Labor must pro-actively manage potential conflicts of interest

Sep 14, 2022
Canberra Parliament House in Sunrise at Lake Burley Griffin
Canberra Parliament House in Sunrise at Lake Burley Griffin

The Liberal Party’s attack on the Attorney-General, Mark Dreyfus, over an alleged conflict of interest in his share ownership was an unimpressive flop. It did not establish a case that Dreyfus had failed to meet the technical standard of disclosure of interests set by the prime minister – a standard far higher than that set down by any prime minister before. It also failed to make any case that conflict of interest was involved, by any other standard, including the pub test.

No doubt the opposition raised its issues – which also raised questions of whether two other frontbenchers followed the new standards – because the government’s anti-corruption bill comes before parliament soon, if no longer next week. That debate should involve a lot of adverse comments about morally and ethically dubious, and sometimes unlawful and corrupt, conduct by a host of coalition ministers, many still in the parliament. In this sense the throwing of mud now might invite the public to believe that all parties engage in such misconduct, and that Labor is no better than itself.

On appearance so far, it won’t, or it shouldn’t wash.

Misconduct by Labor governments in the states has amply demonstrated that it will not be outdone by corruption, rorting and looking after its mates by the formidable show put up by coalition governments in the same jurisdiction. Mercifully, the bug of maladministration among governing parties tends to run in cycles, with new governments fairly clean until ministers come to take power for granted and start fiddling at the edges for personal or partisan gain as a perk of office. Two or three terms of office are enough to exhaust stocks of decency and honesty, let alone worthwhile policy ideas and ideals. It becomes time to throw the latest crop of bastards out, in the hope that the other side learnt something from the public’s disdain for their last period in power.

Politics at the Commonwealth level may well fit the same general pattern. But until the last decade, plain corruption and abuse of power was rare under either party. Politicians were usually at a remove from the letting of contracts or the hands-on work of carrying out government policy. Under Morrison, that separation broke down, and ministers gloried in it.

The Morrison regime involved much more than a government lowering standards as it ran out of energy and zeal. It was almost from the start a lawless government, in open revolt against the normal conventions and general principles of good and honest government. Its compulsive secrecy was not a reflex from a day when citizens had only limited rights to know what was going on.

It was an operating rule to conceal misconduct and maladministration, or to hide from the public actions of which they would, if they knew, disapprove. The law was subverted, or simply ignored. Billions were shovelled out to mates, cronies and party donors without any sort of care for prudent stewardship or the public interests. Ministers came to think that the Treasury was a party war chest able to be used for any purpose they wanted. Ministers stacked boards and tribunals, actively undermining public confidence in the integrity of important public institutions. In the United States it might properly have been described as an organised crime gang.

A cowed and compliant public service made much of the corruption possible

The police and other organs of law enforcement seemed compromised and uninterested, restricting themselves to weekly announcements of new record drug hauls (from a seemingly inexhaustible supply) and the marketing of its zealous efforts to crack down on child sexual exploitation – generally regarded as representing less than one per cent of the sexual abuse of children, a general subject in which the federal side of the AFP seems to manifest no interest. Checks and balances against bad government – such as the Auditor-General’s office, the Information Commissioner and the Ombudsman, received reduced funding, and accorded less respect.

Those defending the Morrison government might point to a creditable performance in managing the pandemic, in keeping the economy going in the face of lockdowns and business closures, and in managing national security issues. The achievements in such fields are a proper matter of debate, but even assuming quality outcomes (which I dispute) the government’s methods were often breath-taking. Major contracts were let without tender by autocratic government. It made no arrangements to recover grants for which businesses had not been eligible (because their income did not fall with the pandemic). Between $20 billion and $40 billion was negligently lost. Meanwhile an ideologically-based based scheme to punish the poorest citizens in the community based on wrongly-assessed claims of welfare overpayment continued in the face of firm evidence that the scheme was illegal and was causing real pain to victims – sometimes leading to suicide.

Just as concerning were indications that a hollowed-out and dispirited public service was acting as a mere cypher of autocratic government. Departments which should have known better, such as Finance, stood by as ministers and other agencies made nonsense of the Financial Management Act, which was supposed to regulate how public money was spent. The prime minister’s department set the public service standard for resisting obedience to FOI law, delay and obstruction, and the concoction of bogus exemption claims. Treasury was aware of the scale of rorting, and, like Finance knew perfectly well that self-serving claims of a capacity by ministers to override the law on grants schemes were false. But it did nothing, or, if it did through internal avenues, was singularly ineffective. Anyone writing a history of this extraordinary aberration in our system of representative and responsible government would have to judge the public service complicit, or so weak and cowed, that it was unable to do its duty.

Conflict of interest of the essence of bad stewardship

In all this sharp deterioration of the quality and integrity of government, one might think that matters of conflict of interest would be almost incidental problems. That is by no means true. The very essence of government in the public interest involves a separation of matters that benefit the public generally and matters that benefit some people or groups wrongly, improperly or in a way that is unfair or inequitable bearing in mind relative need or merit. Sometimes this improper interest involves feathering one’s own nest, a matter which can often be concealed if private interest declarations are allowed to be vague, well out of date, or misleading. The coalition showed that for it conflicts included family interests, but also included the interests of favoured lobbies, electorates, or party donors.

A number of ministers in the Morrison government had clear conflicts of interest in their shareholdings or private affiliations. When caught out they would deny actual conflicts or would make hard-to-check claims that their affairs were in some form of management by others that dealt with issues of conflict. The phrase “blind trust” was never so much abused. People with interests in a blind trust have cashed in their interests, and handed the money to an independent third party, who invests the money without reference or disclosure to the beneficiary. That means that the person, while a minister, does not know whether he or she benefits directly or indirectly from any decisions made.

The Albanese system permits the buying of unit shares in a publicly owned investment trust, where there is no power in the unitholder to direct those making investment decisions. The potential weakness in these – seized on by the opposition with Dreyfus – is that a minister could read annual reports and act to benefit some of the companies in which the trustees had invested. Ideally, the trust should have a wide spread of shares, and, if the trust is expressed as being focused on any activity – say housing development – a minister having any functions in that area should not have the units.

Bowen report on public duty and private interest

The basic text of political and administrative conflict of interest was written nearly 50 years ago by a committee headed by Sir Nigel Bowen, a former Liberal Attorney-General and later Chief Justice of the Federal Court. It was focused on being practical and workable, even as it insisted that the appearance of a conflict of interest can be just as damaging to confidence in a minister or official as an actual conflict. But if the advice allows some wiggle-room where there seems only a theoretical possibility of an actual conflict, it recognises that a serious conflict can arise in practice anywhere and at almost any time. The conflict may not be a financial one. It may involve the interests of a child, partner or other member of a group, or a personal cause, hobby or hobbyhorse.

The rules are not designed to make an officeholder avoid any participation in society. They are to avoid situations where personal and public interests might be thought to be in conflict. Usually, it is not about memberships or interests held in common with a wide range of people. The rules are not, for example, usually much interested in religious affiliation, or membership of sporting or cultural groups. But these could be potential conflicts when such groups are getting special or exclusive benefits, or preference ahead of other community groups. Transparency is the key. Secretiveness is often a sign of a guilty conscience.

The Bowen rules need some revision for modern times. Some MPs or officials do not declare (or do not admit to knowing) the interests of partners or children. They say that modern society should recognise that a partner can have their own interests. Yes, certainly, and that may justify non-disclosure. But it does not excuse any action favouring the interests of that partner in circumstances where a fair-minded observer (which includes suspicious minded, such is the earned reputation of MPs) might perceive a conflict of interest. I am pretty convinced that the spirit of the rules, and the laws, does not permit “Chinese walls” situations, where folk pretend that there are secure systems restricting the information available to partners in the same enterprise, so that, it is said, a person who is ignorant of the information is said to lack a conflict of interest. Yes, but what if she profits from the secret arrangements.

Albanese may have fashioned a rod for his own back by requiring ministers to detail their interests. But he should not hold back on that account. He must recognise too that one cannot simply tick off a declaration as compliant without regular checking, preferably by public servants, that entries are up to date, that they comply with the rules, and that actual conflicts have been declared and managed. Experience has demonstrated that there’s no point in having a rulebook merely as an exhortation to good behaviour. Too many of our chaps, and chapesses can’t be trusted. Ministers and officials must be very conscious of the risk of being caught putting their personal interests ahead of the public’s.

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