JOHN AUSTEN. Infrastructure Claims – Above the law?

Oct 22, 2019

Ongoing urging of infrastructure proposals for Commonwealth funding exacerbates already high moral hazard. Yet nothing is done to discourage the possibility of illegal behaviour costing Australia dearly.

Supposed Commonwealth gamekeepers – Infrastructure Australia and the Treasurer – are virtually advertising public monies for ‘shovel ready’ infrastructure projects. The Opposition’s criticism: not enough spending! The apparent supposition: beneficiaries – State Governments and the infrastructure club – can do no wrong.

A greater difference from social welfare could not be imagined.

What would be the reaction were social welfare claims subject to similar urging?

Already virtually every cent of welfare spending is watched over with an eagle eye. The public is asked to report ‘suspected’ abuse, there are exhaustive ‘reporting’ regimes and ongoing attempts to limit how recipients spend entitlements – even their time! Community concern is continuously stoked by politically inspired beat-ups. Gutless Government and bureaucrats hide behind computers that intimidate the poor – Robodebt.

The amount of welfare cheating is unknown, and – somewhat conveniently for shock jocks – uncheckable. Estimates put outstanding debt – unrecovered payments in excess of entitlements – around $3 billion. Most of which, no doubt, is the result of innocent misunderstandings arising from Australia’s convoluted, stingy system.

To counter the obvious triviality of the amounts in question overpayments are presented as the result of an almost organised criminal disregard of laws which will ‘destroy Australia’. Especially if recipients dare protest against Government policy!

The Commonwealth Criminal Code (part 7.3) deals with this by e.g. creating offences of:

• doing something with the intention of dishonestly obtaining a gain from a Commonwealth entity;

• doing something with the intention of dishonestly causing a loss to a Commonwealth entity;

• dishonestly causing a loss, or a risk of loss, to a Commonwealth entity; or

• dishonestly influencing a public official.

Social security fraud is an important part of the Director of Public Prosecutions’ practice. The Director lists other frauds: customs; Medicare; Comcare, national disability insurance; veterans affairs etc.

But what about infrastructure fraud – not mentioned in the Director’s list? Of dishonesty by State Governments, their officials, advisers and assorted urgers – in pursuit of Commonwealth funds for pet projects?

While Commonwealth advisers presumably review claims about project benefits and costs, some critical issues which underpin proposals appear to remain unexplored.

There are plenty of warning signs about the validity / veracity of infrastructure claims.

There have been reports of private sector lawsuits over misleading traffic forecasts for road projects– albeit projects not involving Commonwealth funding.

There is at least one explicit claim of State Government ‘fraud’ regarding a project submitted for Commonwealth consideration – East-West Link in Victoria.

There are cases where publicly available facts conflict with advice to / decisions by the Commonwealth Government e.g. Sydney Metro, WestConnex,.

The rail aspects of the Western Sydney ‘City Deal’ are based on such a ludicrous belief – single-deck and double-deck trains cannot use the same tracks – that a formal investigation is warranted.

Commonwealth funds at stake far exceed any imaginable social security fraud. Multiple billions are involved in each case. The direct financial cost of just the few projects mentioned above – and the trajectory they create – easily tops $100 billion.

And this is quite apart from the more likely dishonesty – fabrications in benefit:cost claims that supposedly underpin funding decisions. How many multi-billion-dollar projects are reviewed ex-post to see if benefit:cost promises used to induce Commonwealth funding have been met, and if not met, whether that outcome was virtually certain at the time of making the claims? So far, the answer in the public domain is: none.

The Criminal Code can be breached by ‘omission’ as well as ‘commission’ and even if the Commonwealth does not provide funds. How many ‘unsuccessful’ project submissions might fall foul of these aspects?

Given the apparent lack of oversight and the scale of money involved, the potential of infrastructure fraud to threaten society is far greater than social welfare cheating. This is consistent with observations of eminent jurists that threats to society are more likely come from a Government than elsewhere.

The matter should be of interest to every Parliamentarian. Nearly all Commonwealth infrastructure funding relies on grants to the States for which the Parliament – not the Government – is responsible.

There is no excuse for the present incitement of moral hazard by Government and Opposition in the absence of proper legal safeguards and sanctions.

A start to overcoming this lamentable situation would be open public inquiries into proposals with evidence taken under oath. An understanding of the potential for criminal prosecutions would have a salutary effect.

Yet like typical bullies, so far the powers-that-be pick on the ‘soft’ welfare target, a distraction which won’t upset any game of mates. Their excuse: Governments – Ministers and officials – are ‘good chaps’ whose infrastructure claims can do no wrong.

These are arguments for immunity from law traceable to Coke’s observation of 1615 – when the king was a forerunner of today’s Executive Government – ‘the king can do no wrong’.

In fact, the context shows Coke specifically rebutted such arguments:

‘Coke had stated that the king should not enjoy immunity, because as the fountain of justice and as God’s representative, he was expected to uphold high standards of behaviour and provide a role model for others.’

We can only wish one day this will be true for Australian infrastructure!

John Austen is a happily retired former NSW and Commonwealth official living in Western Sydney.

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