The Western Australian government has announced immediate public sector reforms following revelations of large-scale corruption in the Department of Communities and its Housing Authority.
Weeks ago it was revealed that senior public servant Paul Whyte — assistant director-general in the department — had been charged with two counts of corruption after a joint investigation by WA Police and the Corruption and Crime Commission. They alleged that Whyte had corruptly obtained up to $25 million in payments over the course of a decade, in what CCC chief executive Ray Warnes has described as “the most serious case of public sector corruption in Australia”. Whyte has since been sacked.
On Monday, Premier Mark McGowan and Treasurer Ben Wyatt announced a range of immediate changes to public sector financial management in an attempt to stop such corruption from occurring again. They said the reforms would “take time” due to the need for legislative amendments, and would have a financial impact on the state budget.
Under the changes, agencies must have an audit committee with an independent and external chair, a regular rotation of accounting firms conducting internal audits, and a clear segregation of duties in payment authorisation.
A new steering committee would initiate structural changes to the functions of the Housing Authority. While social housing and non-commercial functions would stay with the department, land development and other commercial functions would go to DevelopmentWA.
Wyatt said he would ask the state auditor-general to “forensically audit targeted agencies’ contract management systems and performance” using data analytics to do the targeting.
“These new reforms will drive even stronger financial accountability controls that can give Western Australians confidence in our public sector,” he said.
“Independently chaired audit committees for agencies will bring about a whole new level of neutral oversight that makes sense.”
The treasurer recently told The Australian Indigenous members of the community in Kimberley had raised suspicions about Whyte years ago, but had been ignored.
“I was hearing rumours from the Aboriginal community about money simply going missing,” Wyatt said.
He said Whyte had “made it very difficult” to get answers from the WA parliament’s public accounts committee.
“We weren’t satisfied even then with the answers we were getting … and it ran cumulatively into tens of millions of dollars. Now the signals around this fellow go back some way.”
In the initial aftermath of the corruption allegations, McGowan announced an independent review into the Housing Authority, to be overseen by the Public Sector Commission. It will look at the adequacy of the governance and administrative arrangements within the agency, in regards to financial management, monitoring and reporting; internal audit and risk management; delegations and authorisations; and procurement and contract management.
It will also look at the department’s integrity systems and controls, including its policies, practices and codes of conduct; systems to detect, report and prevent misconduct; integrity oversight, education and promotion.
McGowan has now asked the commission to also review current arrangements for dealing with the suspension of employees who face allegations of corrupt and fraudulent activity, so such employees can be immediately suspended without pay.
He said that while the majority of the public sector does an “incredible job”, he would not “take a backward step” when it comes to improving accountability and oversight.
“Without proper reform of the sector, inappropriate conduct can develop amongst a small number of individuals, as what has occurred over the last decade,” he said.
He argued the reforms would identify poor practice and misconduct across the public sector, while the upcoming review would ensure the public can have confidence in government.
“These are immediate and ongoing reforms that will also mean services are delivered better to the people that need them,” he said.
The state auditor-general recently said it would have been extremely difficult to detect the type of fraud Whyte conducted.
“We have conducted quality audits in accordance with the audit standards,” she told radio 6PR.
“Audit can never be everywhere, if people want audit to check every transaction and every action of every public sector entity, it will duplicate the costs of public administration.
“I’m not advocating that, that is not in the best interests of public expenditure.”