The term ‘quango’ — ‘quasi-autonomous non-government organisation’ — became famous in 1980. Episode seven of ‘Yes Minister’ has Sir Humphrey concealing a critical report on a major building project and instead telling the minister everything is on track. Minister Hacker then appears on the BBC, where he praises the project as an example of a public-private partnership.
Banker Desmond Glazebrook is prepared to bail the project out, in exchange for a lucrative appointment as chair of a quango. But how can Hacker and Sir Humphrey silence Joe Morgan, the unionist who knows the truth about the project? Hacker has a brainwave. ‘Glazebrook might need a Deputy Chairman, one with real experience of industry. A trade unionist perhaps.’ Humphrey thinks this is an awfully good idea. ‘It takes two to quango, Minister.’
The ‘Yes Minister’ episode refers to Britain having an incredible 8000 quangos. In Australia today, the number across the federal and state governments is even higher than that. And the recent sports rorts scandal has shone a light on the role of quangos, their board members, and whether they should call out breaches of public integrity.
Formally, the duties of directors are clear. They include legal duties to act in good faith and to manage public resources properly. Typically, the directors are tasked with pursuing their organisational objectives independently from day-to-day direction by the executive branch of government.
In practice, though, the executive branch is often very hands-on with public bodies, and this often puts the board members in a difficult position. That difficulty is magnified when a hands-on minister also tests the limits of propriety.
Andrew Wilke is the independent member for the federal seat of Clarke. We interviewed him on 5 February about the sport rorts affair and public integrity in general. Though pork barrelling was a familiar feature of government, he said, the sports rorts affair was a remarkable example.
‘This one was bad practice on steroids, because it was just so blatant.”
“Arguably, the minister did not have the legal right to allocate the grants. And I think it is very alarming that the secretary of Prime Minister and Cabinet did not find fault in that regard.”
Observers have suggested the minister’s actions in the affair may have constituted a crime. Former NSW auditor-general Tony Harris, for example, said on 3 February in relation to the affair, ‘there should be an investigation into the crime of misconduct in office and there should be an investigation into the crime, whether or not it occurred, into electoral bribery’.
This posed a devil’s dilemma for the Australian Sports Commission, and the dilemma is yet to be resolved. Some have called for the whole board to resign. That is still a live option, and there are good precedents, including a mass resignation of directors during the NSW electricity privatisation.
A collective decision to step down would help define the role of independent boards, and the boundaries of ministerial interference in quango affairs. In this particular case, it would also signal a strong response to an apparent breach of public integrity. As Tony Harris noted, a group resignation would empower other boards to protect their independence, just as parliament intended.
Boards of all major organisations need to be reminded from time to time of their duties and responsibilities, including the responsibility to speak out. Richard Goyder is chair of Qantas and Woodside Petroleum, and he was on the AFL Commission when Adam Goodes faced racist attacks. Goyder later shared with the Australian Institute of Company Directors his reflections on that time: “We listened to too many people and just didn’t come out and say what we thought, which was that the behaviour against him was racist…We didn’t jump on it.”
For Andrew Wilkie, the pressures on public body boards are symptomatic of a wider problem, “an erosion of integrity in the political class and the lack of safeguards to detect integrity issues, most notably the absence of an effective integrity agency. The government is talking about a federal integrity agency of some kind but they’re dragging their feet and what they envisage, it’s just going to be half-baked and ineffective.”
In the famous ‘Yes Minister’ episode, political advisor Frank suggests a new regime where an independent Select Committee of Parliament makes all appointments to quangos, to “end the scandal of ministerial patronage, all those thousands of jobs for the boys — get the best men for the job, instead of old chums, party hacks, and you scratch my back and I’ll scratch yours”. In response, Sir Humphrey deploys his most damning bureaucratic criticisms: Frank’s proposal is ‘original’, ‘imaginative’ and ‘novel’.
All board members perform difficult roles. In their dance with the executive branch, they must step through a minefield. But there are lines that mustn’t be crossed. Taking an analogy from cricket, it might be OK to rub the ball on your trousers, but sandpaper in the palm is a step too far. To avoid corruption and a creeping loss of confidence in our institutions, we need a bipartisan commitment to the integrity and independence of quangos.
We’ve all heard the line that integrity is doing the right thing when no-one is looking. Well now everybody is looking. The sports rorts affair should serve as an ethical call to action for public body directors to be more assertive of their independence, their principles and their legal duties. When a minister or senior official steps over the line, directors need to call it out — even if to do so would be ‘courageous’.