Non-competitive government grants sustain underperforming “subsidy businesses” in Australia

Australia hands out the best part of $1 billion per year in grants to businesses. Many of these come with no strings attached, meaning there is no need to evaluate whether the grants boost employment, help the recipients become more efficient, or benefit the nation.

To test what good these grants do, my team at the Institute of Public Accountants-Deakin University Small and Medium Enterprise Research Centre tracked the performance of the 141,800 firms that received a total of $4.2 billion in Commonwealth government grants in the five years from 2018 to 2022.

Our task was made easier by a requirement that from 2018 all grants from Commonwealth entities be published on the government’s GrantConnect website.