Wednesday, 3 May 2023

Bills

Operation Daintree Implementation (No. 1) Bill 2023

Statement of compatibility

David DAVIS (Southern Metropolitan) (09:58): I lay on the table a statement of compatibility with the Charter of Human Rights and Responsibilities Act 2006:

In accordance with section 28 of the Charter of Human Rights and Responsibilities Act 2006 (the Charter), I make this statement of compatibility with respect to the Operation Daintree Implementation (No. 1) Bill 2023 (the Bill).

Clause 12 of the Bill “New sections 98B to 98E inserted” (into the Public Administration Act 2004) under subsection 98E “Ministerial officers to co-operate with investigation of complaints” seeks to implement recommendation 9 of the Operation Daintree special report by requiring Ministerial officers to co-operate with an investigation into a complaint made against the Ministerial officer or any other Ministerial officers.

This clause protects the human rights of Minister advisers with the important proviso, drawing upon the Ombudsman Act 1973, that a Ministerial officer is not required to give information to, or otherwise co-operate with, such an investigation if the giving of the information or the other co-operation would tend to incriminate the Ministerial officer or make them liable to a penalty.

In my opinion, the Bill, as introduced to the Legislative Council, is compatible with the human rights protected by the Charter.

David Davis MP

Shadow Special Minister of State

Second reading

David DAVIS (Southern Metropolitan) (09:59): I move:

That the bill be now read a second time.

Victorians were shocked when the Independent Broad-based Anti-corruption Commission (IBAC) released its Operation Daintree report, a special report in April 2023.

The report was in response to a complaint received by IBAC alleging the procurement process and awarding of a contract by the Department of Health and Human Services (DHHS) to the Health Education Federation (HEF) constituted serious corrupt conduct.

IBAC made 17 formal recommendations through Operation Daintree. This bill does not seek to respond to all of those recommendations but responds to many in full and others in part and recognises that further work is required to fully respond to all of the recommendations made by IBAC. It is envisaged that another bill will be brought forward to deal with these matters but that in the interim a start must be made.

The opposition accepts that this bill and indeed IBAC’s recommendations from Operation Daintree are part of a wider matrix of reform that draws from a series of IBAC and Ombudsman reports seeking to deal with corruption in the Victorian state government and to prevent corruption in the future.

Cost of corruption

The cost of corruption is significant in terms of the public standing of Parliament and government, but it is also significant in terms of the financial cost where projects and contracts are awarded which are either not in the public interest or produce costs and wastage at the expense of taxpayers. The need for proper procurement is clear with the scale of state government spending. Every dollar squandered through corrupt decisions or spending is a dollar that cannot be spent on health, education or other services and cannot be returned to taxpayers as lower taxation.

Government response to Operation Daintree report

The Premier, in responding to the Daintree report, dismissed it as ‘educational’. This disgraceful approach ignores the fact there are literally dozens of findings and conclusions in the report, many highly negative and many concerning the Premier and former ministers as well as ministerial advisers in the Premier’s office and advisers in the offices of former health ministers.

The Victorian Ombudsman has said:

It was not an educational report. It was a damning report about misconduct of ministerial advisers and ministerial responsibility for those advisers. It was not what I would have described as an educational report.

What Operation Daintree found

The investigation ultimately interviewed Premier Daniel Andrews, former health ministers the Honourable Jenny Mikakos and the Honourable Jill Hennessy, ministerial staff working in the offices of the ministers and the Premier and DHHS employees as well as others. Health Workers Union officials were also interviewed.

Whilst the investigation found the conduct did not reach the threshold – the high threshold – of corrupt conduct as defined in section 4 of the IBAC act, it did make serious findings of fact. It found:

The investigation substantiated the factual allegations in the original complaint. It also substantiated the suspicion in the Ombudsman’s notification that a ministerial advisor working in the Health Minister’s office exerted pressure on DHHS staff to award the contract to the HEF. It also found that an advisor in the office of the subsequent Health Minister and an advisor in the office of the Premier (acting through the Health Minister’s office) intruded into DHHS’ management of the contract in ways favourable to the HEF and against the public interest.

…

It did however reveal a range of concerning conduct and omissions in breach of the public duties and ethical obligations of ministers and ministerial advisors. It also identified conduct by senior public servants that fell short of the required Victorian public sector standards.

…

The secretary of the HWU lobbied a senior advisor in the Premier’s Private Office (PPO) and a senior advisor to the Health Minister in favour of the HEF being contracted to develop and deliver the training. The senior advisor to the Health Minister helped the HWU to shape an unsolicited proposal that HEF be contracted to deliver training to 575 healthcare workers. The senior advisor then submitted that proposal to DHHS for consideration.

Whilst staff in DHHS had significant concerns about the proposal, the contract was signed in the hours before the caretaker period commenced in 2018. The contract entered into was for $1.2 million.

Ministerial responsibility

Ministerial responsibility is the bedrock of the Westminster system of government. The convention of ministerial responsibility holds that ministers are responsible to Parliament for their actions, the actions of their departments and the actions of their staff.

It is widely held that Victorian standards of ministerial responsibility have slipped or deteriorated over recent years.

A key issue determined by IBAC is ministerial responsibility and the need for proper ministerial oversight over ministerial staff, with the Operation Daintree report saying:

The evidence of Ms Mikakos on this issue was revealing. While she accepted responsibility for the conduct of her office and DHHS, she said it was not her role to supervise ministerial staff, as that was the role of her Chief of Staff. As this and other evidence from the investigation illustrates, it is necessary to again refer to ministerial responsibility for the conduct of advisors, including their Chief of Staff and their department. The conventions of individual ministerial responsibility (and the Code of Conduct for Ministers and Parliamentary Secretaries) required the minister to ensure that her advisors understood the boundaries within which they could operate.

At a minimum, the convention requires a minister to answer questions from the parliament about the conduct of their advisors and its consequences (in the sense of any remedial actions that have or can be taken to address any problems it has caused or prevent a recurrence of such problems in the future), even where they are ignorant of such conduct. In addition, where the conduct has serious consequences, some commentators suggest the convention is that the minister ought reasonably to have known about the conduct and be held personally responsible for it. That is a matter for parliament to determine. In any event, Ms Mikakos is no longer a minister or a parliamentarian, so the application of the convention or the code to her is now theoretical. Nevertheless, her office’s intervention in DHHS management of the HEF contract does raise issues about the adequacy of the supervisory arrangements in ministerial offices, which is addressed in the next chapter.

It is of particular concern that the Premier’s submission to the draft report suggests there is a ‘modern’ and ‘nuanced’ –

his words –

approach to the convention, but does not articulate what the standards now are that should be applied. These are matters which require parliament’s urgent consideration, so there is clarity for ministers, parliament and the public about the standards that are now to be applied if they have changed.

The Premier was similarly accountable for the conduct of his advisor within the PPO, even if he was unaware of how the stakeholder was engaging with his advisor and the action the advisor was taking in response.

IBAC’s recommendations on ministerial responsibility are substantially implemented in this bill.

The influence of third parties

IBAC was of the view that the influence of third-party stakeholders could give rise to conflicts of interest that needed to be properly and transparently managed. IBAC said:

The governing party in Victoria at the time of the events investigated in Operation Daintree was the ALP. Trade unions, many of which are affiliated to the party at a state level, continue to exercise considerable influence over the ALP in a variety of ways, such as voting rights at state and national conferences, supplying candidates for preselection and operating as something of a ‘training ground’ for advisors.

…

In response to the suggestion that the Labor government might have a conflict of interest between acting in the public interest and acting to implement ALP policies that affected a union stakeholder, both the Premier and HWU submitted that policies formulated by the ALP, while influential, are not binding on a Labor government. IBAC accepts that submission. However, IBAC observes that the special relationship between the union and a Labor government can create an actual conflict of interest when the government contemplates conferring a benefit on the union, which needs to be carefully managed.

The Premier’s, HWU’s and Health Advisor A’s rejection of the existence of a conflict of interest between the government and the HWU, by reason of the HWU being an affiliated union, is difficult to reconcile with the evidence before IBAC.

IBAC went on to say:

Some of the hallmarks of the union’s privileged status relative to other stakeholders were evident from when it first started lobbying government on its training proposal, and during the procurement and contract management phases …

…

Regardless of the Premier’s view of the HWU’s importance, it was plainly given preferential treatment by his and the Minister for Health’s advisors, which resulted in an outcome that did not serve the public interest.

Recommendation 1 of the Operation Daintree report is implemented in this bill.

The Premier’s memory

Operation Daintree is yet another report that reflects on the integrity of the Premier of Victoria, particularly his erratic memory. The Premier has been called to give evidence at four recent IBAC inquiries, of which Daintree is one. He also had difficulty with his memory at the COVID-19 hotel quarantine inquiry headed by the Honourable Jennifer Coate. In Operation Daintree IBAC found:

The Premier had no recollection of what he discussed with Ms Asmar, no recollection of any discussion with his advisors that led to this announcement and no awareness that they and the Minister for Health’s advisor had discussed a detailed proposal including costings ten days before the announcement that the HEF should deliver training to 1,000 workers over a four-year period.

It is highly likely that the Premier was informed of the commitment proposal as formulated by his advisors and conveyed the substance of the intended commitment to Ms Asmar when he met her before making the announcement. During his examination, the Premier ultimately accepted that he may have done so.

The report goes on:

After the Premier realised that his recollection of what he announced was faulty he left open the possibility that he may have made a commitment to Ms Asmar but remained quite uncertain that what he announced amounted to a commitment. He maintained that what he said was not a ‘tender announcement’ and that if the union was to be the provider, he would have been very clear about that.

It is deeply concerning that the Premier cannot accurately recall a commitment of taxpayers funds exceeding $1 million.

Concerning failures and breach of public duties

The conclusions of Operation Daintree, as outlined at 4.8 in the report, state:

The investigation did, however, reveal a range of concerning conduct or failures to act in breach of the public duties and ethical obligations of ministers and ministerial advisors. It also identified conduct and omissions by senior public servants that fell short of the required Victorian public standards. IBAC considers that such conduct, if not addressed, makes Victoria more vulnerable to corrupt conduct as defined in the IBAC Act.

It is clear that tighter obligations are required on ministers and ministerial advisers and sharper direction is required for Victorian public servants. IBAC is right to point to the risks of corrupt conduct unless these matters are addressed.

Grey corruption – inadequate systems, policies and controls

Operation Watts drew attention to the issue of grey corruption. Other IBAC reports have pointed to weaknesses in systems, policies and controls. With respect to the adequacy of systems, policies and controls, at 5.1 Operation Daintree found:

… ample evidence of the misuse of power and influence by ministerial advisors and departmental executives who breached codes of conduct and established conventions, and a lack of appropriate supervision and control within those ministerial offices and departments, for all of which their ministers were ultimately accountable to parliament.

The pursuit by advisors of the perceived interests of their ministers, including the Premier, at the expense of proper process and standards is another example of the phenomenon of grey corruption that is of increasing concern to integrity bodies around Australia. As the Operation Watts report observed, grey corruption involves the bending or breaking of rules, even if that might not amount to criminal behaviour, but that unfairly favours the allies, friends and networks of decision makers. It corrodes standards of public governance, decision-making in the public interest and trust in government, and if left unchecked increases the risk of corrupt criminal offending.

While the specific issues of public governance are different to those explored in Operation Watts, they can nevertheless be assessed against the same general integrity model used in that investigation.

The grey zone of ministerial adviser power and influence needs to be addressed to root out corruption, including grey corruption. This bill responds not just to Operation Daintree but to repeated integrity agency reports.

Clause-by-clause summary

Clause 4 of the bill, ‘Guidance regarding ministerial accountability’, seeks to implement recommendation 2 of the Operation Daintree report by making, at a minimum, the Privileges Committee of each house responsible for preparing and issuing guidance regarding the scope of the convention of ministerial accountability and the application of that convention to Victorian ministers.

Clause 5 of the bill, ‘Ministerial code of conduct – consultation’, seeks to implement recommendation 6 by requiring the Premier to consult with the Victorian public sector commissioner (commissioner) and the Secretary of the Department of Premier and Cabinet in preparing any ministerial code of conduct.

Clause 6 of the bill, ‘Ministerial code of conduct – contents’, seeks to implement recommendations 3, 12 and 13 by requiring the Premier to ensure that any ministerial code of conduct is consistent with the guidance issued under clause 4 above; sets out the relevant procedures and conventions for ministers to observe when communicating with public sector bodies and public sector employees; and provides that each of the following is a breach of the ministerial code of conduct:

• intimidating or victimising a person who has reported the conduct of, or made a complaint about, a ministerial officer;

• interfering with an investigation or inquiry into the conduct of a ministerial officer for the purpose of influencing the outcome of that investigation or inquiry; and

• treating a person detrimentally or less favourably because that person has made a legitimate report or complaint about a ministerial officer.

Clause 7 of the bill, ‘Mandatory induction and training’, seeks to implement recommendation 7 by requiring the Premier, in consultation with the commissioner, to ensure that there is a mandatory induction program for new ministerial officers and a training program and relevant guidance for public sector employees who communicate with ministerial officers; and requiring the commissioner to:

• keep records of attendance by ministerial officers at induction programs;

• publish attendance numbers annually on the internet;

• keep records of attendance by public sector employees at training programs; and

• publish attendance numbers for each public sector body annually on the internet.

Clause 8 of the bill, ‘Unsolicited proposals to supply goods or services’, seeks to implement recommendation 16 by requiring the Secretary of the Department of Health to prepare, issue and publish on the internet guidelines regarding the assessments and management of unsolicited proposals to supply goods or services on behalf of the Victorian government, regardless of how the proposals are received or by whom they are made.

Clause 9 of the bill, ‘Review of implementation’, seeks to implement recommendation 17 by requiring the Premier to table a report of a review of the implementation of all of the recommendations in the Operation Daintree special report no later than 31 October 2023 and again no later than 30 June 2024; and requiring the Premier to ensure that the Independent Broad-based Anti-corruption Commission is consulted during the conduct of the reviews and the preparation of the reports.

Clause 10 of the bill, ‘Codes of conduct’, seeks to implement recommendation 14 by amending the Public Administration Act 2004 to require the Victorian Public Sector Commission to ensure that a code of conduct that applies to public sector employees prohibits the making of frivolous, vexatious or malicious complaints about, or allegations against, a ministerial officer.

Clause 11 of the bill, ‘Register of lobbyists’, seeks to implement recommendation 1 by amending the Public Administration Act 2004 to require the Premier to ensure that the Victorian government professional lobbyist code of conduct requires that an association of employers or an association of employees, including a trade union, that conducts or intends to conduct lobbying activities is registered as a lobbyist.

Clause 12 of the bill, ‘New sections 98B to 98E inserted’, into the Public Administration Act 2004:

• under subsection 98B, ‘Ministerial officer code of conduct’, seeks to implement recommendations 4, 6, 12, 13 and 14 by requiring the Premier to:

• prepare and issue a code of conduct for ministerial officers in performing their functions that:

(a) contains principles for ministerial officers to observe when dealing with public sector bodies and public sector employees; and

(b) prohibits a ministerial officer from directing a public sector employee; and

(c) provides that each of the following is a breach of the code of conduct:

(i) intimidating or victimising a person who has reported the conduct of, or made a complaint about, a ministerial officer;

(ii) interfering with an investigation or inquiry into the conduct of a ministerial officer for the purpose of influencing the outcome of that investigation or inquiry;

(iii) treating a person detrimentally or less favourably because that person has made a legitimate report or complaint about a ministerial officer; and

(d) prohibits the making of frivolous, vexatious or malicious complaints about, or allegations against, a ministerial officer;

• consult the Secretary of the Department of Premier and Cabinet and the commissioner in preparing the code of conduct and any amendment of the code of conduct; and

• ensure the code of conduct as amended or reissued from time to time is publicly available;

Subsection 98B also determines that a contravention of the code of conduct by a ministerial officer is capable of constituting misconduct; permits the Premier to amend and reissue the code of conduct or issue a new code of conduct in substitution for a previously issued one; and requires the Premier to review the code of conduct at regular intervals and at least once every four years;

• under subsection 98C, ‘Annual report’, seeks to implement recommendation 5 by requiring the Premier to cause the following information to be included in the report of operations of the Department of Premier and Cabinet for each financial year:

(a) the number of ministerial officers and other staff working in each ministerial office as at the end of the financial year; and

(b) the total cost of employing ministerial officers and other staff in ministerial offices for the financial year;

• under subsection 98D, ‘Mechanism for complaints against ministerial officers’, seeks to implement recommendation 10 by requiring, at a minimum, the Privileges Committee of each house of Parliament to establish a mechanism for the making and investigating of complaints against ministerial officers; and

• under subsection 98E, ‘Ministerial officers to co-operate with investigation of complaints’, seeks to implement recommendation 9 by requiring ministerial officers to co-operate with an investigation into a complaint made against the ministerial officer or any other ministerial officers with the proviso that a ministerial officer is not required to give information to, or otherwise co-operate with, such an investigation if the giving of the information or the other co-operation would tend to incriminate the ministerial officer or make them liable to a penalty. Subsection 98E also states a failure to comply with this section by a ministerial officer is capable of constituting misconduct.

Clause 13 of the bill, ‘New section 28A inserted’, seeks to implement recommendation 11 by amending the Parliamentary Committees Act 2003 to state a joint investigatory committee may compel the attendance of a ministerial officer and may compel the ministerial officer to give evidence on oath or affirmation.

Clause 14 of the bill, ‘New section 51A inserted’, also seeks to implement recommendation 11 by amending the Parliamentary Committees Act 2003 to state:

(1) A standing committee established under the Standing Orders of the Council or the Assembly, or a sub-committee appointed by any such standing committee, may compel the attendance of a Ministerial officer and may compel the Ministerial officer … to give evidence on oath or affirmation.

(2) Subsection (1) applies irrespective of whether the Minister in whose office the Ministerial officer works is a member of the Council or the Assembly.

(3) The Procedure Committee of the Council and the Standing Orders Committee of the Assembly must prepare and issue guidance material for their relevant standing committees and Ministerial officers in relation to the attendance of Ministerial officers before those committees.

(4) This section is in addition to, and does not take away from anything in, the Standing Orders of the Council or the Assembly.

The clauses in this bill do not deal with all of the issues raised in Operation Daintree but make a significant start and should be understood in the context of other recent integrity agency reports.

Conclusion

This bill, Operation Daintree Implementation (No. 1) Bill 2023, takes a further step in cleaning up the mess of corruption and grey corruption left by the Andrews Labor government, a government that has achieved new low standards of accountability and transparency.

I commend the bill to the house.

Lee TARLAMIS (South-Eastern Metropolitan) (10:22): I move:

That debate on this bill be adjourned for two weeks.

Motion agreed to and debate adjourned for two weeks.