The news that NSW's anti-corruption watchdog is investigating alleged illegal political donations made by Catholic Schools NSW (CSNSW) has sent shockwaves through both the education sector and the political landscape. It is easy to look at this as just another standard political funding scandal. But doing so misses the real issue.
This isn't just about administrative errors or rule-bending by party operatives. It raises fundamental, uncomfortable questions about how public taxpayer funds are tracked, managed, and potentially redirected into political operations. When millions of public dollars flow into non-government school systems, the public deserves absolute certainty that not a single cent is being diverted to fund political campaigns or branch-stacking operations.
With the Independent Commission Against Corruption (ICAC) launching Operation Rosny, the spotlight is firmly on CSNSW and its now stood-aside chief executive, Dallas McInerney. Let's look at what is actually going on, why the current oversight system is failing, and why this matters to every single taxpayer.
Inside Operation Rosny and the Alleged Branch-Stacking Pipeline
ICAC’s public inquiry, starting July 27, 2026, aims to unravel a complex web of influence, undeclared funds, and backroom political maneuverings.
At the center of the investigation are allegations that political donations exceeding legal caps—and completely undeclared—were made by Catholic Schools NSW. According to ICAC, these payments were allegedly arranged and approved by McInerney.
But what was the money supposedly used for?
It wasn't just to help fund a general election campaign. The commission alleges the funds were used for recruiting or renewing members of the Liberal Party. In plain terms, we are talking about funding internal party factional warfare and branch-stacking.
The list of people caught up in this inquiry reads like a roster of state political insiders. It includes Liberal Party operatives Christian Ellis, Jeremy Greenwood, Robert Assaf, and Jean-Claude Perrottet (brother of former NSW Premier Dominic Perrottet). It also involves property developer Jean Nassif and hotelier Michael O’Hara.
The sheer variety of characters involved highlights a messy overlap of corporate interest, religious-school advocacy, and internal party powerplays. McInerney has stood aside from his chief executive role while the investigation runs.
Why the Fungibility of Public Funds is a Massive Problem
The standard defense in these types of funding scandals is simple: "No public money was used for political purposes; we used our private revenue streams."
But anyone who understands institutional finance knows this argument is paper-thin.
Non-government school authorities receive massive amounts of taxpayer funding. In NSW, Catholic school systems are heavily subsidized by both federal and state governments to cover operational costs, salaries, and infrastructure.
When an organization receives millions of dollars from the government, all of its money becomes highly fungible. If government grants cover 80% of your operational overhead, it frees up 80% of your private revenue—like membership fees, investment returns, or private donations—to be spent on other things.
Without strict, granular accounting audits, it is practically impossible to separate "public" money from "private" money. If a taxpayer-funded entity has enough excess cash to allegedly funnel undeclared payments to political operatives, then the government is essentially subsidizing those political maneuvers.
Education funding experts have pointed out this exact systemic loophole. Currently, government departments check if schools are meeting basic educational outcomes. They rarely conduct deep, forensic audits to ensure that the broader corporate entities running these school networks are not using their freed-up private capital to buy political influence.
The Broken Oversight of Private School Funding
How did we get to a point where a major education body could allegedly run an undeclared political donation pipeline? The answer lies in the hands-off approach governments take toward private school system authorities.
Unlike public schools, which are subject to strict public sector financial controls, freedom of information laws, and direct government oversight, systemic private school offices operate with a high degree of corporate autonomy. They receive bulk funding allocations and are largely trusted to distribute those funds internally.
This lack of transparency creates a massive accountability deficit. We need to look at how we regulate the corporate entities behind non-government schools.
- Audit gaps: Existing government reviews focus almost entirely on individual school campuses, not the central corporate offices where major financial decisions are made.
- Political lobbying vs. political donating: While advocacy and lobbying are legal and expected, direct financial involvement in internal party factional battles crosses a dangerous ethical line.
- Lack of reporting: If an educational authority can bypass donation caps and disclosure laws, the public is kept completely in the dark.
If the ICAC inquiry proves these allegations, it will show that the current regulatory model is completely inadequate for protecting public money.
What Needs to Change Right Now
We can't just wait for ICAC to hand down its findings in a few years. Governments need to take immediate steps to reform how non-government school funding is policed.
First, we need to mandate complete financial transparency for all central school systemic offices. Any organization that receives systemic public funding should be subject to the same rigorous financial disclosures and audit requirements as public departments.
Second, we must establish strict legislative firewalls. If an entity accepts taxpayer funding for education, it must be legally barred from making any political donations or funding political party activities, directly or indirectly.
Finally, the NSW Electoral Commission and the Department of Education must collaborate on random, forensic financial audits of non-government school authorities. We need to stop taking their financial assertions on trust.
If you want to understand the scale of the corruption watchdog's investigation, the 7NEWS report on the CSNSW chief standing aside offers a great breakdown of how Dallas McInerney's exit has rocked the political and education sectors in NSW.
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