IBAC reform backtrack: minister sees no evil, hears no evil

By David Donaldson

May 13, 2015

Public trust in public administration is the loser if integrity bodies are not given the powers they need to fully investigate corruption and misconduct, says former Victorian auditor-general Des Pearson, who is sceptical of Victorian Special Minister of State Gavin Jennings’ claim that Victoria is less corrupt than New South Wales and therefore may not require the same level of anti-corruption powers.

In what appears to signal a backflip on Labor’s pre-election position, Jennings told The Age he believed NSW politics was more “contaminated” than Victoria’s, and that giving the Independent Broad-Based Anti-corruption Commission the same level of powers as NSW’s Independent Commission Against Corruption may be unnecessary:

“If we instantly replicate them [the NSW integrity rules] in Victoria it may expose some degrees of corrupt practice … but I don’t think it is going to unleash an avalanche of disclosures.”

Jennings (pictured above) is undertaking a review of the state’s integrity system, including IBAC, the ombudsman and auditor-general, as well as freedom of information and political donations. It is expected to be completed by the end of this year.

His statements are at odds with Labor’s pre-election position, when it promised to fix what it called former premier Denis Napthine’s “toothless tiger” by removing the requirement for IBAC to find prima facie evidence of an indictable offence before it can investigate and giving it jurisdiction over the offence of misconduct in public office.

But the former auditor-general thinks Jennings’ argument that Victoria is less corrupt and therefore doesn’t need the same level of scrutiny is “problematic”.

“If you don’t look you’re not going to find anything,” Pearson told The Mandarin.

“I’d like to know what’s the basis for Jennings’ claims, other than gut intuition. We’re all Australians, we have a similar culture. We’re next door to them. We’ve had underworld wars and the current unfolding with the education department. It just appears to be an idealistic claim and it’s hard to see a reliable foundation,” he said.’

Evidence at IBAC in recent weeks has shown several school principals and senior bureaucrats at the Department of Education and Training had colluded in creating fake invoices to hide the alleged misuse and theft of $2.5 million in department funds.

Some who have appeared at IBAC hearings have already resigned from the department.

Pearson believes IBAC is not the only integrity body in need of reform. “The integrity system needs attention. Currently it lacks cohesiveness,” he argues. “The auditor-general has a glaring omission in his mandate in terms of follow-the-dollar powers.”

Implementing so-called follow-the-dollar powers would allow the auditor-general to audit private companies contracted under public-private partnership arrangements, an area worth about $17.7 billion in capital costs.

Pearson also criticised the integrity system for being too process-heavy at the expense of outcomes.

“The weakness in the Victorian framework is that there’s a lack of a principled approach. The current process isn’t joined up or necessarily logical,” he thinks.

One example of onerous process is the requirement to consult with the Public Accounts and Estimates Committee on each individual performance audit plan — Pearson says he is unaware of this being required by any other jurisdiction — and the imposition of further oversight and checks by the inspector.

“The AG is already required to consult with the PAEC on the annual plan of audits — something I think is reasonable and is now generally required in other jurisdictions –however to then require further consultation on each and every individual audit plan is too micro-focused and adversely affects the operational efficiency of the auditor, in my view,” said Pearson.

“Integrity is not only doing the right thing, it’s also about being seen to do the right thing, doing it quickly and transparently, creating a framework that serves as a basis of trust with the public.

“Public trust in public administration is the loser here,” said Pearson.

Others are sceptical of the value of the ICAC-style approach, however, arguing that while public hearings produce a daily show for the media, ICAC itself has a thin record of helping bring about prosecutions.

But Pearson is unconvinced by this argument, pointing out that only around half of criminal prosecutions end in success.

One former senior public servant who spoke to The Mandarin said that while NSW was more corrupt than Victoria a few years ago, “things have cleaned up a lot” thanks to reforms banning certain groups, including property developers, from making political donations, as well as the revelations of ICAC.

While Australia in general is “crystal clean” — even compared to the United States or Japan — the question is “whether we are good enough on our own standards”. With its booming property sector, Victoria should consider implementing a ban on property developer donations like NSW, the source added.

On the question of whether an increasingly powerful integrity system was making it more difficult for public servants to do their jobs, Pearson said that whereas the private sector had an obvious way of measuring success — profit — such a clear measure was lacking in the public service, “but that’s why I’m a strong supporter of performance indicators.”

“I can see why people would take that view,” he added. “A lot of things have long lead times and lots of subjectivity.

“But I think it’s the ones who don’t bring rigour are the ones who are frightened of the auditor-general.”

Correction: This story originally said Pearson stated as an example of onerous process “the requirement that the auditor-general’s office undergo a full performance audit by the parliamentary Public Accounts and Estimates Committee every three years, which Pearson says is not required by any other jurisdiction in the world”. This was incorrect, and Pearson believes this to be a reasonable check.

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[…] Victoria may backflip on its promise to strengthen the state's anti-corruption body. Public trust will suffer, argues former auditor-general Des Pearson.  […]

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