COVID-19 grants paid to 9,000 ineligible Victorian businesses

In short:

An IBAC investigation found more than $250 million in business support grants was paid to 9,000 ineligible Victorian businesses.

The report found senior public servants withheld information from the Victorian government minister overseeing the scheme.

The opposition says the report is more evidence Labor mismanaged taxpayers' money during the pandemic.

More than $250 million in COVID-19 support was paid to 9,000 ineligible Victorian businesses, but senior public servants never reported the payments to the minister, an anti-corruption commission probe has found.

During the pandemic, billions of dollars in support were paid to businesses as Melbourne endured repeated lockdowns. To qualify, businesses needed to be registered for GST.

A special IBAC report found that in 2021-2022, public servants suspected that $285 million may have been paid to businesses that had backdated their GST to qualify for the payments.

Rather than report the design and application error, three public servants withheld information in briefings to the minister for industry support, Martin Pakula.

"Frank and fearless advice is essential to safeguarding limited public funds against fraud and corruption,"

IBAC's report said.

IBAC found approximately $257 million was paid to more than 9,000 ineligible businesses.

The report said while there was no evidence of political pressure to withhold information from the government, it did find "self-censoring occurred and information about the suspected GST backdating loss was withheld in circumstances" because it would anger the minister or otherwise reflect poorly on the department.

In his response to IBAC, Mr Pakula cautioned the commission against giving "credence to the suggestion that presumed Ministerial displeasure might explain a failure by public servants to provide truthful and fulsome information".

" In my view, it is dangerous for IBAC to provide such a signal, either to the public service or indeed to Ministers. "

IBAC commissioner Victoria Elliott said Operation Harmonia uncovered behaviour contrary to the Victorian Public Sector code of conduct, professional obligations and a clear failure to act in line with the high integrity standards expected.

"While officers within the department spoke up, their leaders failed to act, meaning the government was left uninformed and unable to move quickly to address this suspected significant loss of public funds,'' the commissioner said.

It also found that the public servants, who were not named in the report, also withheld information from the Victorian Ombudsman.

Victorian Opposition Leader Jess Wilson said the report was more evidence that Labor mismanaged taxpayer money during the pandemic.