Renewed calls for changes to NSW integrity agencies’ funding model

By Shannon Jenkins

February 8, 2021


The New South Wales parliamentary committee tasked with examining the budget process for the state’s integrity agencies has repeated calls for a stronger and more independent funding model to be established.

There is an “urgent and compelling need for reform” of the budget process for the independent oversight bodies and the NSW Parliament, according to a report released by the Public Accountability Committee on Friday.

“The current funding arrangements cannot be allowed to continue; apart from the risks which they pose to the independence and mandates of the bodies concerned, the lawfulness of aspects of the arrangements has been called into doubt,” it said.

The paper is the final report on the inquiry into the funding arrangements for five integrity bodies: the Independent Commission Against Corruption (ICAC), the Law Enforcement Conduct Commission (LECC), the NSW Electoral Commission, the NSW Ombudsman, and the NSW Audit Office.

The release of the findings follows on from the committee’s initial report, published in March 2020, as well as a May 2020 special report on ICAC funding from Barrister Bret Walker, and an audit report on the funding of integrity agencies, released by state auditor general Margaret Crawford in October.

Each report highlighted major issues with the way oversight bodies are funded, including threats to their independence.

The Public Accountability Committee, in its new paper, has considered Crawford’s and Walker’s findings, and has made 13 recommendations to government.

Read more: Independence of NSW integrity agencies threatened by state government’s role in funding arrangements, audit finds

The committee has repeated its previous call for the state government to remove ICAC, LECC, the ombud and the Electoral Commission from the Premier and Cabinet cluster, and has added the audit office to the list this time around.

“The committee concluded that the positioning of these bodies within a cluster creates the appearance that they are subordinate to the Executive Government, and makes it challenging for the bodies to compete against government priorities to receive the funding they require,” the report said.

The committee said the annual budgets for the oversight bodies (excluding the audit office) should include a set contingency fund to address unbudgeted financial demands. The four entities should also be directly allocated their annual funding through the Appropriation Act, rather than the funding being allocated to the relevant minister, “so they are not subject to reductions in funding during the financial year”, the report said.

In regard to the Audit Office, the committee has argued that aspects of the budget process “have the potential to threaten the Audit Office’s independence and mandate”.

The Audit Office, unlike the other integrity bodies, does not provide an annual budget submission. This is because it’s funded from fees charged to auditees for financial audits and by an annual government contribution for the conduct of performance audits and the reporting of financial audit results.

The inquiry heard that the Audit Office has submitted bids for additional funding. The committee has recommended that it be able to review any budget bids by the Audit Office, in collaboration with the Public Accounts Committee of the Legislative Assembly, and make recommendations to the Parliament as to the funding priorities of the Audit Office.

Other recommendations outlined in the report include:

  • Annual funding for the Audit Office’s performance audits should be provided as a separate amount in the Appropriation (Parliament) Bill rather than as a government contribution,
  • The Joint Standing Committee on Electoral Matters should inquire into and report on the adequacy of the funding allocation of the Electoral Commission for the 2023 election, taking into account the latest advice on issues of electoral integrity arising from foreign interference in elections,
  • NSW Parliament should review and ensure the provision of adequate staffing and resourcing to Hansard services.

In his foreword, committee chair David Shoebridge noted that the report’s recommendations have the support of all committee members, including those from Labor, the Liberals, the Nationals, and the Shooters Fishers and Farmers Party.

“This is strongly indicative of the widely accepted need to create a far more robust and independent funding model for the critical oversight bodies in NSW,” he wrote.

At a Governance Institute of Australia forum late last year, ICAC chief commissioner Peter Hall said influence and control over ICAC funding by NSW’s executive government was inconsistent with the commission’s statutory independence.

“Any influence, any control over the ICAC by the executive is entirely inconsistent with, it’s contradictory to, the commission’s statutory independence,” he said.

Read more: Anti-corruption chiefs: Public hearings and independent funding indispensable to integrity


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