition was that it was “subject to the finalisation of a satisfactory business case”, which then “can” be approved by the NSW Treasurer.
The next month, January 2017, Baird resigned as NSW Premier.
Berejiklian became NSW Premier and Perrottet became NSW Treasurer.
At department level there was confusion as to how the $5.5m grant would be funded, the ICAC has heard.
Earlier plans to have the grant sourced via the NSW Office of Sport were abandoned.
“Michael Toohey (NSW Office of Sport director) has advised that the that the original ERC minute was not correct, and the Office of Sport has no involvement at all, and do not want any involvement in the funding,” one high-level NSW Government email states.
The December ERC cabinet submission regarding the gun club proposal makes no mention of the Restart NSW Fund.
Maguire and Berejiklian before Maguire was forced to resign from NSW Parliament in disgrace in 2018. Source: Supplied
Yet the “minute” recording the ERC outcome on December 16 states the grant “should be sourced from the Regional Growth – Environment and Tourism Fund” and “comply with criteria to access the fund”.
The gun club proposal went to NSW Infrastructure for a “benefit cost ratio” assessment.
That assessment was completed in mid-April 2017.
The proposal failed, achieving a score of 0.88.
Daryl Maguire at the Wagga Wagga gun club. Source: Supplied
ICAC has heard Berejiklian then intervened, an “updated” business case was prepared and in July another “cost-benefit analysis” was conducted.
This time the project passed, with a score of 1.1.
That score relates to the cost of the project compared to its perceived benefits – it does not relate to whether the legal criteria for funding under the Restart NSW Fund is met.
On July 8, 2017, Jenny Davis of Infrastructure NSW sent an email to seven colleagues across three NSW Government departments.
“The project is unusual,” Davis wrote.
“The ERC (Expenditure Review Committee) minute approved it before we had ever heard of it.”
“We need to ensure that the funding goes to public infrastructure, not to private assets on private land” — Jenny Davis, Infrastructure NSW
In any event, even if it passed through Infrastructure NSW, the grant needed to go to the “Treasurer” for approval.
“We need to ensure that the funding goes to public infrastructure, not to private assets on private land,” Davis wrote.
“Our recommendation doesn’t need to go back to ERC, but it does need the Treasurer to approve it.”
“It does need the Treasurer to approve it” — Jenny Davis, Infrastructure NSW
Weeks later, on August 27 2017, Perrottet approved the $5.5m grant from the Restart NSW Fund.
It was not for “public infrastructure”, but for private assets on private land.
It did not meet any of the requirements of the Restart NSW Fund.
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