The federal government auditor has slammed the allocation of a multi million dollar grant to a study into a new coal fired power station, finding that it did not satisfy the grant criteria, and has also raised questions about the use of private emails by energy and emissions reductions minister Angus Taylor and department officials.
The Australian National Audit Office has released the findings of an audit of the $10 million Supporting Reliable Energy Infrastructure Program, which had been established to fund studies into new generation projects, including a proposal to build a “high-efficiency, low-emissions” coal fired power station in Collinsville in Queensland.
The ANAO audit found $3.3 million of this funding had been awarded to the proponents of the Collinsville coal-fired power station, Shine Energy, despite a departmental assessment concluding there was a significant risk that Shine Energy would be unable to deliver a feasibility study the grant was supposed to fund.
The audit also found that department officials had not appropriately disclosed potential conflicts of interests and identified multiple instances of federal energy minister Angus Taylor receiving confidential documents relating to his ministerial duties via his personal email accounts.
The funding provided to Shine Energy was to be spent to ” ‘deliver a bankable feasibility study” of the proposed Collinsville Power Station. The funding had been promised to Shine Energy as part of the Morrison government’s 2019 election pitch – after pressure from several Queensland LNP members, including former resources minister Matt Canavan.
The Morrison government established the Supporting Reliable Energy Infrastructure Program as an ad-hoc and uncompetitive grant program to ensure it could fund the studies into the controversial coal power station proposal.
Despite the department identifying risks relating to Shine Energy’s ability to actually deliver the feasibility study, Taylor subsequently approved the allocation of grant funding to Shine Energy, based on the department’s recommendation.
The ANAO slammed this outcome, saying that the department’s recommendation to provide funding to Shine Energy did not fully satisfy its own grant criteria and that the assessment had been conducted on an incomplete application submitted by Shine Energy.
“[The department’s] recommendation that the Shine Energy grant be made was not consistent with its assessment work which identified that some eligibility requirements and appraisal criteria had not been met,” the ANAO said.
“An incomplete application from Shine Energy was received after two extensions to the due date were provided and did not meet a number of the eligibility requirements. This was because it will not result in a bankable feasibility study being produced by 30 June 2021 that enables a final investment decision on the construction of a high energy low emissions plant.”
“Rather, the application that was awarded funding related to the first two (of four) stages of a feasibility study with funding sources for the remaining stages not identified and completion of the study not due until February 2023.”
The ANAO concluded that funding under the program had been provided on an uncompetitive and ad-hoc basis, and the ANAO found that this approach meant that money spent under the program was “not fully informed by an appropriate assessment process”.
Concerns had also been raised about the ability of Shine Energy to successfully build and operate the power station, with the company having no prior experience in major energy projects, and reportedly having a management committee made up of individuals with ties to a number of Queensland political parties.
The Australia Institute’s climate and energy program director Richie Merzian said that the ANAO’s findings were indicative of the lack of interest in building new coal-fired power stations from genuine market players.
“The Morrison government funding for a coal plant feasibility study at Collinsville was flawed from the get go. It is alarming the Auditor General has highlighted serious concerns with the process including that grant rules were not followed and the department’s due diligence was incomplete and not up to date,” Merzian said.
“It is clear there is no appetite from the market to build new coal plants, and Audit Office’s damning findings shows how hard it was for the Australian Government to justify and fund a feasibility study into one.”
In its conclusions, the ANAO also raised concerns that the department had not maintained an appropriate conflict-of-interest register for officials overseeing the grant funding and that confidential government information was sent to a range of non-government email accounts.
This included advisors to Angus Taylor sending documents relating to the grant applications to the private Gmail or MSN email accounts of Taylor instead of the minister’s official email address.
In another instance, correspondence sent by Shine Energy to a departmental official was forwarded to a non-government email account of their spouse.
The ANAO felt compelled to issue a wider warning to all government entities that government officials involved in the allocation of public funds must appropriately disclose potential conflicts of interest and must use official government email accounts when undertaking government business.
The department indicated that it had accepted all recommendations made by the ANAO.
“The department agrees with the audit’s three recommendations and is either already compliant with obligations or is considering how to best effect their implementation. Implementation of the recommendations will be overseen by the department’s Assurance and Audit committee,” a spokesperson for the department said.
“The department is committed to continued compliance with the Commonwealth Grant Rules and Guidelines and to effective administration of government policy.”