Posted 14/02/2017 by Cathy Madden and Deirdre McKeown
On 13 January 2017, in response to the recent controversy over MPs’ travel entitlements, Prime Minister Malcolm Turnbull announced the establishment of an Independent Parliamentary Entitlements Authority. The Prime Minister also foreshadowed further legislative reform dealing with business expenses. On 9 February the Prime Minister introduced the Independent Parliamentary Expenses Authority Bill 2017 (IPEA Bill) and a Consequential Amendments Bill. The IPEA Bill is modelled on the British Independent Parliamentary Standards Authority (IPSA).
The Opposition has indicated that it will study the Bill but supports the establishment of the Independent Parliamentary Expenses Authority (IPEA).
In his second reading speech introducing the IPEA legislation, the Prime Minister stated that his Government would present ‘a further significant bill’ to the Parliament which ‘will improve the legislative and administrative framework of the … work expenses framework—further encouraging transparency, accountability and value for money’.
Commencement
The main provisions of the Bill would commence on a date to be fixed by Proclamation. In his second reading speech, the Prime Minister stated that ‘the IPEA will commence on 1 July 2017’.
Main functions of the IPEA
The Bill seeks to establish the IPEA as an independent statutory authority with the following functions as set out in proposed section 10:
The Authority would have functions relating to:
(a) the work expenses, travel expenses and travel allowances of members of parliament; and
(b) certain travel expenses of former members of parliament; and
(c) the travel expenses and travel allowances of persons employed under Part III or IV of the Members of Parliament (Staff) Act 1984.
These functions would include:
(a) giving advice about travel expenses and travel allowances; and
(b) monitoring travel expenses and travel allowances; and
(c) preparing regular reports relating to work expenses, travel expenses and travel allowances; and
(d) audits relating to work expenses, travel expenses and travel allowances; and
(e) processing claims relating to travel expenses and travel allowances.
Main provisions of the IPEA Bill
Under proposed sections 15 and 16 the Authority would consist of up to five-members consisting of a Chair, the President of the Remuneration Tribunal, and at least two but not more than three others. Membership of the IPEA would have to include a former judicial officer, a former member of parliament, and a member with substantial experience or knowledge in the field of auditing. If the IPEA were to consist of five members, one member would also need to have substantial experience or knowledge in at least one of the fields of public administration and corporate governance.
The Bill would restrict the advice, monitoring and processing and rulings given by the IPEA to MPs (and to staff employed under the Members of Parliament (Staff) Act 1984 (Cth)) to travel expenses. The definitions of MPs’ travel expenses and work expenses are set out in proposed section 4.
Under the Bill the IPEA would also report and conduct audits on work expenses and travel expenses (proposed section 12). The reporting function, currently undertaken by the Department of Finance on a six-monthly basis, would gradually be increased to monthly disclosures by the IPEA. The range of functions for the IPEA listed in proposed section 12 includes a number that anticipate a new work expenses framework (such as incurring an authorised MP travel expense on behalf of the Commonwealth—proposed paragraph 12(1)(h)) while others relate the current entitlements framework.
Under proposed paragraph 12(1)(n) the IPEA would be able to recover overpayments, repayments and cost recovery payments in relation to travel expenses.
Under the Bill IPEA information-gathering powers would require persons to give the Authority information or documents relevant to the Authority’s reporting and auditing functions, which encompasses material relating to work expenses and travel expenses (proposed section 53). There are criminal penalties for contravening this requirement although a person can be excused if it ‘might incriminate the person or expose the person to a penalty’ (proposed section 55). The Guardian has suggested that:
… [This] means the authority will have weaker powers than many civil regulators including the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission, the Australian Taxation Office and the Australian Building and Construction Commission whose regimes don’t allow people to refuse on the basis of a privilege against self-incrimination.
The Bill does not clearly define the extent of IPEA’s investigatory powers. For example, in the case of a breach of a travel expense, it is unclear what avenues IPEA could pursue other than recovery of payments. This is in contrast to the UK IPSA’s powers of enforcement which were enhanced by the establishment of the statutory position of an independent compliance officer. In the UK system this officer is able to:
… by law, impose penalties on MPs for failing to comply with a request for information or a repayment direction. If the Compliance Officer suspects there may be a case for a criminal investigation, the matter is referred to the police. There are protocols in place for referrals to the police and Director of Public Prosecutions. (See 2016 review of IPSA’s operations 2010 to 2015)
Also unlike IPSA, which regulates and sets not only UK MPs’ business costs and expenses but also pay and pensions, the administration of federal MPs’ pay and entitlements in Australia will involve the IPEA, the Department of Finance, and the Remuneration Tribunal (which will continue to determine MPs pay and work expenses). It is not yet clear how the IPEA and the Department of Finance will interact.
Under proposed section 49 of the Bill staff of the IPEA would be employed under the Public Service Act 1999 (Cth); provision is also made for the Authority to be assisted by officers and employees of other Commonwealth and state/territory agencies (proposed section 50).
Scope of the IPEA
While providing advice to MPs, former MPs and parliamentarians’ staff in relation to travel expenses is one of the stated functions of IPEA under proposed section 12, there is no equivalent function for providing advice in relation to work expenses. One criticism of the Bill has been that its scope is not broad enough:
Focusing solely on parliamentarians work expenses, [the Bill] overlooks a number of other issues usually considered relevant to promoting ethical standards among parliamentarians.
Other legislation introduced in the Parliament has proposed specific advisory positions in relation to parliamentary conduct and ethics; for example the role of Independent Parliamentary Advisor proposed by the National Integrity Commission Bill 2013.
Interim arrangements
The Prime Minister announced that until the IPEA commences, an interim advisory body will be established by executive order to:
… administer travel expenses and allowances, and provide advice and support to parliamentarians on the current parliamentary work expenses system in respect of travel expenses and allowances.
The interim body will be governed by a board which will transition to the IPEA when the new body is established.
The Independent Parliamentary Authority (Consequential Amendments) Bill 2017
Proposed Schedule 1 of the Independent Parliamentary Expenses Authority (Consequential Amendments) Bill 2017 would seek to amend the Freedom of Information Act 1982 (Cth) so as to exempt the documents providing personal advice to MPs and MOPs staff in relation to travel expenditure matters as outlined in proposed sections 12(1)(a) and (p) of the IPEA Bill.