Standards commissioner flagged for ICAC’s ministerial gap

By Harley Dennett

Monday March 16, 2015

Consensus has been building in New South Wales that a non-judicial public servant should be tasked with enforcing MPs and ministers’ codes of conduct, providing an alternative to ICAC’s “nuclear option” when the political class behaves badly.

Last month a second bipartisan report out of parliament recommended a new non-judicial commissioner for standards or parliamentary investigator, backing calls from a range of agencies and NGOs including the clerk of the upper house David Blunt, ICAC and the St James Ethics Centre. This new statutory position would be charged with regulating the conduct and propriety of politicians.

Accountability, integrity, ethics or standards, whatever your preferred antonym for corruption, is becoming a crowded field in NSW. The number of stakeholder agencies has grown with the rising public interest in stamping out rort. ICAC has shed parts of its prevention and education roles to the NSW Public Service Commission, which has taken a strong lead on ethics since its creation a few years ago, and the NSW Audit Office runs guidance on gifts.

Dr Robert Waldersee, executive director of ICAC’s corruption prevention division told The Mandarin they all work effectively as a team: “We don’t want to duplicate the other agencies, we’d rather fit within the system that they make up along with us … to provide an integrated and coordinated approach to oversight of the public sector. We’re not walking all over each other or putting out contradictory guidance.”

PSC and the audit office only deal with the public sector, not politicians, so ICAC is keen for someone more specialised to take on the duty of tracking ministers’ interests and conflicts. Waldersee explained:

“There’s been a long standing concern that we’re a bit of a nuclear option for what can be quite small matters. So you either don’t deal with the matter at all, or you end up with a corrupt finding and the person probably loses their seat in parliament. The concern had become that there was no proportional response to rather small misdemeanours by members. We agreed.”

The privileges committee were also concerned about a gap in ICAC’s powers, which provides jurisdiction to investigate breaches of applicable codes: MPs’ code of conduct is applicable, but ministers’ is not. “Were it criminal it would, but not as a breach of the code,” Waldersee clarifies. ICAC is interested in the gap being covered, but ideally by a parliamentary investigator rather than the commission itself. The committee agreed and now two bipartisan parliamentary reports have taken up a proposal from Legislative Council clerk David Blunt in a paper to the Presiding Officers and Clerks Conference in 2013, that the new commissioner be subordinate to parliament but free of any individual minister.

Director of Public Prosecutions, Lloyd Babb, while supportive, noted a risk that politicians would get away with lighter punishments than public servants and private citizens:

“I am concerned, however, that any such office has well defined investigation powers and clear protocols as to how the proposed office intersects with the roles of ICAC, the NSW Police and the criminal justice system. The creation of a system where the remedies are limited to “rectification”, “reimbursement” and apology, risks creating a closed system where appropriate matters are not dealt with by the criminal justice system. [Whereas] Private citizens who dishonestly misuse company funds, for example, face investigation by the NSW Police and possible criminal charges under fraud offences.”

Blunt’s model was based on two similar positions in the UK Houses of Commons and Lords. Oddly enough, only a year earlier, Whitehall thought it could learn how to bring accountability to the upper echelons of the UK government by studying Australia’s political system. It found much praiseworthy in Canberra’s relaxed approach despite a tendency for our prime ministers’ decision making to be “too informal and opaque”. Britain sometimes forgets we have states, so it overlooked what would have been a fascinating case-study in NSW: the gift to corruption prosecutors (and investigative journalists) that is Macquarie St.

The St James Ethics Centre and local media have tapped into a feeling that rort is all too prevalent in NSW politics, last week launching the “The Politicians Pledge”, as a voluntary step towards better accountability, and effectively taking on the ethics and education role that ICAC, PSC and the audit office play in the public sector.

Corruption is linked to waste

Most public sector corruption is dealt with before reaching an ICAC public inquiry. Some 3000 reports are sent to ICAC each year, including mandatory reports from agency heads who find anomalies. However, ICAC remains concerned about the corruption that is not seen at all.

“It’s not just that is happens in private, it’s that nobody sees it happening even when it’s there, visible,” Waldersee says. “One agency had a four million dollar construction program budgeted at six million, someone saw the spare two, and managed to take it without anyone noticing because it was already in the budget … you have to wonder how could the government have lost two million without noticing.

“The secrecy is one thing, but it’s the fact you can be losing value as a government under the nose of the managers without them noticing; that’s where the prevention focus has turned in the last five years.”

Managers not having a tight enough gasp of the budgets they’re approving, whether procurements match need, whether contingency use is flagged, and whether it actually gets delivered are the hotspots ICAC now educates agencies to watch out for. Waldersee explains: “A lot of waste now is actually waste and corruption. You can have codes of conduct and risk assessment, but if you’re leaving millions of dollars laying around someone is going to try to get their hands on it. There’s issues of waste, failure to get value for money for the taxpayer, they’re all intertwined, corruption is the worst outcome.”

ICAC provides agencies with best practice solutions and analysis of growing risk-hotspots such as Human Services funding for NGOs, ICT contracting, procurement systems, and is currently looking at risk areas relating to foreign student services.

There’s less value in looking for high risk personnel, who it seems look very much like your agency’s best employees. Well known flags are gambling or debt problems, or people who won’t take holidays or rotate jobs, preventing independent examination of how they’re running their part of the business. “Corrupt people are usually there for quite a long time, and they’re very good employees,” Waldersee says, “Your best employee is indistinguishable from your corrupt employees. It’s not a useful flag, but is unfortunately one of the profiles.”

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