Former NSW government accused of ‘pork barrelling at public’s expense’ after scathing audit

Post-Covid pandemic funding program was designed in office of then treasurer Dominic Perrottet without consulting affected communities, auditor says. Photograph: Dean Lewins/AAP

Labor has accused the former New South Wales Coalition government of “pork barrelling at the public’s expense” after the auditor general found the design of a $5bn scheme to funnel money into areas worst hit by Covid lockdowns “lacked integrity”.

In a report released on Wednesday, Margaret Crawford found that more than $1bn was allocated to “low or moderate merit” infrastructure projects in western Sydney as part of the massive post-pandemic spending program WestInvest.

She found the program was “not informed by robust research or analysis” to justify the massive spend.

The fund was announced in September 2021 under the previous government to pay for “transformational” infrastructure projects across 15 local government areas in western Sydney, funded through the sale of the WestConnex motorway.

At the time, Gladys Berejiklian was the premier and Dominic Perrottet was the treasurer. Shortly thereafter, Pettottet took the top job and Matt Kean was promoted to treasurer.

The current state treasurer, Daniel Mookey, said on Wednesday the report was a “devastating indictment” on the previous government and the scheme was “a classic in the genre of pork barrelling at the public’s expense”.

“This is another example of the Liberal party playing politics with the public’s money,” he said.

The scathing audit of the scheme found the money was not evenly spread across the region and advice from the public service about the grants was not followed.

“Funding allocations through the NSW government projects round did not follow the advice of the agencies that administered the program and were not aligned with the stated objectives of the WestInvest program,” the audit found.

It also found that while the $5bn commitment was presented as a post-pandemic stimulus measure, there was “no business case or other economic analysis conducted to support consideration of the potential benefits and costs of the program”.

The government “did not have sufficient regard to the implications for the state’s credit rating” and the program was designed in the then treasurer’s office without consulting affected communities, the auditor found.

The auditor found state Treasury had been asked to provide advice on the scheme in the week before it was announced, which limited any chance for “thorough analysis”.

The scheme was split into three sections. There was $3bn for NSW government agency projects, $1.6bn for competitive grants to councils and community groups, and $400m for non-competitive grants to councils.

The auditor found many projects funded in the government projects round had “no clear link to the purpose” of the scheme, and advice from the seeing committee about the eligibility and merits of projects “was not followed consistently by the then treasurer”.

“Justifications for the funding decisions made by the treasurer were not documented,” the audit found.

It found a third of projects – nine out of the 27 – were assessed by the committee as having low or moderate merit before they were allocated combined funding of $1.1bn.

At the state election last year, the program was altered and rebranded as the Western Sydney Infrastructure Grants Program.

The auditor found the new Labor government decided not to fund 11 of the projects that had been announced previously and shifted money to 17 other projects. Fifteen of those did not have complete business cases, as required.

Addressing the media after the report’s release on Wednesday, Kean accused Mookhey of hypocrisy and rejected the claim the Coalition’s administration of WestInvest amounted to pork barrelling.

“If I had my time again, I’d do it all over,” Kean told reporters.

“I don’t think that the funding of air conditioning in classrooms in western Sydney has low merit.”

Kean suggested the responsibility for the design of the scheme lay with the senior public servants who ran the Premier’s Department and Treasury at the time, rather than the former government.

The auditor recommended that advice to cabinet from government agencies should be “clearly identified” and kept apart from advice provided about political considerations.

The government was also advised to consider whether competitive grants were the best way to achieve the purpose of the fund and to create guidelines moving forward.