To grant or not to grant: don’t waste the opportunity

This article was first published in Waste Management Review on 7 July 2021.

Depending on who you talk to, government grants are often either lauded or disparaged.

With the Federal Government putting waste and recycling firmly on the national agenda, now is the time for industry bodies to become involved in the design, development and delivery of funding programs, to ensure that grants are implemented effectively.

But is grant funding appropriate against the background of waste reduction and recycling? And how can industry bodies work together to pitch constraints or flexibilities that should be interwoven into any requirements for grant applications? Consideration also has to be given as to whether industry bodies should lobby for incentive programs as opposed to grants, to ensure an even playing field for the operators.

Benefits associated with grant funding

A grants policy framework at both the Commonwealth and state levels is an important part of the resource management framework. This framework provides for government entities to work together with other stakeholders to achieve sound government policy outcomes (i.e. satisfying a greater need while assisting the grantee to achieve its objectives).

Government grants may include, but are not limited to, research grants, grants that provide for the delivery of services, help fund infrastructure or assist in building capacity.

There are many positives associated with government grants:

• grants are essentially ‘gifts’ that do not need to be repaid;
  
  
• they encourage stakeholders to forward plan;
  
  
• grants support the implementation of best practice and raise the bar for the waste reduction and recycling industry, thereby holding the operators to account;
  
  
• they encourage opportunities to drive innovation in design and practice; and
  
  
• grants allow governments to partner with individuals, organisations and researchers to deliver outcomes to the Australian public.

Negatives associated with grant funding

However, government grants are not without their critics. Such criticisms often include:

• smaller operators cannot compete against much larger, sophisticated entities;
  
  
• the significant detail required in the grant application itself;
  
  
• the small timeframes in which the grants are often open for application;
  
  
• conversely, a larger window for grant applications may broadly delay planned investigations or improvements until after the grants are decided;
  
  
• the requirement for collaboration with other stakeholders often requires nuanced business discussions and the disclosure of commercially sensitive information;
  
  
• the possible anti-competitive effect of substantial grants;
  
  
• grants might be issued on conditions that may not necessarily be in the best interests of the business (e.g. it may require a schedule of works that is difficult to achieve);
  
  
• funding may be stopped with little or no notice; and
  
  
• grants may be seen to reward recipients who had not previously operated at best practice.

Matching of funds

Increasingly, grant funding requires matched funds by a level of government and the applicant.^[1] An example of this in the Queensland Government’s Resource Recovery Industry Development Program (RRIDP) which provides $100 million in funding and other support over three years to develop a high-value resource recovery industry in Queensland.

The RRIDP offers three streams tailored to attract a range of projects, requiring different levels and types of assistance. Relevantly, Stream 1 involves a dollar-for-dollar capital grant of between $50,000 and $5 million to provide funding for infrastructure projects which will enhance or build new facilities or for capital investments in new processing and technological capabilities. Dollar-for-dollar funding ensures that the grantee incurs risk as well and should therefore be dedicated to achieving the desired goal.

Further, funds from the Federal Government’s Recycling Modernisation Fund (RMF) will be invested in new infrastructure to sort, process and remanufacture materials such as mixed plastic, paper, tyres and glass.

However, importantly, the Federal Government’s $190 million commitment to the RMF is also contingent on 1:1:1 co-funding from industry, and State and Territory governments. The Federal Minister for the Environment, Hon Sussan Ley, justified the co-funding arrangement in the following way: “… we need manufacturers and industry to take a genuine stewardship role that helps create a sustainable circular economy”.

This dollar-for-dollar funding practice aligns with the Commonwealth Grants Rules and Guidelines 2017 issued under section 105 of the Public Governance, Performance and Accountability Act 2013. These Guidelines articulate the expectations in relation to the seven principles of the grants administration:

• robust planning and design;
  
  
• collaboration and partnership;
  
  
• proportionality;
  
  
• an outcomes orientation;
  
  
• achieving value with relevant money;
  
  
• governance and accountability; and
  
  
• probity and transparency.

What role for industry bodies?

Industry groups and operators (including local governments) should consider working together with government and non-government stakeholders to plan, design and administer grants, with a focus on removing the negative issues that can flow from a grants program. For example, in certain limited circumstances, funding or partial funding granted retrospectively may be important to ensure industry do not delay innovation so as to be eligible for future grants.

Potential grantees and beneficiaries of grant programs will likely have valuable insights into how best to design and implement grant opportunities, and may be able to assist to ensure outcomes are appropriately aligned to public needs.

It goes without saying that industry groups should be robust in providing transparent feedback to the government bodies about the likely effectiveness of any grants program and whether current legislation or policy approach promotes or inhibits waste innovation and efficiency.

For example, if waste stewardship and particular materials or the combination of materials in one product are obstacles to recycling, then whilst somewhat counter-intuitive, industry bodies may wish to guide the government to better educate consumers, introduce legislation to deal with the issue or even to suggest that grants be directed to the ‘front-end’ of the waste chain.

Further, there may well be development constraints on expanding waste facilities which may impact on the delivery and/or the scheduling of outcomes funded by grants.

Ideally, all relevant planning and implementation issues will be addressed before a state or the Commonwealth commences grant opportunities. These issues should be built into the design of any grant program, but there are often operational and bureaucratic challenges (i.e. getting approval from universities to partner in research) that government bodies may not be fully across. Accordingly, input from industry would be beneficial.

In circumstances where governments wish to drive policy and infrastructure in a particular way, an alternative to grant funding may be incentives across the three levels of government. Most notably, at the Commonwealth level, this could include tax deductions.

There are a range of incentives that could also be employed such as rebates for the purchase of specific plant or equipment, or reduced development application fees for development that is identified and classed as ‘sustainable’. This may create a more transparent and fairer competitive market.

Where to from here?

Minister Ley said last August that recent Federal waste legislation is about “…tackling a national environmental issue that has been buried in landfill or shipped offshore for far too long”. It is clear that the Federal Government has placed waste firmly on the national agenda. Seemingly, grants will be used to drive change. Once that change is entrenched, funding in this area is likely to decrease.

So, now is the time for industry bodies to have a say in how those funding programs are developed and delivered.

In the meantime, stakeholders are encouraged to keep an eye on new funding initiatives both at state and federal levels. Furthermore, stakeholders are urged to broadly consider grant programs – not just those typically announced on the waste resource recovery webpages but also on digital, science, entrepreneur and innovation government sites.