hl.pap.15807

20 February 2008

Institute for International Research
11 th Annual Corporate Governance in the Public Sector Conference
Melbourne, 5-6 March 2008

ACCOUNTABILITY AND CORPORATE GOVERNANCE IN THE NEW PARLIAMENT

Harry Evans

Clerk of the Senate

NOTES

Attachment 1

 DOCUMENTS REFUSED TO THE SENATE
1 July 2005 to 20 September 2007

Communications—Telstra—Documents held by Telstra Corporation relating to shareholder attitude surveys conducted by Crosby/Textor.

Defence—Iraq—Depleted Uranium—Report of the Australian Defence Force on the presence of depleted uranium in the Australian area of operations in Al Muthanna province in southern Iraq.

Education—Voluntary Student Unionism—Documents relating to options for voluntary student unionism.

Employment—Community Partners Program—The review of the Community Partners program, as commissioned by the Office of the Employment Advocate and conducted by Deloitte Touche Tomatsu.

Environment—Hope Downs Iron Ore Project—Briefing packages produced by the former Department of the Environment and Heritage for the Minister’s consideration of the Hope Downs Iron Ore Project proposed by Hope Downs Management Services Pty Ltd.

Environment—Northern Territory—Uranium Mines—Documents relating to the Commonwealth Government’s authority to unilaterally approve uranium mines in the Northern Territory.

Environment—Review of Matters of National Environmental Significance—Report on the review of matters national environmental significance made under section 28A of the Environment Protection and Biodiversity Conservation Act 1999.

Environment—Tasmania—Styx and Florentine Valleys—Documents relating to the implementation of the 2004 election commitment to protect 18 700 hectares of old-growth forest in the Styx and Florentine valleys.

Family and Community Services—National Disabilities Advocacy Program Review—The National Disabilities Advocacy Program Review 2006, carried out by Social Options Australia.

Family and Community Services—Smartcard Proposal—Documents relating to the smartcard proposal.

Finance—Board of the Reserve Bank of Australia—Appointment—Documents relating to the nomination and appointment of Mr Robert Gerard to the Board of the Reserve Bank of Australia.

Foreign Affairs—United States of America—Military Commissions Act—Legal advice received by the Government relating to the legality of the United States of America’s Military Commissions Act (2006).

Health—Better Outcomes in Mental Health Initiative—Report from the review of the Better Outcomes in Mental Health Initiative.

Health—Regulation of Non-prescription Medicinal Products—Report provided by Deloitte Touche Tohmatsu relating to the regulation of non-prescription medicinal products.

Immigration—457 Visa Program—Report prepared by the Department of Immigration and Multicultural Affairs relating to T&R Pastoral and its employment of workers on subclass 457 visas.

Immigration—SIEV X—Documents detailing passengers purported to have boarded the vessel known as SIEV X.

Law and Justice—Australian Wheat Board—The Organisation for Economic Co-operation and Development foreign bribery survey response by AWB Limited.

Law and Justice—Border Rationalisation Taskforce—Report of the Border Rationalisation Taskforce prepared in 1998.

Science and Technology—Commonwealth Scientific and Industrial Research Organisation—Documents relating to the research and development work to be undertaken by the CSIRO.

Science and Technology—Commonwealth Scientific and Industrial Research Organisation—Sheep Study—Documents relating to a sheep study conducted by the CSIRO on the effect of transgenic peas on the immune response of sheep.

Taxation—Infrastructure Borrowings Tax Offset Scheme—Documents held by the Department of Transport and Regional Services relating to taxation deductions under the Infrastructure Borrowings Tax Offset Scheme.

Transport—Civil Aviation Safety Authority—Transair—Documents relating to Lessbrook Pty Ltd trading as Transair.

Defence—Naval Ships—Safety—Documents including briefs to ministers concerning complaints and allegations relating to substandard maintenance on Navy ships, particularly with respect to HMAS Westralia.

Environment—Proposed Anvil Hill Coal Mine—Documents relating to the Anvil Hill coal mine.

In a paper presented at the 9 th Annual Conference in 2006, entitled Corporate governance and a government Senate majority, I set out likely effects of the government majority in the Senate, which took effect on 1 July 2005, on accountability in general, and particularly in respect of public sector governance. The paper referred to two case studies: the Regional Partnerships Program and the Senate committee inquiry into it, and the AWB Iraq wheat affair, in relation to which there was conspicuously no Senate inquiry. The treatment of two bills raising public sector governance issues was also examined. These cases also provided “before and after” pictures of the decline in accountability and in the attention given to public sector governance resulting from the government majority. The conclusion of the paper was that this would be unfortunate for the public sector, because it could well lead to a lack of attention to governance issues and more unfortunate cases like regional partnerships and AWB in the future.

A more detailed paper, prepared as part of an Australian National University study on the performance of parliament, covering the complete life of the government majority, tracked this decline in accountability, particularly in the ability of the Senate to inquire into public sector operations and scrutinise new legislation. This paper may be found at: http://www.aph.gov.au/Senate/pubs/evans/15692/index.htm

There is some evidence of the decline of accountability and accompanying governance problems contributing to the defeat of the government in the 2007 general election. Certainly a former minister thought that that was the case, referring to his government majority as a “poison chalice”. The two cases referred to in the earlier paper came back to haunt the political process, spectacularly so in one case. The Regional Partnerships Program was the subject of an Australian National Audit Office report released shortly before polling day, to the great embarrassment of the outgoing government. This report supported the earlier conclusion that the program was a governance disaster, beyond the dimensions identified by the Senate committee. The AWB affair, as an editorial in The Age put it, “is not over yet”. Claiming that the seeds of the demise of the government can be traced to that matter, the editorial called for a further Senate inquiry “to explore to what extent the public service was compromised”. As a result of these developments, the public, the Parliament and the media are likely to be much more aware of the intersection of political issues and public sector governance, and the latter is therefore likely to receive much more attention in coming years.

As everyone in this audience would be aware, the new government will have to deal with a non-government majority in the Senate, in two stages: a Coalition majority up to 1 July 2008, followed by a majority consisting of non-government parties and independents for the remainder of the parliamentary term.

This is likely to lead to heightened scrutiny and greater parliamentary accountability, and specifically a concentration on public sector governance issues, because of a range of factors.

• The government will not be able to control the inquiries pursued by the Senate and its committees. Minor parties and independents are always anxious to pursue accountability issues, and the incoming Opposition shows every sign of doing likewise, as oppositions usually do and are expected to do. Contrary to what might be thought to be the case, this effect is likely to increase after 1 July, because minor parties, independents and oppositions always compete to pursue accountability issues.
• When a new government takes office, high-level political issues are usually few in number and are slow to emerge over the parliamentary term. This means that senators are more likely to concentrate on governance issues in their pursuit of accountability.
• In any event, a new government is not likely to avoid parliamentary scrutiny or the raising of governance issues, particularly when it so keenly pursued those issues when so recently in opposition. Indeed, incoming governments are inclined to use parliamentary scrutiny to assist themselves to gain knowledge and control of the complex government machine. There were clear signs of this in the past round of estimates hearings held recently.
• A new government also does not strongly identify with the existing public sector apparatus or with the existing governance arrangements. A new government is more inclined to let that apparatus take its chances in the parliamentary forum and see whether it has survivability. A striking example of this is the new Minister for Defence conspicuously not defending the existing arrangements in the Defence Department.
  A new government obviously has many new projects and programs, and often new statutory and non-statutory bodies to establish, which give rise to governance issues and to scrutiny of their governance arrangements.
• This new government was elected on a platform of greater transparency and accountability in government operations, so is likely to be more sensitive to issues of public sector governance. Its announced policies on merit selection for statutory appointments and registration of lobbyists, for example, will impose expanded functions on public servants and more accountability avenues.
• This new government has a particular incentive to avoid the accountability problems of its predecessor. In the recent estimates hearings, the new Minister for Immigration and Citizenship, Senator Evans, declared that he has too much power to intervene in immigration matters. If he acts on this belief, it will throw responsibility and scrutiny back on his department.
• As with the Regional Partnerships affair, and as a result of that and other recent experiences, the Audit Office is likely to be more vigilant in scrutinising governance arrangements surrounding government expenditure. A recent report identified governance problems with payments to the Australian Rail Track Corporation. As before 2005, Senate inquiries are likely to trigger, or to follow up, Audit scrutiny.
• Similarly, the public, stirred by the press, are likely to be more conscious of accountability in the public sector as a result of recent cases. Every public servant should read the succession of articles in the Sydney Morning Herald exposing and attacking various operations of the New South Wales public sector, to gain an appreciation of the potential of this heightened scrutiny. Of course, all of the problems are sheeted home to the political wing of government, the responsible ministers, but the fallout still falls heavily on public servants. Another good example is the intense scrutiny of the Australian Federal Police's handling of the Habib and Haneef cases.
• Because of the previous government's majority in the Senate, and the new government's lack of such a majority, there are heightened expectations of, and pressures on, the Senate to take action in relation to various problems in the public sector. The Senate recently appointed three select committees, one of which, on state government financial management, is expected to be closely focussed on governance issues at the state level. State public sector personnel will be extremely vulnerable to revelations emerging during this inquiry.
• Although the Senate committee structure is not likely to be changed, so that the government will retain a majority on all of the legislative and general purpose standing committees, this will not mean that the committees will be any less active. It is the numbers in the chamber that determine the level of committee activity. Those committees have a standing reference to scrutinise the performance of government departments and agencies. Under this reference they can undertake reviews of particular departments and agencies without a reference from the Senate. It is quite likely that committees will make greater use of that standing reference in the future, and that departments and agencies will find themselves under scrutiny without much notice.

The recent estimates hearings have exhibited all of these factors in play to a certain extent. There was a significant concentration on process questions, requiring public servants to explain their processes and the governance arrangements applying to particular programs. Some public servants appeared to be rather startled by the rigorous nature of the questioning and the interest in their internal departmental arrangements.

In short, the public sector will have to be more than ever diligent about its governance arrangements and its processes in the next few years. Parliamentary scrutiny is back, with emphasis.

PROPOSED REFERENCES TO SENATE COMMITTEES
2001 - 2004

Date	Committee	Subject	Agreed to	Negatived	Source
13 March 2002	Employment, Workplace Relations and Education	Education of students with disabilities	1		Opp
20 March 2002	Employment, Workplace Relations and Education	Small business employment	1		Opp
20 March 2002	Economics	Public liability and professional indemnity insurance	1		Opp
21 March 2002	Finance and Public Administration	Recruitment and training in the Australian public service	1		Opp
16 May 2002	Rural and Regional Affairs and Transport Legislation Committee	Quota management controls on Australian beef exports to the United States	1		Opp
19 June 2002	Community Affairs	Proposed legislative participation requirements for parents and mature-age unemployed Australians	1		Opp/AD
20 June 2002	Environment, Communications, Information Technology and the Arts	Regulatory, monitoring and reporting regimes that government environmental performance at the Ranger and Jabiluka uranium operations and the Beverley and Honeymoon in situ leach operations	1		Opp
25 June 2002	Environment, Communications, Information Technology and the Arts	Capacity of the Australian telecommunications network to deliver adequate services	1		Opp/AD
25 June 2002	Environment, Communications, Information Technology and the Arts	Role of libraries as providers of public information in the online environment	1		AD
25 June 2002	Legal and Constitutional	Implications of excision for border security	1		Opp
27 June 2002	Rural and Regional Affairs and Transport Legislation Committee	Australian meat industry	1		Govt
27 June 2002	Rural and Regional Affairs and Transport	‘Plantations for Australia: The 2020 Vision’ strategy	1		Govt
27 August 2002	Legal and Constitutional	Progress towards national reconciliation	1		AD
29 August 2002	Rural and Regional Affairs and Transport Legislation Committee	Great Barrier Reef Marine Park Amendment Regulations		1	ON
18 September 2002	Employment, Workplace Relations and Education	Government’s refusal to respond to an order of the Senate for documents relating to financial information concerning higher education	1		Opp
19 September 2002	Foreign Affairs, Defence and Trade	Possible military attack against Iraq by the United States of America		1	AD
21 October 2002	Community Affairs	Poverty and inequality in Australia	1		Opp
21 October 2002	Rural and Regional Affairs and Transport	Rural industry-based water resource usage	1		AD
23 October 2002	Employment, Workplace Relations and Education	Skills shortage and labour demand	1		Opp
2 December 2002	Treaties Joint Standing Committee	Proposed agreement with the United States of America pursuant to which Australia would agree not to surrender US nationals to the International Criminal Court without the consent of the US	1		AD
10 December 2002	Foreign Affairs, Defence and Trade	Adequacy and effectiveness of the Government’s foreign and trade policy strategy	1		Opp
12 December 2002	Foreign Affairs, Defence and Trade	General Agreement on Trade in Services	1		Opp
12 December 2002	Superannuation Select Committee	Planning for retirement	1		Govt
12 December 2002	Economics	Structure and distributive effects of the Australian taxation system	1		Opp
4 March 2003	Community Affairs	Government or non-government institutions and fostering practices established to provide care and/or education for children	1		AD
6 March 2003	Community Affairs	Pharmaceutical Benefits Scheme		1	AG
19 March 2003	Finance and Public Administration	Framework for employment and management of staff under the Members of Parliament (Staff) Act 1984	1		Opp
24 March 2003	Foreign Affairs, Defence and Trade	Assessment and dissemination of threats to the security of Australians in South East Asia	1		AG (as amended by Opp)
27 March 2003	Legal and Constitutional	Deployment of troops to Iraq		1	AG
27 March 2003	Finance and Public Administration	Funding for new building and machinery at the Moruya Steel Profiling Plant in New South Wales	1		Opp
14 May 2003	Foreign Affairs, Defence and Trade	Report by the Director of Trials of the Review of Test and Evaluation in Defence	1		Opp
17 June 2003	Superannuation Select Committee	Superannuation Industry (Supervision) Amendment Regulations 2003	1		Opp
17 June 2003	Legal and Constitutional	Capacity of legal aid and access to justice arrangements to meet community need	1		Opp/AD
18 June 2003	Environment, Communications, Information Technology and the Arts	Burning of Australia’s biggest tree, in Tasmania	1		AG (as amended by Opp)
18 June 2003	ASIO, ASIS and DSD Joint Statutory Committee	Nature and accuracy of intelligence information received by Australia’s intelligence services	1		Opp
18 June 2003	Foreign Affairs, Defence and Trade	Role, operation and effectiveness of Australia’s security and intelligence agencies in the lead-up to the Iraq war		1	AG
19 June 2003	Finance and Public Administration	Revised system of administrative review within the area of veteran and military compensation and income support	1		Opp
19 June 2003	Foreign Affairs, Defence and Trade	Adequacy of arrangements within the Department of Defence for the health preparation for the deployment of the Australian Defence Forces overseas	1		Opp
24 June 2003	Environment, Communications, Information Technology and the Arts	Broadband services		1	AD
25 June 2003	Economics	Whether the Trade Practices Act 1974adequately protects small business from anti-competitive or unfair conduct	1		Opp
26 June 2003	Environment, Communications, Information Technology and the Arts	Regulation, control and management of invasive species	1		AD
26 June 2003	Legal and Constitutional	Process for moving towards the establishment of an Australian republic	1		AD/Opp
26 June 2003	Environment, Communications, Information Technology and the Arts	Levels of competition in broadband services	1		Opp
26 June 2003	Employment, Workplace Relations and Education	Government’s proposed budget changes to higher education	1		Opp/AD
19 August 2003	Community Affairs	History of post-transfusion Hepatitis in Australia	1		Opp
13 October 2003	Rural and Regional Affairs and Transport	Draft Aviation Transport Security Regulations 2003	1		Opp
16 October 2003	Employment, Workplace Relations and Education	Building and construction industry	1		AD
16 October 2003	Rural and Regional Affairs and Transport	Quarantine risks associated with return of sheep stranded aboard the MV Cormo Express	1		Opp
16 October 2003	Legal and Constitutional Affairs	Australian expatriates	1		Opp
30 October 2003	Foreign Affairs, Defence and Trade	Australia’s military justice system	1		Opp
26 November 2003	Treaties Joint Committee	Optional Protocol to the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment	1		Opp
10 February 2004	Foreign Affairs, Defence and Trade	Australia’s involvement in preparations for the deployment of the United States of America’s proposed missile defence program		1	AG
4 March 2004	Finance and Public Administration	Funding and disclosure of political parties, candidates and elections		1	AG
4 March 2004	Electoral Matters Joint Committee	Electoral funding and disclosure	1		AD
23 March 2004	Legal and Constitutional Affairs	Australian Federal Police Commissioner’s views on the connection between Australia’s involvement in the war on Iraq and the threat to Australia’s security		1	AG
11 May 2004	Employment, Workplace Relations and Education	Functioning of the Office of the Chief Scientist	1		AG (as amended by AD)
13 May 2004	Employment, Workplace Relations and Education	Government’s schools funding package	1		AD (as amended by AG)
16 June 2004	Economics Legislation Committee	Superannuation Industry (Supervision) Amendment Regulations 2004	1		Opp
23 June 2004	Finance and Public Administration	Level of expenditure on, nature and extent of, government advertising since 1996	1		Opp
23 June 2004	Community Affairs	Aged care workforce	1		Opp
24 June 2004	Environment, Communications, Information Technology and the Arts	Budgetary and environmental impacts of the Government’s Energy White Paper	1		AD
24 June 2004	Community Affairs LegislationCommittee	Pharmaceutical Benefits Scheme		1	AG
9 August 2004	Rural and Regional Affairs and Transport Legislation Committee	Animal welfare	1		AD
Total			53	10