The Independent Parliamentary Expenses Authority began taking over a limited range of functions from the Department of Finance in early April, but the real test of its independence and whether it can boost public trust in government begins on July 1.
The new agency is broadly based on the United Kingdom’s Independent Parliamentary Standards Authority but fits much more comfortably into the existing system than its British counterpart, which underwent a baptism of fire.
Given some of the treatment IPSA staff faced from MPs and the press, that should be a relief for IPEA’s employees, soon-to-be-announced board members and chief executive (a role currently being performed by the Department of Finance’s head of ministerial and parliamentary services, Leonie MacGregor).
“The hostility was unrelenting,” explained Andrew McDonald, the highly regarded British civil servant who established IPSA in 2009 and ran it for five years, in a recent public lecture organised by the Australian National University Centre for International and Public Law, the Attorney-General’s Department, and the Department of Foreign Affairs and Trade.
On the other hand, from fire comes steel. Leading IPSA, McDonald saw the truth to a piece of civil service wisdom — “the best and the brightest tend to go to where the gunfire is” — and now his “greatest worry” for the agency, which was born into a national crisis, is that it will atrophy as its work grows more mundane.
He believes “top-class staff” were attracted to the challenge of reining in parliamentary remuneration amid the massive expenses scandal that transfixed the UK in 2009, with a ludicrously short timetable and seriously angry stakeholders.
“The risk now for IPSA is that its task becomes administrative, it begins to move in well worn ruts and it doesn’t hold on to the best and the brightest,” said McDonald, who suggested a new challenge like taking on “a wider regulatory role or another function” could possibly prevent that slide into comfortable routine.“Forget the legislation. MPs will focus on what’s in front of them.”
The situation here is obviously a lot more chilled out. Not much has been heard about IPEA since the Prime Minister’s announcement early this year, hours after former Health Minister Sussan Ley fell on her sword over controversial taxpayer-funded trips she nonetheless maintained were legitimate.
This also meant for the lucky few who made it along, the insightful and entertaining presentation was a timely and welcome addition to our local discourse.
But there was reason to his raconteuring; he drew lessons and observations from the IPSA experience that could be relevant to IPEA in its early days, considered what it could be expected to achieve, and flagged some of the challenges it might face.
McDonald offered five observations from his time leading IPSA that could help Australia’s nascent extra-parliamentary regulator.
Firstly: don’t rush. IPSA was forced to get up and running within an incredibly short space of time and “broke every rule in the change management book” as a result. This created problems to fix later that could have been prevented or reduced with more planning, consultation, and pilots of new service delivery methods.
“The second point I’d make to IPEA is that the time to be radical is early on,” said McDonald. In hindsight, he believes IPSA should have moved to stop MPs employing family members right at the start.
“That just seems to me, and seemed to me at the time, totally wrong. IPSA has now moved on finally to put that to an end although it’s going to be wound back very slowly and gently. We should have just done that at the time.”
His third point is that once legislation is passed, “administrative reality” is ultimately what counts for an agency trying to exercise extra-parliamentary oversight.
“You could have the most robust legislation imaginable, and it wouldn’t do you any good at all unless your whole team behaved in a way that made sure that independence was being created and re-created every day,” he said.
“If you came in the next day and you began to behave in a way that was different, perhaps even more generous, forget the legislation. MPs will focus on what’s in front of them.”
The extraordinary culture of entitlement in Westminster that was exposed in gory detail goes all the way back to the start of the 1980s. The two parties, so the story goes, made an unofficial pact. “It was agreed there would be no salary increase for MPs,” said McDonald. “Salaries would be held down, but the word would go out that you can max out on expenses. Every subsequent prime minister, one way or the other, gave that word to his or her backbenchers.”
British MPs showed each other how to game the system to such an extent, “they’d worked out that you had to buy a Ford Mondeo 2.2 litre Estate if you wanted to get the absolutely best deal on fuel allowances,” according to the former civil servant.
This, he explained, was maintained and kept out of the public eye through a “subversion of the relationship” between MPs and staff of the House of Commons Administration, which previously managed expenses. Such a situation demonstrated “the administrative culture is absolutely critical” in ministerial and parliamentary services.“He sat through a parliamentary committee with a staffer behind him repeating, just out of reach of the microphone, ‘You’re a fucking liar’.”
McDonald’s fourth tip was that overseeing elected officials can easily become a “tough gig” for public servants. Although IPEA is unlikely to face the same gauntlet as IPSA, it will still be a challenge to satisfy both the public and parliamentarians.
Finally, he added, the IPSA experience shows that “extra-parliamentary regulation, particularly relating to expenses and entitlements, is viable and it does work”.
Parliament is not a single entity, he pointed out, and nor are its occupants all truly represented by any one office bearer. IPEA will have to deal with them all and recognise they are “individuals … with very strong minds and opinions and voices”.
McDonald thinks IPEA might also need a way to stop parliamentarians seeking “protection” for every minor travel expense. He also warned that determining the “dominant purpose” of travel could be harder in practice than on paper, and questions how consistent the new agency’s rulings will be as they accumulate over the years.
A harrowing experience
These reflections came with a big caveat. The purpose behind McDonald’s harrowing and humorous account of several hundred elected members throwing everything they could at him, both within the system and outside it, was to show how specific it was to a series of events in the UK over several decades.
At one point, according to one of many eye-opening anecdotes, he sat through a parliamentary committee with a staffer behind him repeating, just out of reach of the microphone, “You’re a fucking liar.”
“I can tell you after about two hours, that gets pretty wearing,” he added. But it is unlikely anything like that will happen here. Australian scandals like Sussan Ley’s troubles or the choppergate controversy that embroiled Coalition veteran Bronwyn Bishop are like flare-ups of a chronic illness, compared to a serious acute infection that caused major trauma to the UK’s institutions of government, McDonald noted.
“The early days were quite wild; I’d never experienced anything like it in a long and diverse career,” he said. And to his surprise, the press immediately turned against IPSA as well, and were soon mendaciously suggesting its leaders were hypocritically feathering their own nests while cracking down on MPs.
“I thought they were going to be our allies. But so tight was their grip on the story, they wanted to determine the outcomes, not simply to set up the boxing match.”
The “story” is of course the UK’s endlessly shocking parliamentary expenses scandal that hit the news in 2009. Four years earlier when a new freedom of information regime had commenced, the expense accounts were requested and — despite strong resistance from the House of Commons Administration — eventually released in heavily redacted form. Soon after the whole lot was leaked to the media.
“Meanwhile, the redacting went on, as though the world hadn’t changed,” said McDonald. “But the world had changed. Every day people were buying the Telegraph to see what the new scandal was. Through the summer of 2009, the UK was transfixed by the story. And still the redacting went on in the background.
“The first casualty of the scandal was the Speaker of the House of Commons, Michael Martin, who was forced to resign because of not only his expenses but also his handling of the affair.
“But before you are too distressed on his behalf, he was very soon ennobled, which I’m sure helped to salve some of the pain that he suffered, and he’s still to be found in the House of Lords today.”
The depth of the conduct exposed after being hidden for so many years was “a rort on a truly world-class scale” that just doesn’t compare to anything seen here, in McDonald’s view.
“Depending on who you listen to in the UK, it either did worse damage to Parliament than the Nazi bombs of the war … or it did worse damage than has been done to Westminster Parliaments in the previous 200 years (that was the then-PM Gordon Brown).”
An election shortly followed the revelations and the IPSA chief assumed returning MPs would be “chastened” somewhat by the bipartisan embarrassment.
“Not a bit,” said McDonald. Rather, they were “up for a fight” and the campaign of “intense and determined opposition” began. What followed was a slow process to negotiate with the petulant politicians and move forward.
The expenses scandal has since subsided, IPSA is accepted, and its former CEO says it had barely any measurable impact on public trust in political representatives, mainly “because the index of trust in MPs was so low it could barely get any lower”.
However, he believes “the notion that we have bent MPs” will be lodged in British minds for a long time and he saw plenty of “appalling” attitudes among British MPs that suggested Parliament as an institution was “out of touch” with the people.
“This scandal has done massive damage to the parliament of Westminster and it will take a very long time for that damage to be made good. It’s worth stressing here though, if that damage is to be made good, it won’t ever be made good by IPSA. Parliament itself has to make it good. MPs have to make it good.”
He rejects the idea that IPSA undermined parliamentary sovereignty through its strong powers and robust independence, as it could always be abolished by Parliament.
“What I think IPSA’s creation did mark was another step towards the hollowing out of parliament, where … over the last 20, 30 years or so, what we’ve seen is a progressive either transfer of functions from Parliament, or when a new function is created, it isn’t necessarily entrusted to Parliament,” he said.
This trend, which often sees new entities report to existing departments rather than directly to the legislature, demonstrates an “endemic lack of confidence in Parliament” in McDonald’s view.
Quite a different beast
By comparing and contrasting the two superficially similar agencies and the events that led up to each being established, McDonald also showed why IPEA is likely to create minimal friction as it slips quietly on to the scene — perhaps too little.
He pointed out Canberra’s new agency is “quite a different beast” from IPSA, created in a very different context, and will exist more to help MPs get their expenses right the first time rather than find themselves in hot water.
The UK’s IPSA is more independent than Australia’s IPEA, and has stronger powers of investigation and enforcement. IPSA also has a much wider remit covering MPs’ salaries and pensions (it raised the former but reduced the latter to parity with the civil service).
“Constitutionally, it was a novel creature,” McDonald explained. “It wasn’t part of the executive, so it couldn’t depended on the civil service in any way. It wasn’t part of Parliament. It was as close as a Westminster system can get to something that was genuinely independent.”
While these characteristics meant IPSA made powerful enemies of many MPs, Australia’s IPEA could have the opposite problem, if anything.
There is already considerable scepticism about the new agency and what administrative reality will emerge in the months and years to come. If IPEA simply adds another layer of legitimacy to dubious travel expenses that still don’t sound right when people read about them in the news, it will have achieved little.
McDonald points out IPEA’s independence is weakened by the fact it sits within the Department of Finance and will be funded like any other public service agency. “It’ll have to find its way within the estimates round within its department … so that raises some questions to my mind,” he said.
He is confident the board members will be as independent as possible, but was “was somewhat surprised to see that it’s the minister who directly appoints the CEO” of IPEA. And with its narrow focus on travel expenses, IPEA is coming into “a crowded landscape” featuring the remaining functions that stay in Finance, the remuneration tribunal and the relevant minister.
Relationships with these organisations will be crucial for the fledgling agency, he said, but it will also need to work out what its independence means in practice.
“Is it going to have the robustness it needs, when it needs it, to say no and to defend its employees?”
It is also likely to have a somewhat “complex relationship” with MPs and Senators, in McDonald’s view, as they will be able to ask IPEA for advice on whether a proposed expenditure is appropriate, and get a ruling one way or the other after they have spent the money, all exempt from the FOI Act.
This could be a good thing — helping head off scandals like choppergate before they happen. Or, McDonald speculates, it could become a secret way for MPs to get expenses that wouldn’t pass the “pub test” rubber stamped with an official seal.
The fact that both Ley, Bishop and many others have strongly argued they were within their rights highlights the nature of the issue: the gulf between what MPs think are appropriate travel expenses and what a lot of the public thinks, and the absence of a clear framework to decide who’s right.
When asked whether Ley’s resignation was an admission that she had done the wrong thing, Malcolm Turnbull refused to answer or discuss the findings of a review by the head of his department, Martin Parkinson.
“Australians are entitled to expect that politicians spend taxpayers’ money carefully, ensuring at all times that their work expenditure represents an efficient, effective and ethical use of public resources,” the PM said.
He later denied any widespread rorting and said IPSA’s role would be to reassure Australians that everything was fine, barring the odd accidental chopper ride:
“What you find with these issues is often the result of mistake, it is often the result of errors of judgement, but above all, what we need to do is ensure that the Australian people are satisfied, satisfied beyond any shadow of doubt, that Parliamentarians are spending their expenses appropriately.
“I think, given the nature of our role, given the fact that we are representing the people, given the high responsibilities that we have, we have to go that extra mile or two or three to demonstrate that our expenditures, our expenses, are appropriate.”
But to go some way to restoring trust in the Australian Parliament, IPEA might need to gently educate its members to bring their perspective on what’s acceptable more into line with most citizens. McDonald thinks it should aim to “coax MPs towards a better way of behaving, where there is less risk in the future of Parliamentary rorting”.
“I think a lot of IPEA’s future fortunes depend in good part on how they manage to construct that relationship, to create a new culture between the organisation … and MPs,” he said.
“Can they educate MPs into a different way of being? Can they turn the culture, which was so toxic in Westminster, into something that is healthier here?