How can I tell if the activity is a procurement or a grant?
Sometimes it can be difficult to distinguish between a grant (or a CCE grant under the PGPA Rule) and a procurement, particularly where a procurement is on behalf of a third party.
With a grant, the grantee receives financial assistance from the Commonwealth to help address one or more Commonwealth policy outcomes as well as achieve its own objectives (consistent with Commonwealth goals). Whereas in a procurement, the Commonwealth is usually acquiring goods and/or services that assist the Commonwealth or a third party. Officials should consult RMG 411 for assistance as it provides some considerations to assist in determining financial arrangements. Additionally, Finance has developed a decision tool to assist entities in determining if an arrangement is a grant, procurement or other financial arrangement.
Is a financial arrangement made under specific legislation a grant?
Officials and accountable authorities can make grants under specific legislation. This type of arrangement is generally regarded as a grant and subject to the CGRGs or PGPA Rule. For example, grants made under the Medical Research Future Fund Act 2015 are generally subject to the CGRGs.
However, benefits or entitlements created under specific legislation are excluded from the definition of a grant by paragraph 2.6 of the CGRGs or section 4 of the PGPA Rule. For example, benefits paid under the Social Security Act 1991. However, where a benefit or entitlement is not established through specific legislation it should be treated as a grant.
Can one Commonwealth entity provide a grant to another Commonwealth entity?
As all non-corporate Commonwealth entities are part of the Commonwealth, payments between non-corporate Commonwealth entities are notional payments and not grants.
A payment from a non-corporate Commonwealth entity to a corporate Commonwealth entity may be a grant, as they are legally separate to the Commonwealth. If a payment from a non-corporate Commonwealth entity to a corporate Commonwealth entity meets the definition of a grant in paragraph 2.3 of the CGRGs, and is not included in the exclusions in paragraph 2.6 of the CGRGs, then it is a grant. Paragraph 2.6 excludes payments to non-corporate Commonwealth entities, which are made for operational purposes.
A payment from a corporate Commonwealth entity to another Commonwealth entity (whether non-corporate or corporate) may be a grant under the PGPA Rule, if a Minister is involved in making the CCE grant.
I am making a grant to another government. Do I need to comply with the CGRGs?
The CGRGs and PGPA Rule apply to any grants to other governments, which are not covered by the exclusions in paragraph 2.6 of the CGRGs or section 4 of the PGPA Rule respectively. Payments to state and territory governments, made under paragraph 96 of the Constitution or under the Federal Financial Relations Act 2009 , as well as payments to local government under the Local Government (Financial Assistance) Act 1995, are excluded from the definition of a grant in paragraph 2.6. In these circumstances, the CGRGs do not apply. Similarly, grants to overseas governments that are Official Development Assistance are excluded from the definition of a grant and the CGRGs do not apply.
Are there special conditions to take into account where a grant opportunity involves payments to states, territories and local governments?
Where funding is only available to states and territories then it is likely the payments are under the Federal Financial Relations legislation and will not be subject to the CGRGs or PGPA Rule. However, where local governments or other applicants, such as small business or industry, are able to apply, the payments are more likely to be a grant and subject to the CGRGs or PGPA Rule.
How do I know if my arrangement needs legislative authority? How do I get legislative authority if I need it?
Legislative authority is needed for entering into arrangements and spending for grants that are not categorised as the ordinary and well-recognised functions of government. The legislative authority may be in separate legislation or in a grant or program listed in Schedule 1AA or Schedule 1AB to the Financial Framework (Supplementary Powers) Regulations 1997 (FF(SP) Regulations). The Australian Government Solicitor provides advice on whether an activity requires separate legislative authority. For more information on the FF(SP) Regulations, entities can contact the Financial Management Branch at FFSPRegs@finance.gov.au.
Are grant opportunity guidelines required for one-off or ad hoc grants?
Grant opportunity guidelines are required for all grants, including one-off or ad-hoc grants.
At a minimum, guidelines for one-off or ad-hoc grants should include the purpose or description of the granting activity, grant amounts, the objectives, the selection process, any reporting and acquittal requirements and any evaluation mechanisms.
Grant opportunity guidelines for one-off or ad hoc grants are not required to be published on GrantConnect, and are not subject to the mandatory processes relating to approval of new or revised grant opportunity guidelines. While not mandatory, guidelines for one-off or ad hoc grants may be published on GrantConnect.
Are corporate Commonwealth entities subject to the CGRGs or PGPA Rule?
Corporate Commonwealth Entities (CCEs) are not generally subject to the CGRGs, unless undertaking grants administration “on behalf of” the Commonwealth.
However, corporate Commonwealth entities may be subject to requirements for making CCE grants where a Minister is involved under Division 6A of the PGPA Rule.
The PGPA Rule establishes the requirements for accountable authorities and officials of corporate Commonwealth entities as well as Ministers who approve or request the making of one or more CCE grants by or on behalf of a corporate Commonwealth entity. This Rule does not apply when the accountable authority (whether a Board, CEO or other) of the corporate Commonwealth entity is the decision maker and the Minister has no involvement in the making of the CCE grant.
For more information on the PGPA Rule and CCE grants visit the Grants and Corporate Commonwealth Entities webpage on the Department of Finance website.
