NSW ICAC findings sound warning to federal ministers

Jul 4, 2023
The inscription appeared in a magnifying glass on the black background of the laptop screen.

As the National Anti-Corruption Commission is opening for business, some ministers tend to believe that the mere fact of winning government gives them an unlimited licence to distribute public loot to their friends, constituents and major donors. The silence and complicity of senior public servants in response to such misgovernment is one of the great scandals of our age.

Federal ministers, past and present, should be closely studying the legal findings of the NSW ICAC Commission into the affairs of former NSW Premier Gladys Berejiklian and her former paramour Daryl Maguire. The factual basis, though interesting as gossip and a morality tale, is only the template upon which it has laid down the principle that a strong political interest in seeing a project established can be just as dangerous as a strong personal interest.

That’s if the project is not in the public interest at least. If it is not, the legality of a project will not be helped by the mere fact that the minister or the prime minister or party strategists think that it will help shore up a vital seat. Or dispel some perception that the government has turned its back on some group or region, or that the government is engaged on a general, perhaps worthy campaign but is distributing money with partisan partiality and in some places without any sort of business case, need or proper process.

Opinions may differ, not least between political parties, about what political projects are in the public interest, what priority they command ahead of other public interests, and even about where the need is greatest. Governments may make decisions which “incidentally” benefit their constituents more than the other side. That’s OK, if there is a real interest in the program and it is administered fairly to those who are eligible. But if the intention of the exercise is to so administer it as to benefit only one’s followers and to deny the benefit to the other side, it’s an abuse of power. Think railway parking lots, for example.

Courts and corruption commissions will always allow space for different appreciations of where the public interest lies. In general terms, it is the government of the day which determines where the broad public interest lies. But it is for every public servant, and minister, in acting in that public interest to know and understand where that public interest isn’t. Such as where it benefits a private interest. Or an improper interest. Where a decision is as TS Eliot put it, “the greatest treason, to do the right deed for the wrong reason.” There must always be a compelling public interest case for public expenditure, and some evidence of the application of that interest to the instant facts.

The sort of attention to the public purse so obviously absent, for example, in the previous government when Scott Morrison and Josh Frydenberg, with Treasury assistance, distributed tens of billions of dollars actuated to people in the private sector without the most basic checks and balances, and without attention to eligibility or methods of recovering money wrongly paid. The overall intention – to keep the economy liquid – may have been noble; the scheme of administration was not.

The public Treasury is not some spoil of political war

Some ministers, mostly of the National Party everywhere, tend to believe that the mere fact of winning government gives them an unlimited licence to distribute public loot to their friends, constituents and major donors, particularly in the oil and gas industry. Some think that winning government effectively repeals clear requirements of environmental laws, or processes required by legislation, without the bother of putting changes through parliament.

They seem to believe that while doing so, they can blandly override the considered recommendations of experts, the greater needs, in the same field of activity, of other groups not in the National Party favoured list, and express directions about the process of enabling legislation. Their consciousness of breach of the public interest could be seen in jeers that “it’s our turn [at the public trough] now”, in abuse of the Auditor-General, about the only public official who was complaining, and in their claim that ultimately ministers, as constitutional decision makers, could simply override legal processes and do what they liked.

The silence and complicity of senior public servants, particularly at the centre of government, over the misgovernment of the Morrison regime, is one of the great scandals of our age. As is the complete failure by a new generation of senior public servants, to deal with any of the bureaucratic enablers. It is bad enough to realise one is being governed by crooks and scoundrels. It is far worse when one realises they could have been stopped had officials done their plain duty.

It would be idle to pretend that every Labor minister in government will be pure of heart in devising and executing new policy. Or that they will be stopped by a newer, more ethical, and competent public service.

The National Anti-Corruption Commission, which is now opening for business, is weaker than NSW ICAC, by conscious decision of the Albanese government at a time when it had the numbers to get the stronger version it had promised through the parliament. The most serious weakness is with the capacity to have open hearings once NACC investigators have established a prima facie case of abuse of power. But the broad legal framework of the NACC is much the same as ICAC, and one could expect that Justice Paul Brereton, the senior NACC Commissioner, will tend to follow the broad jurisprudence it has built up. That would include the fact that much of Australia’s anti-corruption law has been framed by judges of the NSW Court of Appeal, on which Brereton himself has sat.

The Berejiklian report has many pages devoted to conflict of interest, all of which is essentially sound but much of which is not new. It affirms one principle, obvious but in contention here, that a sexual or romantic relationship falling short of actual marriage or domesticity can amount to a conflict of interest. I have no wish to pile on the humiliation or loss of privacy Berejiklian has endured. But the facts as disclosed suggest that it was the weaknesses rather than the strengths of the relationship which made the conflict more obvious.

Put bluntly, Berejiklian seemed always anxious to placate, calm, ease and mollify a man of whose long-term affections she seemed to be uncertain. She also seemed to feel the need to build him up in a situation where she was publicly more powerful, and he was resentful at publicly taking second place. He abused her, for example, after he discovered that extra funding for Wagga Wagga was not in the Budget papers. She hurriedly rang her Treasurer Dominic Perrottet, had a $100 million plus funding commitment put in, and rang Maguire back saying that Dominic would do whatever she wanted. That’s no way to conduct good government.

Whether Wagga hospital was a worthy cause is not in issue. It’s her alacrity at jumping at Maguire’s bidding, just to stop him being upset with her.

She wanted a more enduring relationship, probably marriage with children. He had failed to commit to that. Her power and self-confidence in her personal relationship was in complete contrast with her management of her public image. A bit sad, but probably not unusual.

The report also points out that conflict is not merely a matter of a positive relationship, such as with spouses, lovers, children or friends, or causes one admires. Nor about money; strong feelings, religious beliefs and affiliations, and personal passions can cause people to put those interests ahead of the public interest. Think, for example, of the arbitrary money shovelled by the previous government into religious organisations, and dubious social schemes close to the prime minister’s heart. Perhaps OK if part of a scheme open to religions or welfare operations and allocated on merit, but some of this money was handed out without even being asked for!

Conflict of interest with people or causes you hate

Conflict of interest can also be a serious problem with enemies. A minister or decision-maker with a powerful animus against another person, group or cause may have as the motivation for an adverse decision not the public interest but their own animosity. Sometimes, perhaps especially, this can be within one’s own party, where, usually, most of one’s worst enemies are. A minister could have had such a conflict if he ordered that the independent writer of a report be “cut off” from any future government work as a punishment for uncovering facts the government, or the minister, wanted covered up. That’s to say nothing of the contemptible behaviour of the ADF and the Defence department in carrying out the instruction with prejudice. Ordinarily, after all, contracting decisions and personnel appointments regarding such matters should be made independently by officials on merit, not at ministerial direction.

One of the matters in the NSW ICAC investigation of Berejiklian involved a request, hardly fleshed out and without any business case prepared for a $6 million convention centre at a clay target shooting range at Wagga Wagga, in Maguire’s electorate. It was said this would lead to its becoming the venue for (largely non-existent) international competitions and draw visitors to the city (yes, but most likely from elsewhere in NSW, thus not increasing net state economic activity.)

A NSW Treasury official commenced his report on the submission, “As Joel Goodsen famously said, sometimes you gotta say WTF.”

The ICAC report continued, “These words reflected Mr Blunden’s view that the ACTA [convention centre] proposal went ‘against all of the principles of sound economic management’ of ‘ensuring that before public money is spent, there’s a sufficient analysis to indicate the level of any benefit to the state by the state spending money [and] of spending taxpayers’ money wisely.’

“In many respects this echoes the views expressed by those at the Office of Sport … and their view that the ACTA business case did not ‘stack up’ and their interactions with the minister’s office to this effect.

“Mr Blunden’s advice made it clear that he was somewhat incredulous that the ACTA proposal was being brought forward in the state it was in. He told the commission that he saw it as neither a sensible, well-founded economic decision nor could he see a justification as a matter of political strategy.”

Cabinet Expenditure review committee “talking points” prepared by officials for any announcement said pointedly “the submission and business case have not been subject to any agency consultation or independent review.”

The proposal, driven by then Treasurer Berejiklian, went through. Its processing breached most of the rules for ERC business, but this was ignored because Berejiklian had put it on the agenda. Ministers knew how weak the case was. But they approved it in part because Berejiklian was supporting it against the advice of her own department, and because they thought it would be helpful to Maguire’s re-election prospects. None of the ministers or officials present had any idea of the relationship. All said it would have made a critical difference. Even Deputy Premier John Barilaro, no stranger to irregular grants processes, argued that Berejiklian should have declared the conflict, of which he had been unaware.
At one point lawyers for Berejiklian argued that it would be over-onerous to have to consider the public interest in every decision they made. ICAC says, rightly, that it ought to be ingrained into all decisions. After all, if it is not in the public interest, it is not a valid exercise of power.

In considering all the facts of this grant, ICAC was as concerned that the process involved a breach of public trust as much as a conflict of an undisclosed interest. A minister, or any other decision maker is obliged to consider whether spending is in the public interest. This plainly wasn’t. One might have a worthy aim of expanding facilities in regional terms, but this was not a reasoned case for meeting that intention.

We can now infer a positive duty on all public servants, to report dodgy ministerial decisions to NACC, even where agency heads have been silent

Public servants associated with such doubtful schemes may have little choice but to administer them dutifully after they have made their objections clear in frank or fearless advice. But if they believe the spending to be irregular, and not in the public interest, they probably have the duty to refer the matter to the anti-corruption commission. They may end up in trouble if they don’t.

It might be wise for the NACC (and for the ICACs of the states and territories) to have explicit provisions allowing anonymised dob-ins, as well as of the formal ones. That way federal departmental secretaries or agency heads given to over-extreme loyalty to the interests of the government of the day might find that failure to refer does not prevent an investigation, and may invite, as a part of the investigation, questions of why the head did not think the decision iffy.
There have been all too many departmental heads who have put their loyalty to the interests of the government of the day too far ahead of the public interest in recent years. Most were in the Morrison government, loyal and uncomplaining accessories to corrupt pork-barrelling by ministers, handing out public funds on projects that could not be justified in public interest terms, however much they satisfied the political needs of the political party in government.

Perhaps the senior public service and public service commission should organise some seminars focusing the minds of public servants on such issues. These would be far more valuable than rhetorical exhortations about leadership, management and accountability that have characterised their talk, if not their action, for more than a decade. More than a decade, including the past (Albanese) year.

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