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Will 2019 be the year of the watchdog?

close up of calendar on the table, planning for business meeting or travel planning concept

One of the most compelling areas of public administration demanding attention this year is the role of regulation and oversight across government, says Verona Burgess.

As the passing parade of ministers, prime ministers and governments continues to whirl like an out-of-control carousel, the Australian Public Service really has one job in 2019: to deliver good, stable public administration, while tripping as few landmines as possible.

‘Steady as she goes’ may not be a fashionable mantra, but it would not be a bad one for the APS this year, especially with a political ship of state that is anything but steady.

If, as expected, a change of government occurs, there will be the usual flurry of big-ticket movements in the APS, both in departmental structures and who’s who in the incoming zoo (and who’s out of it).

What’s more, the April 2 budget will be up for grabs, with the ink barely dry on its $10 billion or more of election sweeteners (aka promises of tax cuts) ­before the new half-Senate takes its seat on July 1.

These things are obviously of great note. Yet one of the most compelling, if somewhat understated, areas of public administration that is demanding attention this year is the role of regulation and oversight across government.

Bunfights over federal ICAC model

“What will happen to all the existing ‘integrity’ watchdogs in terms of functions, legislation and portfolios is also a potential battleground.”

This is more of a slow burn, but an important and complex one that is being fuelled by scandals across various sectors.

To what extent 2019 will end up being the Year of the Watchdog may be played out most visibly in the continuing bunfights over what model of federal anti-corruption commission the parliament will finally adopt.

What will happen to all the existing ‘integrity’ watchdogs in terms of functions, legislation and portfolios is also a potential battleground.

Even if the Morrison government had not been dragged kicking and screaming to the table and had drafted a perfect bill for an anti-corruption commission, it would have Buckley’s chance of getting it through the parliament before the election.

Another watchdog issue that is bubbling along – and not in a good way – is the Attorney-General, Christian Porter’s unprecedented suppression order on parts of the Auditor-General’s report on the $2.2 billion Defence contract for light vehicles, effectively at the behest of a private contractor, the French multinational Thales.

Federal Labor has rightly flagged amending the Auditor-General Act to prevent such a thing happening again.

But regulation and oversight have many faces in government.

First major date on APS’s 2019 calendar

“The banks have the power to manipulate the economy in the name of reducing risk and you can be sure they won’t hesitate to do so on the back of the horse called Self-interest.”

The first key date on the APS’s 2019 calendar is the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, due to be delivered to government by February 1.

The interim report of September 28 last year was deeply scathing of both financial institutions and federal regulators on a number of fronts, not least over the banks’ putting profit ahead of the law.

Whatever the final recommendations may be and may result in – such as prosecutions, civil cases and/or mandatory changes to remuneration structures and corporate governance – the royal commission has already triggered a rethink of the roles of the regulators and their relationship with the financial sector.

It is evident that business-as-usual is not an option.

The royal commission has well and truly belled the cat on what now seems like a quaint notion that any kind of self-regulation can work without government enforcement.

The wonder is that it has lingered for so long, especially considering the no-nonsense approach of the Australian Taxation Office, which has worked so hard and continuously on finding the right balance between its iron hand and velvet glove – and may well be the most successful of the economic regulators, even if not the most loved. That accolade can probably go to the Australian Consumer and Competition Commission at this point.

The Coalition government can hardly afford to kick the royal commission’s most difficult or principles-based recommendations down the road pending the election, because the Opposition would relish that.

But don’t expect financial institutions to simply throw in the towel and accept tougher government oversight and enforcement, which may require amended federal legislation as well as much more funding for the watchdogs, without fighting back.

The banks have the power to manipulate the economy in the name of reducing risk and you can be sure they won’t hesitate to do so on the back of the horse called Self-interest, if they deem it necessary.

The other key regulatory exercise

But the financial royal commission is not the only regulatory show in town.

A corollary is the opening act of the Royal Commission into Aged Care Quality and Safety, one of the two commissioners being the APS’s very own former Public Service Commissioner, Lynelle Briggs.

This will also continue to test the relationship between self-regulation and enforcement of the private sector, but in a social policy context.

It will also keep aged care and social policy more generally onstage throughout and beyond the budget and election periods, with some appalling political auctions likely to take place over who cares the most about older Australians as more stories of abuse unfold.

Finally, if and when the Thodey review of the APS lands mid-year to even a lukewarm  reception from the government of the day, there will be another set of perspectives to consider, much of it big-picture stuff.

Thodey has made it clear that regulation is within scope, though hardly the review’s first priority.

Momentum may, however, build as the year goes on, especially if any more big scandals are exposed.

Author Bio

Verona Burgess

Verona Burgess is a former Government Business Editor and senior columnist for the Australian Financial Review. She has been writing about the Australian Public Service since 1990. A former Jefferson Fellow, she was also joint winner of the inaugural Richard Baker Senate prize and won a Walkley award with The Canberra Times for team coverage of the 2003 Canberra bushfires.