A mobile cafe in a remote part of Tasmania has received a $365,000 Commonwealth grant without having to make its own contribution to the project, prompting questions around government decision-making.
The process was criticised in a report from the Auditor-General, published last week, which found that co-funding exemptions weren't "appropriately considered" in awarding the Regional Jobs and Investment Packages.
Of the 233 grants awarded nationwide, the Killiecrankie food van on Flinders Island was one of just four projects to be exempted from a co-funding arrangement with the government.
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The Turnbull government announced the grants program in 2016, aimed at driving economic growth in 10 regions across five states through a competitive grants program.
Opposition infrastructure, transport and regional development spokeswoman Catherine King questioned why the Flinders Island proponent had received an exemption from providing "even one dollar of co-funding".
"This is $365,000 of taxpayer funds that could have leveraged hundreds of thousands of dollars in George Town, Exeter or Scottsdale," Ms King said.
Flinders Island Tourism and Business Inc is hoping to have its food van up and running in the north of the island by December this year.
Proponent Michael Buck said the mobile cafe would help revitalise the northern part of the island, which is currently bereft of both businesses and services.
"The $365,000 is in the process of being well-utilised as far as the island's concerned," Mr Buck said.
"One of the things that we made very clear to the department [was] that something was needed [in the north] but for a private investor to do it [on their own] was very questionable."
Mr Buck said the application had originally been for a cafe and community centre at Killiecrankie, but finding land to purchase had proven difficult.
The Infrastructure, Transport, Cities and Regional Development Department was notified of the proponent's decision to pivot to a mobile cafe after the grant had already been awarded.
Mr Buck said the justification for getting a co-funding exemption had been that operating a cafe in the north of Flinders Island was "questionable from the point-of-view of viability".
But he added that this could change once population grew and visitation to the area increased.
A spokesperson for Infrastructure, Transport and Regional Development Minister Michael McCormack said applications for funding weren't made publicly available.
"In selecting each of the ten regions, including regional Tasmania, the government considered a range of factors including recent structural changes in the local economy," the spokesperson said.
The successful applicants for the grants were notified in February 2018 as to whether or not they had been successful in obtaining any of the $220.5 million doled out through the program.
A total of 152 applications originated from regional Tasmania, with 49 of those being approved.
The program guidelines stated that grant funding would be to up to 50 per cent of an eligible project's costs and that applicants had to provide co-funding to show commitment to their project.