Wednesday, August 05, 2009

What have we learnt from the Ozcar case

Yesterday the Auditor-General published his report Representations to the Department of the Treasury in Relation to Motor Dealer Financing Assistance, that is his report on the Ozcar scheme and the "accusation" that the Prime Minister's office had sought special treatment for a "mate" - what became horribly known as Utegate.

It is worth repeating before we continue that the biggest claim the coalition ever really got to was that Treasurer Swan mislead the Parliament in replies to questions about said representations. There is possibly nothing inappropriate in the PMs office, say, contacting Treasury and saying "Mr X has been in contact with the PM in relation to scheme Y and the PM has referred them to you". That perfectly innocent communication could be intended to mean "I am letting you know so that when Mr X contacts you, don't be concerned by any reference he makes to the PM's office". It could however be interpretted by the recipient as "The PM expects you to look after Mr X."

The depressing part is that the obvious device of adding "I am informing you so that you can treat this the same as any other approach and not be influenced if Mr X mentions he was referred to you by the PMO." See if the recipient is of the kind who believes that politicians can, will and at times should so influence public servants, the the extra words will merely be read as "and you know I have to be prepared to deny any involvement."

Hence, ultimately, the public needs to rely scrupulously on the integrity of its public servants. There is some evidence that the public servant at the heart of this affair had both learnt inappropriate behaviour under the previous government, and had developed a taste for being "a player". There is reason to be concerned that many other members of the SES are similarly tainted. In fact, the current culture of the APS as a whole seems to be excessively focussed on doing the direction of Government rather than sound administration.

However, as I pointed out in a Senate committee yesterday there is no real distinction between Government and a Department, but there is a great deal of subtelty in the way that engagement occurs.

However, there are other significant lessons in the report as well.

It is worth repeating the words in the report on our system of Government;

Australia’s parliamentary system is based on the principles of
representative and responsible government. Members of Parliament are
elected by the people to govern Australia in the public interest and individuals
are able to approach Parliamentarians, including Ministers, for assistance.
Ministers are expected to discharge their responsibilities in accordance with
wide considerations of public interest; where arrangements are put in place to
provide assistance to particular industries, this includes equitable treatment of
industry participants, often based on publicly announced criteria.

The fact that a member is a Minister should not restrict them in their capacity to to assist. The question revolves around whether an intervention is designed to over-ride "equitable treatment". The report finds that 12 representations were received through various channels, that the responses varied markedly, but that

The variability in Treasury’s response did not reflect any
instruction on the part of the Prime Minister or his Office, the Treasurer
or his Office, or senior Treasury management that some representations
were to receive more favourable treatment than others.

However the Government does not come out of this totally unscathed. The ANAO report finds that there was errors in the concatenation of policy development and implementation, and that the implementation phase was poorly managed. In particular it notes:

The audit has not made any recommendations to Treasury as ANAO
did not examine, in the time available, whether the policy implementation
shortcomings identified are isolated or more widespread. However, Treasury
is encouraged to review its practices more broadly in the light of the matters
raised in this report so that the culture of the department, which is committed
to providing quality advice to government, absorbs the experience in a positive

This is perhaps the only thing that Mr Grech and the ANAO might agree on, as he has written in today's SMH;

Policy papers would be commissioned in the morning, usually after a discussion among the Prime Minister, Treasurer, Henry and a few others, and considered by much the same group later that day or the following day, with decisions often taken on measures involving billions. OzCar was developed in this environment. I began to rely on a small network of highly experienced former Treasury officers. I saw little point in putting up a policy option to the Prime Minister and the Treasurer if it could not ‘‘fly’’ politically. I would therefore ‘‘road-test’’ a few ideas so the risks of developing half-baked options involving contingent liabilities of $2 billion or more were reduced.

Michael Stutchbury writing in the Oz labels this part of the report as "the Rudd government still needs to heed the Auditor-General's warning that it's easy to generate 24/7 policy activism, but much harder to turn this into something that actually works."

The other part of this story that still needs exploration is the nature of the ongoing reltionship between Mr Grech and Mr Turnbull. In yesterday's press conference this was covered briefly;

QUESTION: Mr Turnbull, was it a case of you accepted this email because Mr Grech had provided you with information before?
MALCOLM TURNBULL: Well I don’t want to go into other discussions we’ve had with Mr Grech. Suffice it to say this – Mr Grech is a very senior public servant.

It does seem that the rumoured relationship between the two has substance, and that Grech had been the source of other material used by the Opposition. This is perhaps supported by Grech's own claim that "When I returned to Treasury in September last year, it became clear the ‘normal’ rules of direction, reporting and accountability had changed significantly and were often confused and chaotic." That is, Mr Grech thought there was serious systemic maladministration occurring.

In his press conference Malcolm Turnbull referred to the important role played by "whistle-blowers" in our democracy. It is time we really did more to distinguish between "whistle-blowers" and "leakers", the latter is an honourable act of disclosing maladministration or corruption. The latter is the process of providing information that is confidential for use in media or politics.

It is unfortunately true that some whistle-blowing occurs via leaks, but not all leaks are whistle-blowing. The manner in which Mr Grech and Mr Turnbull interacted was in the nature of a leak, especially the way in which it was manipulated for maximum political advantage.

Perhaps the Government might like to reflect on the fact that creating better "whistle-blowing" processes will damage the credibility of all leakers, by taking away the "whistle-blowing" defence. Establishing a rigorous external and independent process through which public servants can report maladministration and/or corruption and know that their careers will be not only unharmed but potentially advanced would seem to be a great defence against political leaks. Basically an effective wistle-blowing regime can bring all leaking to the Opposition into the frame of illegal activity.

There is much to be learned from Ozcar, the lessons include;
1. That there is a risk of systemic failures in administration of rushed programs,
2. That there is a culture withing parts of the public service that believes its job is to act politically,
3. That there are benefits in formal whistle-blowing rules.

I won't touch on the lessons to be leraned by Malcolm Turnbull, probably no point. But is the Government paying attention or just relishing the victory?

Note: I have also elsewhere speculated on whether the News Ltd journalist at the centre of the story, Steve Lewis, should "out" his source given that it wasn't a real source. I am pleased to say he has now done so.

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