A City of Launceston councillor is calling for an independent audit of the council's innovation grants program amid concerns that the "first in, best dressed" approach may have excluded worthy recipients and lacked transparency.
Applications to share in $550,000 in Level 2 grants opened following the council meeting on April 2, and closed within three working days under the "rolling" approval process.
The City of Launceston said that the program was designed to allow businesses to "adapt quickly to the emergency" with funding for digital solutions, with grants up to $7000.
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But a range of businesses have raised concerns about the process, including that they had insufficient time to apply, that it disadvantaged small businesses, that the short timeframe would not allow for adequate detail in submissions and, therefore, would not be the best use of ratepayer money.
There were also allegations that one company had rapidly helped businesses to apply, resulting in the funds being exhausted and providing the company with additional clients.
Councillor Tim Walker will move a motion at next week's meeting calling for an audit of the grants program.
He said there was strong concern in the community, and he wanted to see openness and transparency.
"It's a process that by its nature meant that it was always going to happen quickly, that means that its hard to scrutinise as it's happening," Cr Walker said.
"All I'd like to see that someone independent could give the answers to the questions that are being asked in the community."
Councillors held a closed meeting to discuss the issues last week and the program was paused.
Despite successful grant applicants being notified, the council refused to release a full list of the businesses, prompting further concern from Cr Walker and Councillor Paul Spencer.
Cr Spencer said the council had to be transparent.
"[Business have] already got the money, so what's the secret?" he said.
Mayor Albert van Zetten said the program "will be subjected to an audit once the process is complete" and the "on-the-ground business solutions" will be publicly reported, but Cr Walker said he was yet to receive this assurance.
Mayor 'rejects any allegation of impropriety' over grants
Cr van Zetten has promised that the council will release a full list of successful grant applicants "once the process is finalised", and defended the rollout against "any allegation of impropriety".
The motion put by Cr Walker would call for the audit to address the manner in which applications were assessed against the criteria of "genuine need" and "innovative and creative solutions". It would not impact successful businesses.
Cr van Zetten said that a "more traditional grants programme" would have caused businesses to wait for months for the funding, defeating the purpose of the grants.
"Unfortunately, some applicants did miss out and we genuinely feel for those who did," he said.
"We would have loved to have been in a position to help every small to medium business and organisation in Launceston.
"But the reality is, the council has limited funds compared with other tiers of government."
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The package was first flagged in mid-March, and further outlined on March 27 before it was approved by council on April 2.
Other measures included a six-month rate remission for eligible businesses and a freeze on rate rises.
Cr van Zetten said the council was proud of the package, and the Level 2 grants rollout was handled correctly.
"The council categorically rejects any allegation of impropriety levelled at the grants component of this package," he said.
Launceston Chamber of Commerce and Industry executive officer Neil Grose said the council's response to COVID-19 was one of the most comprehensive of any council in Australia.
"We shouldn't let the perfect be the enemy of the good. There are a lot who missed out, but there are those who will be able to transform their businesses," he said.
'We were told we were too late'
One Launceston business of over 100 years, which did not want to be identified to avoid harming its relationship with the council, claimed it lodged its grants application within three working days, but had already missed out.
The business owner said they received an email from the council which said they were outside of the closing date.
"I would've thought they were still collating the applications at that stage. I'm not naive, it was all done with such quickness," he said.
"It's public money. First in, best dressed seems funny to me.
"I don't mind missing out, as long as it's done fairly and there's a formula to it."
The grants program was part of the City of Launceston's $8.5 million response to the COVID-19 crisis.
It was intended to help local businesses with fewer than 20 employees to adapt their business to the changing COVID-19 environment, largely through digital means.
Applicants had to explain the extent of harm caused to their business by COVID-19, outline their proposal, provide a quote, a project plan and a co-contribution.
Rick Marton, the managing director of digital marketing firm Effective Naturally, was one of several businessmen to write to the council to highlight concerns about the application process. He doubted whether an adequate level of detail could have been provided in the short timeframe.
Mr Marton said it was important for the program to demonstrate equity and fairness.
"I have raised my concerns with council and everything was around making sure that the rules were followed and it was an equitable process for all the businesses that applied," he said.
"The council deserve for this to be a good news story because its intent was good, we just have to be 100 per cent sure that the outcome is the best for ratepayers and will actually deliver the businesses the resources that they need to be stronger, whatever the future looks like."
Launceston businesswoman Karen Burbury posted a scathing criticism of the program on social media, saying "there is a huge dark cloud over all of this".
"The entire process requires immediate investigation before any rate payer funds are distributed so the council can save face amongst the majority of small/medium business owners," she wrote.
MLC seeks answers from council
Launceston independent MLC Rosemary Armitage also wrote to City of Launceston chief executive officer Michael Stretton after receiving concerns from constituents.
She received a detailed response, including that the council received 99 applications for the Level 2 grants within the three working days, with a further 29 "commenced in the system".
The council developed a standard operating procedure for the grants - including to "read the brief description", read the quote, verify the supplier was locally based and other standard verifications - which it claimed would provide "a sufficient level of governance and oversight".
Ms Armitage said there was still concern among the business community.
"I have had a number of concerns raised with me regarding the innovation grants program funding process, and while I appreciate the need for expedience in the current climate, I believe it would be in line with ratepayers' expectations that public money is spent in the best interests of our community ensuring a process that is transparent, fair and merit based," she said.
Businesses believed the Level 2 grant program had been finalised when it was paused last week, however The Examiner has been told that further successful businesses were informed on Wednesday.
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