INVESTIGATION INTO PARLIAMENTARY
AND ELECTORATE TRAVEL:
SECOND REPORT
ANALYSIS OF ADMINISTRATIVE
SYSTEMS AND RECOMMENDATIONS
FOR REFORM
December 1998
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© December 1998 – Copyright in this work is held by the Independent Commission
Against Corruption. Division 3 of the Commonwealth Copyright Act 1968 recognises
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material other than as permitted by the Copyright Act 1968 , please write to the
Commission at GPO Box 500, Sydney NSW 2001.
This report and further information about the Independent Commission Against
Corruption can be found on the Commission’s website at www.icac.nsw.gov.au
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CONTENTS
COMMISSIONER'S PREFACE
5
SUMMARY OF RECOMMENDATIONS
6
Introduction
Documentation
Members' Guide
Accounting manual
Accountability
Internal Audit measures
External Audit measures
Administration
Structure
Computer systems
Entitlements
Parliamentary Remuneration Tribunal (PRT)
Recognition of party political activities as legitimate parliamentary business
Administration of entitlements
Office services, facilities and equipment
Shadow Ministers
Air travel
Air travel - popular holiday destinations
Travel agents
Charter travel
Familiarisation with parliamentary, governmental and related matters
Frequent flyer points and other reward systems
Committee travel
Culture
Oath of Allegiance
Members' Code of Conduct
Ministerial Code of Conduct
Induction and training
Internal reporting
INTRODUCTION
Developments since the first report
General principles for use of public resources by Members of Parliament
Recommendation under Section 78(2)
DOCUMENTATION
Members' Guide
Accounting manual
Accountability
Internal Audit measures
External Audit measures
Parliamentary Ethics Adviser
ADMINISTRATION
Structure
Computer systems
ENTITLEMENTS
Parliamentary Remuneration Tribunal (PRT)
Recognition of party political activities as legitimate parliamentary business
Administration of entitlements
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Office services, facilities and equipment
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Shadow Ministers
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Air travel
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Air travel - popular holiday destinations
34
Table 1: Legislative Council - Travel to popular holiday destinations from 1990
to 1998
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Table 2: Legislative Assembly - Travel to popular holiday destinations from
1990 to 1998
35
Table 3: Legislative Council - Five most popular travel destinations from 1990
to 1998
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Table 4: Legislative Assembly - Five most popular travel destinations from
1990 to 1998
35
Travel agents
37
Charter travel
38
Familiarisation with parliamentary, governmental and related matters
39
Frequent flyer points and other reward systems
40
Committee travel
40
CULTURE
43
Oath of Allegiance
Members' Code of Conduct
Ministerial Code of Conduct
Induction and training
Members
Parliament House staff
Electorate officers
Internal reporting
APPENDIX A
NSW Premier’s press release
APPENDIX B
Member’s Code of Conduct
APPENDIX C
Parliamentary Ethics Adviser
APPENDIX D
Ministerial Code of Conduct
ACKNOWLEDGEMENTS
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COMMISSIONER'S PREFACE
This is the second report of the Independent Commission Against Corruption (ICAC) on
the subject of parliamentary entitlements. This report was foreshadowed in the ICAC's
Investigation into Parliamentary and Electorate Travel: First Report, released in April
1998. That report examined the conduct of The Hon Brian Langton MP and six other
Members of Parliament (Members) in relation to the use of travel entitlements.
The purpose of this report is to detail the results of an analysis of Members' use of their
entitlements and allowances and the administrative systems operating within the New
South Wales Parliament, and to make recommendations for change.
To a large extent, the administrative systems within Parliament have evolved over time
without a well thought out, logical blueprint. We live in an era that differs in many ways
from when these systems were established. Now the public expects that Members, in fact
all public officials, should be more accountable, and the expenditure of public funds
more open and transparent. Furthermore, it is important that Members give leadership
to the public sector and the wider community by their own good example-as the ICAC
contends they are elected to do.
The Audit Office of New South Wales assisted the ICAC in its investigation and analysis
with technical expertise and seconded two officers to the project team. A number of
other agencies, including the Council on the Cost of Government (COCOG), the
Premier's Department and The Cabinet Office were also consulted. Valuable assistance
was also given willingly by the administrative staff at Parliament House. The outcomes
of the ICAC's work are, I believe, better as a consequence.
The ICAC interviewed a number of people and gathered and analysed a large amount of
information, either through the course of its investigations, as a result of private and
public hearings, or by issuing notices to Members and other persons to provide
explanations about their use of entitlements and other related matters.
This report contains over 60 recommendations for reform of parliamentary
administrative systems. It is in the public interest that Parliament and its Members show
leadership in pursuing reforms to ensure the effective, efficient and ethical use of public
resources by public officials.
The Hon B S J O'Keefe AM QC
Commissioner
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SUMMARY OF RECOMMENDATIONS
Introduction
1. The ICAC suggests that Parliament consider establishing an Implementation Team to
facilitate and oversee the consideration and implementation of the recommendations
made in this report. The Implementation Team would ideally comprise Members of
Parliament, senior members of the staff of the Parliament, the Parliamentary Ethics
Adviser, representatives of the major political parties, the Premier's Department, The
Audit Office, the Ombudsman's Office, the Council on the Cost of Government and
the ICAC.
2. The ICAC recommends pursuant to section 78(2) of the Independent Commission
Against Corruption Act 1988 that this report be made public forthwith. This enables
either presiding officer of the Houses of Parliament to make the report public,
whether or not Parliament is in session.
Documentation
Members' Guide
3. The Guide should be rewritten to:
4.
a)
promote clarity and remove ambiguity by using plain English
b)
use case studies to highlight the appropriate use of entitlements to aid
understanding
c)
provide checklists for all entitlements to guide Members, electorate staff and
parliamentary administrative staff in the proper use of public resources
d)
include all areas of entitlements, including parliamentary committee travel
guidelines
e)
prominently highlight the requirements of the Members' Code of Conduct
and the consequences of non-compliance with the Guide
f)
make clear the authority for each section of the Guide, such as whether a
condition or entitlement is derived from statute, or determinations made by
a body such as the PRT, or edicts of the Presiding Officers.
The Guide should be regularly updated by a designated officer within the
parliamentary administrative staff, who should also maintain:
a)
a register of the persons to whom a Guide has been issued
b)
a record that each person issued a Guide has received it.
5.
Updates to the Guide should be issued to Guide holders as dated rewritten pages
for ready insertion into the Guide.
6.
The Parliament should have a proactive policy of disclosing entitlements and
conditions of office relating to Members in the interests of accountability, openness
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and transparency and to help deter abuse of entitlements. This could be achieved,
for example, through public release of the Guide on the Parliament's website.
Accounting manual
7.
An accounting manual for procedures and processes should be produced. The draft
user manual for the computer based accounting system should also be finalised and
distributed. Measures should be taken to ensure these manuals are consistent with
information and instructions contained in the Members' Guide.
Accountability
Internal Audit measures
8.
As a priority, the Audit Committee should pursue the completion of a Fraud
Control Plan.
9.
The Audit Committee should seek a greater commitment of resources for the
Internal Audit program.
10. A succession plan should be developed to ensure there is no hiatus in engaging a
replacement Internal Auditor.
11. In future, the Internal Auditor should examine controls over all material accounting
operations included in the Internal Audit plan and ensure that there is some regular
review of all major accounting systems.
12. The Audit Committee should develop an Audit Charter that recognises the rights of
the Internal Auditor to have access to all information, specifying his or her
responsibilities and the ambit of the Internal Auditor's jurisdiction and
independence.
13. The Audit Committee should:
a) include an impartial, suitably qualified person, external to the Parliament, who
has more than observer status
b) ensure the relevant managers within Parliament respond and take prompt action
on all internal audit reports.
14. Non-compliance with internal audit recommendations should be reported to the
Parliament and commented on in the Auditor-General's management letters to the
Parliament.
External Audit measures
15. The Parliament be included in the appropriate schedule of the relevant legislation
to give the Auditor-General statutory jurisdiction to audit the accounts and systems
of the Parliament.
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Administration
Structure
16. The administrative structure within Parliament should be reviewed to achieve
greater efficiency and effectiveness, with particular emphasis on the appropriate
staffing levels in the Parliamentary Accounts Section and on the rules for contact by
Members with the administration.
Computer systems
17. Adequate resources should be provided to ensure speedy implementation of the
new software solution. Program specifications, especially those relating to
management reports, should be developed in consultation with administrative staff,
and internal and external auditors.
Entitlements
Parliamentary Remuneration Tribunal (PRT)
18. The PRT should consider developing a framework to ensure the ethical use of
public resources and issue guidelines or rules on the allowances and entitlements
Members receive.
19. Ideally, the determinations of the PRT should have a preamble explaining the
purpose of the entitlements or allowances and the conditions for their use. This
should form part of the guidelines and rules which govern the use of public
resources by Members.
20. It is the ICAC's opinion that, in relation to all entitlements and allowances, the
following principles should apply:
a) Members must be open in the use of public resources and disclose any conflict of
interest in utilising entitlements, be it pecuniary, personal, familial or as a result
of any association
b) in the interests of transparency, Members use entitlements on the understanding
that this use may be made public
c) ultimately, Members are personally accountable for the use of entitlements. This
accountability cannot be delegated, even though authorisation to incur
expenditure may be delegated to electorate staff
d) Members must use entitlements to achieve appropriate value for money while
meeting parliamentary and electorate obligations
e) Members must use entitlements with integrity, that is in an efficient, effective and
ethical manner and in accordance with any relevant guidelines.
21. In the interests of openness and transparency, the PRT's determinations should be
made public.
22. The PRT should be permitted to seek and consider submissions from the public in
formulating its determinations.
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23. Consideration be given to constituting the PRT with three members: one a judicial
officer, another a suitably qualified community representative and the third a
representative of the Auditor-General.
Recognition of party political activities as legitimate parliamentary
business
24. If it is within the capacity of the PRT, the definition "parliamentary duties" should
be clarified so that the following expenses are not eligible for any allowance:
a) activities such as those associated with membership drives
b) funding of mail distributions for non-electorate or non-parliamentary activities
c) costs associated with election campaigning for an individual Member
d) fund raising for other party political Members (such as the purchase of raffle
tickets, raffle prizes or tickets to attend functions, etc)
e) costs previously borne by political parties which are not principally related to a
Member's parliamentary or electorate duties.
Administration of entitlements
25. All entitlements should, to the extent practicable, be globalised on an annual basis.
Under this system, Members would be given an annual monetary allocation for
each entitlement. The PRT would determine the classes and amounts of
entitlements. Members would be personally responsible for managing these funds to
meet their parliamentary and electorate needs. Any proposal to globalise
entitlements must be underpinned by an acceptance of the conditions specified by
the ICAC as the principles that should attach to all entitlements and allowances (see
recommendation 20).
26. Parliament should provide a standard accounting package and appropriate
administrative support to assist Members in the utilisation of their globalised
entitlements.
27. The one entitlements system should apply to all Members across both Houses of
Parliament, whether or not entitlements are globalised.
Office services, facilities and equipment
28. Consideration should be given to excluding persons other than the Member or his
or her staff from using electorate or parliamentary office services, facilities and
equipment allocated to that Member.
29. Members' staff should be precluded from using parliamentary resources or
information for personal gain. In keeping with general public sector practices, only
minimal private use of office equipment should be permitted, as long as this use
does not impede the effective and efficient operation of the electorate or
parliamentary office.
30. Members should be precluded from using parliamentary entitlements and resources
for private business purposes.
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31. Consideration should be given to developing a secondary employment policy for
Members.
32. To protect parliamentary interests, consideration should be given by the
parliamentary administration to developing a secondary employment policy and
possibly a post separation employment policy for electorate staff.
Shadow Ministers
33. The entitlements of Shadow Ministers should be reviewed to reflect adequately their
additional responsibilities, compared to other Members.
Air travel
34. The Legislative Assembly should adopt the system used for air travel by the
Legislative Council.
35. A mechanism should be established to ensure that:
a) payment for air travel is only made after travel has been completed
b) air travel claims are submitted and processed within a reasonable time period.
36. Travel entitlements should be given a monetary value.
Air travel - popular holiday destinations
37. Each Member should permit and facilitate the annual reporting of his or her
individual use of publicly funded travel resources including destinations, frequency,
reason and cost.
38. An approach should be developed by the Parliament to facilitate the uniform and
timely provision of this information.
39. If Members are not inclined to adopt such an approach, then the Auditor-General
should consider publishing the information in the Annual Audit Reports tabled in
Parliament.
Travel agents
40. Members should be accountable for decisions to book travel through nongovernment contractors. Any decisions to use an agent, other than a government
contractor, should be justified in writing, beforehand if practicable, to the Speaker
or President as the case may be, and kept in a manner and place to facilitate
scrutiny.
Charter travel
41. Charter travel arrangements should be amended to ensure that every person
travelling is required to contribute a pro rata proportion of the cost. No person
should be able to travel on a charter without paying his or her way, unless:
a) exceptional circumstances exist (i.e. a specific or urgent need which can be
established by documentary evidence and when there is no capacity to pay, or it
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would be contrary to the public interest to request payment of a pro rata share
for travel)
b) a written request for approval to dispense with recovery of costs, confirmed with
supporting documentation, is approved in writing, beforehand if practicable, by
the Speaker or President, as the case may be
c) the authorisation and all supporting documentation are referred to the Financial
Controller who should maintain a record of the approval for dispensation to
facilitate auditing. It is not envisaged that exceptional circumstances would exist
when Members have exhausted their travel allocation. In those circumstances,
Members would be expected to pay out of their personal funds or transfer funds
from another accounting category, after obtaining the necessary approval.
42. Air charter firms should be required to provide a passenger manifest to the
Parliamentary Accounts Section when seeking reimbursement for a charter flight in
every instance. A 'no manifest, no payment of account' policy should be introduced.
43. When a manifest has been received by the Parliamentary Accounts Section, a
review should be carried out to ensure that all passengers have contributed a pro
rata proportion of the charter cost, unless approval has been granted to dispense
with the recovery of costs from an individual and that approval is documented.
44. The Member organising the travel should be responsible for ensuring that all
travellers on the charter pay their pro rata portion or obtain the appropriate
dispensation for the recovery of costs.
Familiarisation with parliamentary, governmental and related matters
45. The purpose of travel to Parliament by country Members' staff should be clarified in
the Guide to be principally for "familiarisation with parliamentary, governmental
and related matters".
46. Members should be required to certify the purpose of travel to Sydney by their staff.
In this way, Members can be made accountable for the proper use of parliamentary
resources by their staff.
Frequent flyer points and other reward systems
47. Parliament should consider a uniform approach to all forms of reward or bonus
schemes, with a view to expanding the application of and otherwise amending the
relevant guidelines.
Committee travel
48. Clear guidelines covering administrative processes on committee travel should be
published. The guidelines should address:
a) the use of parliamentary credit cards with specific attention on the types of
expenditure not permitted
b) the records required to be retained by the Committee Clerk
c) procedures for reconciling committee accounts, including time limits for
reconciling and recouping costs.
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49. Guidelines should be produced for committee members, explaining their rights,
duties and obligations in regard to travel as members of parliamentary committees.
50. The details of all committee travel undertaken by Members should be published
annually to encourage transparency and accountability in relation to decisions
about travel and travel arrangements. For each trip taken the details should include:
a) the dates and destinations involved
b) a list of all Members travelling
c) the purpose of the trip
d) whether a report was produced or if there was some other output.
51. Submissions seeking approval for travel should specify anticipated outputs by which
the committee's efforts can be judged.
52. There should be a reasonable time limit for the submission of reports from a
committee returning from an overseas trip.
Culture
Oath of Allegiance
53. Members should take an oath that includes an obligation to well and truly serve the
interests of the people of New South Wales and to abide by the Members' Code of
Conduct.
Members' Code of Conduct
54. The Ethics Committees of each House should consider the appropriateness of the
phrases "private financial benefit" and "decisions in which they participate" used in
Clause 1 of the Members' Code of Conduct and recommend clarification of their
meaning by appropriate amendment.
55. The Ethics Committees of each House should consider the appropriateness of the
phrase "payment or any other personal benefit" in Clause 2 of the Members' Code
of Conduct and recommend an appropriate amendment to clarify its meaning.
56. The Ethics Committees of each House should consider the appropriateness of the
term "private benefit" used in Clause 5 of the Members' Code of Conduct and
recommend an appropriate amendment to clarify its meaning.
57. The Ethics Committees of each House should consider whether the term "legitimate
activities" in Clause 6 of the Members' Code of Conduct should be amended to
define these as activities whose principal purpose is for parliamentary or electorate
benefit.
Ministerial Code of Conduct
58. As a priority, a new Ministerial Code of Conduct should be implemented. This code
should reflect the greater responsibilities and duties of Ministers compared to other
Members.
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Induction and training
59. There should be a structured and comprehensive induction program for Members,
their staff and administrative personnel within Parliament. This should include
components on ethical behaviour, legal obligations of Members and dilemma
resolution.
60. Specifically, as is their function under the Independent Commission Against
Corruption Act 1988, the Ethics Committee of each House should jointly develop
an education program to examine and explain the ethical standards and legal
obligations applying to all Members. Consideration should also be given to whether
continuing education of Members through refresher and update courses is
appropriate.
61. Induction and education programs for Members, their staff and administrative
personnel should cover their respective Codes of Conduct. These programs should
include information about the options available when reporting suspect behaviour.
62. Refresher training sessions should be undertaken to remind Members, their staff
and administrative personnel of the conditions attached to the use of Members'
entitlements and allowances. Consideration should also be given to undertaking this
refresher training at the beginning of each Parliament.
Internal reporting
63. Parliament should review its internal reporting mechanisms to ensure they readily
facilitate the reporting of suspected corrupt conduct, maladministration or
substantial waste of public resources. Specifically, consideration should be given to
developing strategies to overcome the power imbalance that currently favours
Members over electorate and parliamentary administrative staff.
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INTRODUCTION
This report follows the ICAC's Investigation into Parliamentary and Electorate Travel:
First Report released in April 1998. As foreshadowed in that report, the Corruption
Prevention Section of the ICAC has undertaken an analysis of systems operating within
the New South Wales Parliament to determine whether they are, or may be, conducive
to corrupt conduct. The ICAC has also looked at other factors that may influence the
behaviour of Members of Parliament (Members) and the way they use the public
resources allocated to them.
Irregularities in the use of entitlements have damaged the reputations of Members in
New South Wales and elsewhere in Australia. These irregularities often occur because
systems are inadequate, but not only for this reason. The ICAC's work has disclosed a
number of system deficiencies in the New South Wales Parliament that require remedial
action. However, system changes are only part of the solution. This report also makes
recommendations about control, structural and behavioural measures that should be
taken.
The ICAC envisages that acceptance of the recommendations which follow will lead to a
more ethical and accountable Parliament, and help restore public confidence in
Members generally, as representatives of the people and protectors of the public interest.
It is vital to the economic and social wellbeing of our society that those who have a
mandate to represent and protect the public interest, be models of correct behaviour.
At the outset, the ICAC acknowledges that this report can only make recommendations
for change. The ICAC has no authority to implement the recommendations contained in
this report. The responsibility for reforming practices and systems that give rise to
potential corrupt conduct within Parliament lies with a number of bodies and people.
They include:
§
The Government, which has responsibility for the resources allocated to the
Parliament for administrative and support services.
§
The Speaker of the Legislative Assembly (Lower House) and the President of the
Legislative Council (Upper House), who are responsible for the resources within
Parliament which they may provide for the Members of their Houses, and the
guidelines they set for the use of those resources.
§
The Clerk of the Assembly and the Clerk of the Parliaments, as leaders of their
respective administrative sections. They provide leadership to administrative staff
and act as the highest level of interface between the public servants working for
Parliament on the one hand and the Members on the other.
§
The Parliamentary Remuneration Tribunal (PRT) which makes determinations
about, and specifies the conditions for use of, Members' allowances and
entitlements.
§
The leaders of political parties and other persons influential within such parties, to
ensure that the correct behaviour is modelled and that high standards of behaviour
for Members, which meet reasonable community expectations, are established,
promoted and enforced.
§
Each Member of the Legislative Assembly and the Legislative Council, who can
individually and together, enhance the image of Members by supporting appropriate
reforms and behaviours.
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§
The media, as they are one of the most effective means of reaching and influencing
the people who vote Members into or out of office. The ICAC seeks the media's
support to inform people throughout New South Wales objectively about efforts to
reform the systems within Parliament to achieve a more efficient, effective and
ethical use of resources.
§
The people of New South Wales, by demanding high standards of their
parliamentary representatives.
For any reform to be permanent, it must be undertaken with the full consent and
support of those identified above. This will require an ongoing process of interaction
between the above bodies and people and their willingness to commit time and
resources to facilitate the desired outcome.
Recommendation
1.
The ICAC suggests that Parliament consider establishing an Implementation Team to
facilitate and oversee the consideration and implementation of the recommendations
made in this report. The Implementation Team would ideally comprise Members of
Parliament, senior members of the staff of Parliament, the Parliamentary Ethics Adviser,
representatives of the major political parties, the Premier's Department, The Audit Office,
the Ombudsman's Office, the Council on the Cost of Government and the ICAC.
Within the next year, the ICAC will issue a monitoring report on the implementation of
the recommendations in this report.
Developments since the first report
Following the ICAC's first report into parliamentary and electorate travel, the Premier of
New South Wales, The Hon R Carr MP, issued a press release outlining the
Government's response to the ICAC's findings and undertaking to make reforms to the
system of Members' entitlements (Appendix A).
The following have also occurred since the ICAC's first report mentioned above:
§
Both Houses of Parliament have adopted a Code of Conduct after some four years
of deliberation (Appendix B).
§
A number of amendments have been made to the Parliamentary Remuneration Act
1989 to extend the jurisdiction of the PRT and make it more independent from
government. The amendments include:
i.
removing the Premier's power to make determinations about Members'
entitlements, and giving that authority to the PRT
ii. giving the PRT
superannuation
jurisdiction
to
make
determinations
about
Members'
iii. including party political activities in the definition of "parliamentary business" so
that, as determined, Members can receive publicly funded allowances and
entitlements for their party political activities and expenses.
§
The ICAC has, for the first time, made a submission to the PRT on its annual
determination of Members' allowances and entitlements.
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§
An Ethics Adviser has been appointed by the Parliament, following a resolution of
both Houses (Appendix C).
§
The Council on the Cost of Government (COCOG) has reviewed the administrative
systems operating within Parliament. The ICAC has assisted the COCOG with this
review. It is understood the COCOG will provide a report to the Premier with
recommendations for change.
§
The annual audit of the Parliament has been completed by The Audit Office. To
assist this audit, the ICAC provided advice about the observations and findings
made during its analysis of parliamentary systems.
All these actions are welcome and long overdue. The co-operation between agencies,
evidenced above, is indicative of the broad concern for the present systems operating
within Parliament. These developments have occurred as a response to this concern
and, the ICAC believes, as a result of public concern.
The ICAC's attention has turned to Members as the result of the behaviour of a few, and
it would be unfair and inappropriate to extend these concerns about individuals to all
Members. The ICAC does not want to impinge upon the discretion of Members to use
resources in the manner that best helps them to meet their electorate and parliamentary
responsibilities. However, the ICAC believes there must be minimum standards expected
of Members in the use of public resources. The principles upon which these standards
should be based are listed overleaf.
General principles for use of public resources by Members of
Parliament
§
Openness and transparency - the reasons for, and the circumstances surrounding,
the use of public resources by individual Members should be publicly available. The
process by which funds are expended or collected should also be publicly known.
§
Accountability - ultimately, Members are personally responsible for the way they use
the public resources entrusted to them. This responsibility cannot be avoided, even
though delegations may exist for others to incur costs on a Member's behalf. Records
about a Member's use of public resources should be kept to facilitate scrutiny if
required.
§
Value for money - when using the public resources entrusted to them to perform
their official duties, Members must seek the appropriate value for money in the
circumstances.
§
Integrity - Members must use public resources only for the purposes for which they
are provided and in accordance with the conditions attached to the provision of
such resources.
Circumstances may occur in which non-compliance with the above principles would be
appropriate, such as in matters of significant public interest or personal security, but
these would be rare. Any deviation from the stated principles should be supported by
detailed reasoning and recorded appropriately to facilitate scrutiny, if required.
The application of the above principles in relation to Members is dealt with later in the
report, which looks at five main areas:
§
documentation
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§
accountability
§
administration
§
entitlements
§
culture.
Recommendation under Section 78(2)
Recommendation
2.
The ICAC recommends pursuant to section 78(2) of the Independent Commission
Against Corruption Act 1988 that this report be made public forthwith. This enables either
presiding officer of the Houses of Parliament to make the report public, whether or not
Parliament is in session.
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DOCUMENTATION
Members' Guide
The primary reference for Members of the Legislative Assembly and their staff about the
provision and use of entitlements is A Guide to Members' Entitlements, Facilities and
Services, March 1995. Legislative Councillors have a similar guide, The Legislative
Council-Members' Guide, May 1995. These Guides also serve as a manual of policies
and procedures for administrative staff. The term "Guide" will be used to refer to the
Legislative Assembly Guide throughout this report.
During the ICAC's investigation into parliamentary and electorate travel, it was apparent
that there are considerable deficiencies in the Guide. These included:
§
the structure of the Guide is not reader friendly, making it difficult to use
§
it is not written in plain English
§
in some areas it lacks sufficient detail and clarity leading to ambiguity, or claims of
ambiguity
§
it does not cover all uses of parliamentary resources. For example, it lacks formal
guidelines for travel by parliamentary committees
§
it may be inconsistent with the Parliamentary Accounts Section's procedures
§
it is not a publicly available document because Parliament has a policy which does
not permit the public disclosure of Members' entitlements
§
updates to the Guide are usually by memorandum rather than issuing a rewritten
and dated page to be inserted into the Guide. This makes it difficult for Guide
holders to update their copies.
Until recently, the Guide's status was also unclear, and there was debate about whether
it comprised formal policies and procedures or merely guidelines. For example, during
the ICAC's investigation into parliamentary and electorate travel, it was submitted on
behalf of The Hon Brian Langton MP that the guidelines in the Guide had no legal
effect, or alternatively if they did, they only provided the terms of a contract under
which the entitlements were issued and used. This view was not taken by the ICAC
Commissioner, nor by the New South Wales Supreme Court on appeal.
This issue has largely been resolved by the recent adoption of the Members' Code of
Conduct by both Houses of Parliament, which states at Clause 4:
Members must apply the public resources to which they are granted access
according to any guidelines or rules about the use of those resources.
The status of the Guide is now clear. It is arguably one of the measures by which
Members' use of public resources will be judged. Failure to use public resources in the
manner specified in the Guide will mean Members have breached their Code of
Conduct, which may, in turn, amount to corrupt conduct under the Independent
Commission Against Corruption Act 1988.
Given the importance of the Guide in the context of the adoption of the recent Code of
Conduct by both Houses of Parliament, and the deficiencies in the Guide described
above, the following action is recommended.
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Recommendations
3. The Guide should be rewritten to:
a) promote clarity and remove ambiguity by using plain English
b) use case studies to highlight the appropriate use of entitlements to aid understanding
c) provide checklists for all entitlements to guide Members, electorate staff and
parliamentary administrative staff in the proper use of public resources
d) include all areas of entitlements, including parliamentary committee travel guidelines
e) prominently highlight the requirements of the Members' Code of Conduct and the
consequences of non-compliance with the Guide
f) make clear the authority for each section of the Guide, such as whether a condition or
entitlement is derived from statute, determinations made by a body such as the PRT, or
edicts of the Presiding Officers.
4. The Guide should be regularly updated by a designated officer within the parliamentary
administrative staff who should also maintain:
a) a register of the persons to whom a Guide has been issued
b) a record that each person issued a Guide has received it.
5. Updates to the Guide should be issued to Guide holders as dated, rewritten pages for
ready insertion into the Guide.
6. The Parliament should have a proactive policy of disclosing entitlements and conditions of
office relating to Members in the interests of accountability, openness and transparency
and to help deter abuse of entitlements. This could be achieved, for example, through
public release of the Guide on the Parliament's website.
Accounting manual
ICAC Officers observed that there was inadequate documentation relating to the
accounting processes and procedures used by the Parliamentary Accounts Section. Lack
of documentation makes it harder for staff to do their jobs effectively and consistently. In
particular, there was no user manual for the computer based accounting systems.
However, a draft manual for the accounting systems does exist and will be distributed
shortly.
Recommendation
7.
An accounting manual for procedures and processes should be produced. The draft
user manual for the computer based accounting system should also be finalised and
distributed. Measures should be taken to ensure these manuals are consistent with
information and instructions contained in the Members' Guide.
Accountability
Parliament is not without accountability measures at present. Each year, Members are
required to disclose their pecuniary interests in the Register of Disclosures. Committees,
such as the Standing Committee on Parliamentary Privileges and Ethics of the
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Legislative Council and the Standing Ethics Committee in the Legislative Assembly (the
Ethics Committees) and the Standing Orders and Procedure Committee also assess and
rule on the behaviour of Members and assess the rules under which Members operate.
Parliament also has an Internal Audit program and is audited annually by an external
auditor, albeit by invitation. All these measures are appropriate and useful.
Despite the above measures, the ICAC discovered that accountability mechanisms in the
use of public resources are lacking. The low priority given to establishing and
maintaining accountability mechanisms creates the perception that parliamentary funds
and efforts tend not to be directed towards establishing more effective control of
parliamentary resources. Specific problem areas are discussed below.
Internal Audit measures
The Parliament has no Fraud Control Plan.
Fraud Control planning is an essential measure in managing risks and establishing
appropriate controls.
On 7 June 1990, the Premier's Department advised all agencies of a new policy
requiring each agency to establish strategies for prevention of internal and external
fraud. Chief Executives would be responsible for determining and implementing
appropriate fraud control measures. The Premier's Department issues memoranda and
directions under the Public Sector Management Act 1988. As the Parliament is not
mentioned in the schedules to the Public Sector Management Act 1988 , it is unclear
whether Premier's Department memoranda bind the Parliament's administration.
Generally, although not compelled to do so, Parliament voluntarily complies with other
sector wide initiatives and directives, such as Treasurer's Directions.
The Audit Office, Treasury and the ICAC have all issued publications since June 1990
that advocate implementation of fraud prevention, risk management and corruption
prevention strategies.
In 1996, the Parliament asked its Internal Auditor to develop a Fraud Control Plan.
Even though this task was not finalised before he ceased working for the Parliament, the
Internal Auditor undertook to complete the plan. Despite the endeavours of senior
administrative staff within the Parliamentary Accounts Section, the plan has not yet been
delivered.
The delay in implementing a fraud control or corruption prevention strategy in an
institution as important as the Parliament is difficult to comprehend. Considering the
deficiencies in other accountability measures and controls mentioned in this report,
Parliament has been unnecessarily exposed to considerable risks of fraud for some time.
Recommendation
8.
As a priority, the Audit Committee should pursue the completion of a Fraud Control Plan.
The Internal Audit program is small, under resourced and limited primarily to minor
problem areas.
Implementing an adequately resourced internal audit function will reduce problems, loss
and waste. It should be noted that, up to a certain point, savings on the cost of external
audit will offset increased spending on internal audit.
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Recommendation
9.
The Audit Committee should seek a greater commitment of resources for the Internal
Audit program.
There was no Internal Auditor for many months.
The last contract for internal auditing services expired on 30 November 1996. The
Internal Auditor continued to be engaged by the Parliament on a monthly basis until
January 1998. Despite discussion in an Audit Committee meeting on 27 November
1997 about the need to appoint a new Internal Auditor, only recently have steps been
taken to engage a new auditor. During a time of some difficulty for parliamentary
administrative staff, the absence of an Internal Auditor has increased the burden on
personnel - a burden which could have been avoided with adequate planning and
prompt action. In an organisation with no established fraud or corruption prevention
strategy, the absence of an Internal Auditor was undesirable and exposed the Parliament
to greater risk of losses.
Recommendation
10. A succession plan should be developed to ensure there is no hiatus in engaging a
replacement Internal Auditor.
Internal Audit did not cover each major accounting system for the full financial period.
In previous years, the Internal Auditor did not examine controls of all material
accounting operations included in his approved plan.
Recommendation
11. In future, the Internal Auditor should examine controls over all material accounting
operations included in the Internal Audit plan and ensure that there is some regular
coverage of all major accounting systems.
The responsibilities and rights of the Internal Auditor are not embodied in an Audit
Charter or other policy statement.
Although previous contracts for Internal Auditors have been generally well defined, there
is no Internal Audit Charter which permanently, formally and publicly establishes the
internal audit function, specifies its scope, reporting levels and accountabilities. The
absence of an Audit Charter limits the extent to which the Internal Auditor may pursue
his or her functions with vigour and independence.
Recommendation
12. The Audit Committee should develop an Audit Charter recognising the rights of the
Internal Auditor to have access to all information, specifying his or her responsibilities
and the ambit of the Internal Auditor's jurisdiction and independence.
The role and membership of the Parliament's Audit Committee should be reviewed to
achieve greater effectiveness.
The Parliament's Audit Committee has the responsibility for reviewing the reports of the
Internal Auditor, overseeing implementation of recommendations and generally directing
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the work of the Internal Auditor. As presently constituted, there is strong representation
on the Audit Committee from administrative managers within Parliament, but no
independent representative. While The Audit Office is represented on the committee,
that representation is limited to observer status only.
Internal audit reports identify weaknesses and make recommendations for
improvements. The reports are forwarded to relevant managers within Parliament who,
on occasions, respond to them. It does not appear that senior management has taken
prompt action on all internal audit reports nor that there is a satisfactory system to
ensure management responds to all reports received. The Audit Committee should play
a more vigorous role in ensuring internal audit recommendations are addressed by
senior management.
It is a function of the external auditor to review compliance with internal audit
recommendations. Despite this, the audit of financial statements, typically undertaken by
the external auditor, is not aimed at controls per se. The ICAC believes that noncompliance with internal audit recommendations should be emphasised by the external
auditor in every annual audit to aid resolution of identified problems.
Recommendations
13. The Audit Committee should:
a) include an impartial, suitably qualified person, external to the Parliament, who has
more than observer status
b) ensure the relevant managers within Parliament respond and take prompt action on
all internal audit reports.
14. Non-compliance with internal audit recommendations should be reported to the
Parliament and commented on in the Auditor-General's management letters to the
Parliament.
External Audit measures
Treasury is presently considering a proposal to replace the Public Finance and Audit Act
1983 with a new Act, likely to be called the Financial Management and Accountability
Act . The schedules of this Act will specify which agencies the Auditor-General must
audit. Presently, the schedules of the Public Finance and Audit Act 1983 do not include
the Legislative Assembly or Legislative Council. This means the Auditor-General has no
independent authority to audit the Parliament's accounts. Independent auditing of
operations in all sectors of government helps to ensure transparency and accountability,
as well as minimising opportunities for corruption, maladministration and substantial
waste of public resources.
The Auditor-General does audit the Parliament's accounts and has done so for several
years, but only because it has been the practice of the Speaker and the President to
invite him to do so. Although this arrangement may, prima facie, appear adequate, it is
possible that an invitation might not be extended, thus impeding the free and open
reporting of the Parliament's use of public resources.
It has been suggested recently that the Parliament may consider engaging a private firm
of external auditors to audit the Parliament's accounts. However, the great benefit in
having The Audit Office undertake audits is that the findings of the audits are tabled in
the Auditor-General's annual reports to Parliament, making them public documents. This
may not be the case if private auditors were engaged. Furthermore, the same
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professional standards that are applied to government departments and agencies should
be applied to the accounts of the Parliament.
It may be argued that the Parliament requires a special exemption because of the need
to ensure its independence in our Westminster system of government, and that it should
not be subject to audit in the same way as all other public sector agencies. The fact
remains that its operations are publicly funded and the public has a right to know how
public institutions apply the resources entrusted to them. There is at least as much need
for properly regulated accounting, accountability and financial transparency in our
Parliament as in the rest of the public sector.
The inclusion of the Legislative Assembly and Legislative Council in the appropriate
schedules of the relevant legislation would mean that, like other public sector agencies in
New South Wales, the administration of both Houses will have to comply with
Treasurer's Directions and other financial obligations or conditions imposed by the
relevant Act.
The community justifiably expects that the Parliament will show leadership by accepting
administrative and financial controls and scrutiny no less rigorous than those required of
public sector agencies. Such controls will aid the proper management of public resources
and will raise public confidence in the Parliament.
Recommendation
15. The Parliament be included in the appropriate schedule of the relevant legislation to give
the Auditor-General statutory jurisdiction to audit the accounts and systems of the
Parliament.
Parliamentary Ethics Adviser
A Parliamentary Ethics Adviser was appointed recently to assist Members in the
resolution of ethical dilemmas concerning their roles as Members. This is a part time
position that has only an advisory role for matters raised by Members and does not
extend to legal advice. The position has no responsibility for the effective
implementation of the Members' Code of Conduct, but is guided by the Code in giving
advice. The parameters of the Ethics Adviser's role are set out in Appendix C.
While the Ethics Adviser will no doubt provide some measure of guidance to, and thus
comfort for Members, the Ethics Adviser's specified functions do not provide for any
additional accountability in the conduct of Members.
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ADMINISTRATION
Structure
The bicameral nature of Parliament has resulted in separate administrations for each of
the Houses, notwithstanding both administrations have broadly similar functions. This
duplication is not the most efficient system of administration.
The ICAC is also concerned that the present structure does not permit the independent
management of administrative systems without undue influence from Members or others
who serve the interest of such Members.
Consideration should be given to changing the administrative structures in Parliament in
the interests of economy, clarity and ease of administration. If the administrative
sections were merged, it would be necessary to establish what roles the Clerk of the
Parliaments and the Clerk of the Assembly would have. Neither of these officers has
status under the Constitution Act 1902 . However, they play historically important roles
in the management of their respective Houses, being the most senior public servants in
the administration of the Parliament. If there were to be a single administration, then, in
order to establish clear accountabilities, there should only be one officer responsible for
managing this administration. One suggestion is that Parliament should have a General
Manager who is independent of both Houses, not subject to the direction of either the
Speaker or President and who would have ultimate administrative authority. This would
create a third senior officer and this officer would lack accountability under such a
model.
Arguments against such a proposal have also suggested that the merger of the two
administrations may impinge on parliamentary privilege. Further, some believe
arguments about single administrations being more efficient are unconvincing. In
addition, a proposal to merge the two administrations may trigger s.7A of the
Constitution Act 1902 which requires that any reform which will affect the power of the
Legislative Council must be put to a referendum. This would be costly and may not
succeed. It is open to question whether this provision of the Constitution Act 1902
would be triggered.
Nevertheless, it is clear that the administrative structure within Parliament needs to be
reviewed to achieve greater efficiency and effectiveness. The extent of the review and
the degree of reform taken will be for the Parliament, and each of the Houses of
Parliament, to determine and not the ICAC. However, a single administration under a
General or Office Manager, answerable to the Clerk of the Assembly in respect of
Assembly Members and to the Clerk of the Parliaments, in respect of Council Members,
may be a workable model, provided that the rules specify that contact by Members with
the administration must be through the Clerk of the Assembly, or the Clerk of the
Parliaments, as appropriate.
The administrative system in relation to entitlements also suffers from a lack of
resources, particularly for staffing levels in the Parliamentary Accounts Section. The lack
of resources means that anomalies, problems and possible abuses may not be identified
or addressed.
Recommendation
16. The administrative structure within Parliament should be reviewed to achieve greater
efficiency and effectiveness, with particular emphasis on the appropriate staffing levels in
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the Parliamentary Accounts Section and on the rules for contact by Members with the
administration.
Computer systems
The administration of Members' entitlements is hampered by computer systems that are
incapable of producing reports on demand. Furthermore, systems differ from House to
House. Financial systems should be capable of producing reports that alert users to
anomalies based on specified criteria that establish control mechanisms. These systems
should be simple to use and applicable to both the Legislative Assembly and Legislative
Council.
Genuine efforts are being made by administrative staff within the Parliamentary
Accounts Section to reform practices to prevent anomalies. Some progress has been
made towards simplifying the management of Members' entitlements with the
development of a Members' Entitlement System, used by both Houses. While this system
is a considerable improvement on previous systems, it has limited functionality.
Parliament has recently undertaken to purchase a new finance and human resource
software solution. It is understood this package will be utilised by both Houses.
Recommendation
17. Adequate resources should be provided to ensure speedy implementation of the new
software solution. Program specifications, especially those for management reports,
should be developed in consultation with administrative staff, and internal and external
auditors.
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ENTITLEMENTS
Parliamentary Remuneration Tribunal (PRT)
The ICAC's first report into parliamentary and electorate travel called for a review of the
framework for determining entitlements, including consideration of the role of the PRT.
The ICAC considered it was desirable to:
§
remove Members' entitlements from the political arena and from the ambit of
executive discretion
§
place the entitlements on a statutory basis to ensure this
§
vest the PRT with appropriate powers and resources to achieve this.
Parliament has responded to the above by amending the Parliamentary Remuneration
Act 1989 . These amendments include:
§
giving the PRT the authority to make determinations about Members' entitlements
and allowances. Previously, the Premier had the authority to determine Members'
entitlements
§
extending the jurisdiction of the PRT to make determinations about Members'
superannuation
§
defining "parliamentary business" so that, as determined, Members can receive
publicly funded allowances and entitlements for their party political activities and
expenses.
As a consequence of these amendments, the determinations of the PRT are vitally
important to ensuring an efficient, effective and ethical system of administering
parliamentary allowances. This is especially so given Clause 4 of the Members' Code of
Conduct referred to previously in this report (Appendix B).
The ICAC believes that, ideally, determinations of the PRT should have a preamble
which explains the purpose of the allowances and entitlements and the conditions under
which they are to be used. The preamble should form an operative part of the guidelines
and rules which govern their use.
The PRT is not permitted to seek or receive submissions from the public. Nor are the
determinations of the PRT readily available to the public. In other jurisdictions, such as
South Australia, public submissions on entitlements of Members are permitted. The
entitlements and allowances of Members are increasingly of significant public interest.
An additional measure to improve the level of public confidence and trust in the
Parliament and its Members, would be to publicise the PRT's determinations and even to
permit public submissions to the PRT.
The PRT is constituted by one judicial officer, whose responsibilities under recent
amendments have increased, and are thus more onerous. Other jurisdictions, such as
the Federal Remuneration Tribunal, are constituted by three members, one of whom is a
community representative. Constituting the PRT with more than one member, preferably
three, would relieve the burden of the increased jurisdiction and permit a broader range
of views in considering the entitlements and allowances of Members. A community
representative on the PRT would demonstrate to the public that their views are valued
and are represented in matters of significant interest to them. A third member,
representing, for example, The Audit Office of New South Wales, would help ensure that
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the determinations of the PRT included conditions for use commensurate with applicable
accounting standards and controls applying to the rest of the public sector.
A recent ICAC submission to the PRT included the following points which are restated as
recommendations.
Recommendations
18. The PRT should consider developing a framework to ensure the ethical use of public
resources and issue guidelines or rules on the allowances and entitlements Members
receive.
19. Ideally, the determinations of the PRT should have a preamble explaining the purpose of
the entitlements or allowances and the conditions for their use. This should form part of
the guidelines and rules which govern the use of public resources by Members.
20. It is the ICAC's opinion that, in relation to all entitlements and allowances, the following
principles should apply:
a) Members must be open in the use of public resources and disclose any conflict of
interests in utilising entitlements, be it pecuniary, personal, familial or as a result of
any association
b) in the interests of transparency, Members use entitlements on the understanding that
such use may be made public
c) ultimately, Members are personally accountable for the use of entitlements. This
accountability cannot be delegated, even though authorisation to incur expenditure
may be delegated to electorate staff
d) Members must use entitlements to achieve appropriate value for money while
meeting parliamentary and electorate obligations
e) Members must use entitlements with integrity, that is, in an efficient, effective and
ethical manner and in accordance with any relevant guidelines.
21. In the interests of openness and transparency, the PRT's determinations should be
made public.
22. The PRT should be permitted to seek and consider submissions from the public in
formulating its determinations.
23. Consideration be given to constituting the PRT with three members. One a judicial
officer, another a suitably qualified community representative and the third a
representative of the Auditor-General.
Recognition of party political activities as legitimate
parliamentary business
The Parliamentary Remuneration Act 1989 , recognises the existence of political parties
as part of our parliamentary system by virtue of recent amendments which provide:
(1).General provisions as to determinations of additional entitlements
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(2) In making determinations, the Tribunal is to give effect to the following
principles:
(a) additional entitlements are to be provided for the purpose of facilitating
the efficient performance of the parliamentary duties of Members or
recognised office holders,
(b) parliamentary duties of Members and recognised office holders include
participation in the activities of recognised political parties.
The Parliamentary Remuneration Act 1989 also provides the following definition of
"parliamentary duties":
"parliamentary duties" of a Member or recognised office holder means the
duties that attach to the office of a Member or recognised office holder, and
includes the duties that a Member or recognised office holder is ordinarily
expected to undertake, including participation in the activities of recognised
political parties, and includes any duties prescribed as being within this
definition, but does not include any duties prescribed as being outside this
definition.
From the above amendments it is clear that entitlements can be used to facilitate
participation in the activities of recognised political parties. This interpretation of
"parliamentary duties" is problematic as it could arguably include:
§
activities associated with membership drives
§
funding of mail distributions for non-electorate or non-parliamentary activities
§
costs associated with election campaigning for an individual Member
§
expenses incurred in fund raising for other party political Members (such as the
purchase of raffle tickets, raffle prizes or tickets to attend functions, etc).
A key tenet of public duty is that private advantage should not be gained through the
expenditure of public money. The above illustrates how party political activities could
result in a personal or private gain. A reasonable test might be to establish whether the
principal purpose of the expenditure was for personal, parliamentary or electorate
benefit.
The ICAC is also concerned that a transfer of expenses from political parties to the
public purse may occur under the amended Parliamentary Remuneration Act 1989 . The
system of Members' entitlements and allowances should not be used to fund party
political activities unrelated to a Member's actual electorate or true parliamentary duties.
Historically, these have been borne by the Members themselves or by the political
parties. The amendments should not be seen as an opportunity to reduce the operating
costs of political parties but as recognition that many Members must engage in certain
party political activities in order to discharge their functions and duties as Members.
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Recommendation
24. If it is within the capacity of the PRT, the definition of "parliamentary duties" should be
clarified so that the following expenses are not eligible for any allowance:
a) activities such as those associated with membership drives
b) funding of mail distributions for non-electorate or non-parliamentary activities
c) costs associated with election campaigning for an individual Member
d) fund raising for other party political Members (such as the purchase of raffle tickets,
raffle prizes or tickets to attend functions, etc)
e) costs previously borne by political parties which are not principally related to a
Member's parliamentary or electorate duties.
Administration of entitlements
In its recent submission to the PRT, the ICAC suggested that all Members' entitlements
should be globalised, to the extent practicable. To this end, Members would be given an
annual monetary allocation for each entitlement. Consequently, Members would become
personally responsible for managing these funds to meet their parliamentary and
electorate needs. Arguments for globalising include:
§
the value of entitlements is quantified and this facilitates scrutiny and control
§
Members can exercise greater control over their entitlements to better meet their
electorate and parliamentary responsibilities
§
Members are more personally accountable because of their increased control of
entitlements.
The ICAC's suggestions to the PRT are restated in the following recommendations.
Recommendations
25. All entitlements should, to the extent practicable, be globalised on an annual basis.
Under this system, Members would be given an annual monetary allocation for each
entitlement. The PRT would determine the classes and amounts of entitlements.
Members would be personally responsible for managing these funds to meet their
parliamentary and electorate needs. Any proposal to globalise entitlements must be
underpinned by an acceptance of the conditions specified by the ICAC as the principles
that should attach to all entitlements and allowances (see recommendation 20).
26. Parliament should provide a standard accounting package and appropriate
administrative support to assist Members in the utilisation of their globalised entitlements.
27. The one entitlements system should apply to all Members across both Houses of
Parliament, whether or not entitlements are globalised.
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Office services, facilities and equipment
The Guide details Members' allowances for office services, facilities and equipment.
As stated previously, recent amendments to the Parliamentary Remuneration Act 1989
have made it clear that entitlements can be used to facilitate participation in the
activities of recognised political parties. The amendments also categorise the provision
of office services, facilities and equipment as additional entitlements. This means that
the office support and equipment provided to a Member can be used for party political
purposes or his or her parliamentary or electorate duties and functions. For example, the
office facilities of a Member of the New South Wales Parliament could be used to assist
a campaign for his or her political party in the Federal sphere.
In addition, resources in a Member's office could also be used to support activities
related to:
§
intra-party factions
§
youth wings of political parties
§
other party political activities not associated with the Member's parliamentary or
electorate responsibilities.
Whether the use of the public purse to fund the above activities is actually in the public
interest is questionable. The following case studies illustrate this point.
Case study 1
A Member gave persons within her political party access to her
electorate office and equipment. Access included regular use of:
§
telephones for organising delegates to participate in the party's
annual conference
§
photocopying equipment and paper for producing factional
publications
§
the electorate office for factional meetings
§
postage and stationery for use in mail-outs to faction members
§
computer equipment to design factional publication and leaflets,
and to produce letters.
None of this business was related to the Member's parliamentary or
electorate duties.
It is difficult to argue in the above case study that a public benefit was derived from the
use of facilities provided at public expense for the Member.
The provision of Members' office services, facilities and equipment is also subject to a
number of risks. One risk is the use of electorate office staff, facilities, services and
equipment for private business purposes. This is discussed in the case studies below.
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Case Study 2
A Member used his electorate staff and office partly to run a private
business. During business hours the following activities relating to the
Member's private business were conducted:
§
clients were interviewed by the Member at his electorate office
§
staff were required to handle telephone enquiries, type
correspondence and file official documents
§
business documents were regularly photocopied and faxed by
electorate staff.
The Member did not endeavour to compensate the Parliament for the
private use of these resources, provided to him at public expense.
Case Study 3
An officer employed on a Member's staff issued business cards to
prospective clients, giving the phone number of the Member's office
as a contact number. The officer on the Member's staff marketed
himself as a political lobbyist who was available for hire.
The above case studies represent a clear abuse of parliamentary
entitlements for private gain, not to mention a clear conflict of
interests for the officer employed on the Member's staff.
Recommendations
28. Consideration should be given to excluding persons other than the Member or his or her
staff from using electorate or parliamentary office services, facilities and equipment
allocated to that Member.
29. Members' staff should be precluded from using parliamentary resources or information
for personal gain. In keeping with general public sector practices, only minimal private
use of office equipment should be permitted, as long as this use does not impede the
effective and efficient operation of the electorate or parliamentary office.
30. Members should be precluded from using parliamentary entitlements and resources for
private business purposes.
31. Consideration should be given to developing a secondary employment policy for
Members.
32. To protect parliamentary interests, consideration should be given by the parliamentary
administration to developing a secondary employment policy and possibly a post
separation employment policy for electorate staff.
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Shadow Ministers
The entitlements system should recognise the role of Shadow Ministers. The current
system is a source of problems as it:
§
does not match parliamentary and public expectations that Shadow Ministers
embark on additional activities to fulfil the role of an informed opponent to a
Government Minister who is resourced by a department or agency
§
encourages the misuse of resources as there is a discrepancy between the resources
presently provided and the expectations held of Shadow Ministers.
Case Study 4
Only a Member who travels on a charter can surrender travel
warrants in payment of that charter. In consideration of this rule, a
junior Member was encouraged by a more senior colleague to agree
to undertake charter travel to a rural location for the sole purpose of
assisting a Shadow Minister to meet the cost of the charter. The
junior Member had no official business in the region and was
unavailable to deal with constituent matters during the period of
travel. As a result of this arrangement, the Shadow Minister was able
to retain for future use some of his own travel entitlements, which he
would otherwise have had to use to pay for the charter.
It is not in the public interest for Members to undertake unnecessary travel at public
expense. In such instances, the public is deprived of access to local Members and there
is an increased burden on the public purse. Giving Shadow Ministers additional
resources to meet their obligations would help to prevent such situations from occurring.
Recommendation
33. The entitlements of Shadow Ministers should be reviewed to reflect adequately their
additional responsibilities, compared to other Members.
Air travel
Air travel entitlements for Legislative Assembly Members are provided in the form of
travel warrants. In the Legislative Council no physical warrants are used, instead they
are simply termed "entitlements" and a computer record is kept of their usage.
The use of travel warrants in the Legislative Assembly is complex and cumbersome,
resulting in a number of control deficiencies, some of which are referred to.
A Member using a warrant is required to note the destinations and date of travel and
then sign the warrant. The Member is also required to fill out these details on the
warrant butt. ICAC Officers observed that many Members do not correctly fill out their
warrants. Particular problems concerning the issue and use of warrants include:
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§
a Member refusing to accept possession of a warrant book
§
pre-signing of the warrants in warrant books
§
failure to sign warrants
§
use of correction fluids on warrants to make alterations to details supporting their
use
§
failure to fill in date and destination details
§
failing to return expired warrants
§
failing to submit warrants, for travel undertaken, to the Parliamentary Accounts
Section within a reasonable time.
These deficiencies reveal a lack of control and accountability in the use of warrants,
which increases the burden on staff responsible for monitoring and processing travel
claims. Consequently, the system is difficult for the Parliamentary Accounts Section to
reconcile and is susceptible to abuse. No such difficulties were encountered with the
Legislative Council system.
Weaknesses common to both the Legislative Assembly and Legislative Council travel
entitlement systems are set out.
§
There is no mechanism in place to scrutinise the purposes for which Members
undertake travel.
§
There is a lack of proper mechanisms to ensure that travel is actually undertaken
before payment is made to travel agents. For example, although it would be
fraudulent, Members could conceivably book travel, surrender entitlements to the
Parliamentary administrative staff and later cancel the arrangements and recoup the
cash.
§
The value of travel that can be charged by Members to the public purse is not known
because warrants do not have a specific monetary value.
§
Members often delegate the task of organising travel and completing associated
documents to their staff. While this is a Member's prerogative, it creates the danger
that Members may incorrectly feel that they are unaccountable for any anomalies
which may arise.
§
Members who have exhausted their travel entitlements can arrange for another
Member to accompany them on a charter flight to cover the cost of the trip, even
though there is no necessity for the Member surrendering travel entitlements to
conduct business at the charter destination. In many cases, the total cost of the
charter flight is more expensive than the cost of a single commercial scheduled flight.
Recommendations
34. The Legislative Assembly should adopt the system used for air travel by the Legislative
Council.
35. A mechanism should be established to ensure that:
a) payment for air travel is only made after travel has been completed
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b) air travel claims are submitted and processed within a reasonable time period.
36. Travel entitlements should be given a monetary value.
Air travel - popular holiday destinations
The Guide describes the purposes for which some entitlements are provided. For
example, the air travel section states "Members are provided with air travel entitlements
for electorate and parliamentary business only".
However, an analysis by the ICAC of all Members' travel over the 1990-98 period
suggests that many Members may not be complying with this requirement. The analysis
showed that, excluding travel to or close to home localities and electorates, about 15 per
cent of travel by Members in the Legislative Council and about 23 per cent of travel
undertaken by Members in the Legislative Assembly, was to, or close to, popular holiday
destinations, as set out in the tables.
Table 1: Legislative Council - Travel to popular holiday destinations from 1990 to
1998
Destination
Coolangatta
Coffs Harbour
Port Macquarie
Cairns
Ballina
Noosa
Broome
Lord Howe
Island
Alice Springs
Lizard Island
Maroochydore
Totals
No of trips*
115
32
18
11
10
8
7
5
3
3
3
215
No of
Members
29
17
9
10
9
4
6
4
Most trips by
one Member
18
7
6
2
2
5
2
2
Percentage of
1990-98 travel
8.21
2.28
1.28
0.79
0.71
0.57
0.5
0.43
3
3
3
1
1
1
0.21
0.21
0.21
15.4
* For the purposes of the analysis, travel to and from a particular destination, has been
counted as a single trip.
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Table 2: Legislative Assembly - Travel to popular holiday destinations from 1990 to
1998
Destination
No of trips*
No of Members
218
91
50
35
Coolangatta
Coffs Harbour
Port Macquarie
Lord Howe
Island
Cairns
Gold Coast
Broome
Maroochydore
Hamilton Island
Ballina
Cooktown
Great Keppel
Island
Noosa
South Molle
Island
Totals
79
45
30
26
Most trips by
one Member
22
7
8
3
Percentage of
1990-98 travel
10.36
4.33
2.38
1.66
27
22
16
10
3
2
1
1
24
13
14
8
3
1
1
1
2
3
2
2
1
1
1
1
1.28
1.05
0.76
0.48
0.14
0.10
0.05
0.05
1
1
1
1
1
1
0.05
0.05
478
22.74
* For the purposes of the analysis, travel to and from a particular destination, has been
counted as a single trip.
This is not to suggest that travel to popular holiday destinations by Members is
necessarily for purposes other than electorate or parliamentary business. However, the
comparatively high percentage of travel to or near holiday destinations creates a
perception that Members may be using public resources for private purposes.
The following tables show the five most popular travel destinations during 1990-98,
excluding travel to and from Members' localities or electorates.
Table 3: Legislative Council - Five most popular travel destinations from 1990 to
1998
Destination
1. Coolangatta
2. Melbourne
3. Coffs Harbour
4. Tasmania
5. Perth
Total percentage of
travel during 1990-98
8.21
2.64
2.28
1.93
1.93
Table 4: Legislative Assembly - Five most popular travel destinations from 1990 to
1998
Destination
1. Coolangatta
2. Coffs Harbour
3. Perth
4. Port Macquarie
5. New Zealand
Total percentage of
travel during 1990-98
10.36
4.33
2.95
2.38
2.09
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The above analysis shows that popular holiday destinations figure prominently on the
list of the top five travel destinations overall.
As an illustration of the perception that some Members may be using their parliamentary
travel entitlements for private benefit, the ICAC found:
§
In the course of one year, a Member who openly declared it was his last year in
Parliament and who had minimal travel to popular holiday destinations previously,
made 13 trips to Coolangatta. All these trips included weekend stays, generally
beginning on Saturday and ending on Sunday.
§
Over a period of seven years, approximately 70 per cent of travel taken by one
Member was to popular holiday destinations, many of which included weekend
stays.
§
Some Members openly discuss using their entitlements to go on holidays.
The use of entitlements for private purposes clearly cannot be construed as within the
meaning of the recent amendments to the definition of "parliamentary duties" in the
Parliamentary Remuneration Act 1989. Similarly, private purposes cannot be
contemplated as being within the meaning of the phrase "electorate and parliamentary
business only", used in the Guide.
The resources of Parliament may also be used by some Members for travel which has
the guise of parliamentary business, but whose principal purpose is private benefit. To
illustrate:
Case study 5
En route to an airport to undertake pre-arranged private travel, a
Member called his Electorate Secretary and asked him to hastily
arrange a meeting with a prominent business person or a local
government official in the locality he was travelling to, which was also
a holiday port. The meeting was held late in the afternoon that same
day, a Friday, and lasted a short time only. The purpose of the
meeting was recorded in the Member's diary as to investigate tourism
options for the Member's own electorate. However, the true purpose
of the meeting was to give the guise of the travel having been
undertaken for electorate purposes. The Member returned to his
electorate on Monday, having spent the weekend away. Travel
warrants were surrendered to pay for the air travel. This meant
parliamentary resources were used for what was principally a private
benefit.
Members are not required to give reasons for travel they undertake. The ICAC suggests
that, instead of imposing bureaucratic checks to determine the purpose of Members'
travel, the best deterrent would be for Members to adopt the General principles for
use of public resources by Members of Parliament outlined in this report.
Adoption of these principles would help to restore and enhance public confidence and
trust in the institution of Parliament and its Members. No matter how trustworthy, all
public officials must be subject to scrutiny in their use of public resources. To this end,
the voluntary publishing of details of individual Members' use of travel resources would
help to deter abuse and encourage value for money. Overseas travel by members of
government agencies is contained in the agencies' annual reports as an accountability
measure. It is also an important principle that, in a representative system of government,
Members should be accountable to their constituents.
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Members are well aware of this, as stated in the preamble to the Members' Code of
Conduct:
The electorate is the final arbiter of the conduct of Members and has the
right to dismiss them from office at regular elections.
Acceptance of the following recommendations will enable the electorate to make more
informed decisions about the conduct of their local Member.
Recommendations
37. Each Member should permit and facilitate the annual reporting of his or her individual
use of publicly funded travel resources including destinations, frequency, reason and
cost.
38. An approach should be developed by the Parliament to facilitate the uniform and timely
provision of this information.
39. If Members are not inclined to adopt such an approach, then the Auditor-General should
consider publishing the information in the Annual Audit Reports tabled in Parliament.
Travel agents
The Guide states that air travel should be booked through government contractors,
currently Qantas or Travellers. However, three legitimate exceptions to this general
principle include if:
§
it is impractical due to short notice to book with Qantas or Travellers
§
the physical location of a Member's home or electorate office precludes the use of
Qantas or Travellers booking service
§
the services of Qantas or Travellers are not immediately available.
In practice, many different travel agents are used by Members to book travel. This
means that taxpayers do not receive the benefit of savings from discounts available
through the use of government contract holders. Although in some instances the use of
non-government contractors is justified, such as instances stated above, this is not
always the case. The following case study is an example of an inappropriate use of a
travel agency by Members.
Case Study 6
The ICAC became aware that certain Members were encouraged to
favour a travel agent associated with a particular Member's family.
This arrangement was not in the public interest because:
§
it did not encourage value for money as use of the government
contracted travel agents would have resulted in lower travel costs
§
it gave rise to perceptions of favouritism resulting in private gain
for a parliamentary colleague and his family
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§
there was clearly a conflict of interests for the Members
concerned between the public interest and their colleague's
private financial interest.
Recommendation
40. Members should be accountable for decisions to book travel through non-government
contractors. Any decisions to use an agent, other than a government contractor, should
be justified in writing, beforehand if practicable, to the Speaker or President as the case
may be, and kept in a manner and place to facilitate scrutiny.
Charter travel
Parliamentary accounts staff are required to be advised of a number of matters when
Members travel by charter flight, including who travelled on the flight and which
passengers will be surrendering travel warrants or otherwise making a pro rata payment
for their travel (travellers who do not possess travel warrants are normally required to
pay a pro rata proportion of the cost of the charter).
If this information is not provided, two problems might arise:
§
A person not entitled to travel warrants may avoid paying for his or her share of the
cost of travel undertaken. In this case, private travel could be funded by the public
purse through the travel warrants of another, approved, traveller on the charter.
§
Warrants of a person who did not travel may be submitted for payment of the
charter.
These circumstances actually occurred in the use of travel entitlements by The Hon
Brian Langton MP, the subject of the ICAC's first report on parliamentary and electorate
travel.
An examination undertaken by ICAC Officers of parliamentary travel records revealed:
§
Some charter companies do not forward a passenger manifest to the Parliamentary
Accounts Section, despite being required to do so. This means that it is difficult for
accounts staff to review a travel claim to determine whether the warrants used to
cover the cost of the charter were surrendered by a Member who was a passenger.
§
Passenger lists, to be provided by the Member organising the charter, were
sometimes not provided, inaccurate or falsified.
§
Some passengers who would ordinarily be required to pay a pro rata proportion of
the costs of charter travel were not required to do so, due to inaction on the part of
the Member organising the charter.
Recommendations
41. Charter travel arrangements should be amended to ensure that every person travelling is
required to contribute a pro rata proportion of the cost. No person should be able to
travel on a charter without paying his or her way, unless:
a) exceptional circumstances exist (i.e. a specific or urgent need which can be
established by documentary evidence and when there is no capacity to pay, or it
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would be contrary to the public interest to request payment of a pro rata share for
travel)
b) a written request for approval to dispense with recovery of costs, confirmed with
supporting documentation, is approved in writing, beforehand if practicable, by the
Speaker or President, as the case may be
c) the authorisation and all supporting documentation are referred to the Financial
Controller who should maintain a record of the approval for dispensation to facilitate
auditing. It is not envisaged that exceptional circumstances would exist when
Members have exhausted their travel allocation. In those circumstances, Members
would be expected to pay out of their personal funds or transfer funds from another
accounting category, after obtaining the necessary approval.
42. Air charter firms should be required to provide a passenger manifest to the Parliamentary
Accounts Section when seeking reimbursement for a charter flight in every instance. A
'no manifest, no payment of account' policy should be introduced.
43. When a manifest has been received by the Parliamentary Accounts Section, a review
should be carried out to ensure that all passengers have contributed a pro rata
proportion of the charter cost, unless approval has been granted to dispense with the
recovery of costs from an individual and that approval is documented.
44. The Member organising the travel should be responsible for ensuring that all travellers
on the charter pay their pro rata portion or obtain the appropriate dispensation for the
recovery of costs.
Familiarisation with parliamentary, governmental and related
matters
The Guide states that additional travel entitlements are provided to country Members for
the purpose of bringing staff to Sydney for "familiarisation with parliamentary,
governmental and related matters". The vagueness of this provision leaves this category
of entitlements open to abuse. The following case study illustrates this point.
Case Study 7
Certain Members officially arranged for their staff to attend Parliament
for the purposes of "familiarisation with parliamentary, governmental
and related matters" around Christmas time each year. In reality, their
staff were travelling to Sydney principally for social activities and
shopping. However, official records showed that the purposes for the
visits included a range of functions, such as computer training. This
arrangement involved the incurring of expenses from the public purse
for what was principally a private benefit.
Recommendations
45. The purpose of travel to Parliament by country Members' staff should be clarified in the
Guide to be principally for "familiarisation with parliamentary, governmental and related
matters".
46. Members should be required to certify the purpose of travel to Sydney by their staff. In
this way, Members can be accountable for the proper use of parliamentary resources by
their staff.
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Frequent flyer points and other reward systems
The Guide states:
Members may accrue frequent flyer points offered by Qantas or Ansett
when utilising their air travel warrants, provided any free benefits or trips
obtained are used for parliamentary or electorate business only (not private
use).
The Guide also requires Members wishing to obtain frequent flyer points for private
travel to maintain a separate account for this purpose. There is no similar requirement
for other forms of reward schemes.
The issue of other reward schemes such as bonus points for using credit cards or motel
chains is not addressed in the Guide, and this is problematic. The following case study is
an illustration.
Case Study 8
A Member routinely travelled throughout Australia and overseas on
parliamentary and private business, staying at one particular chain of
motels that offered reward points for frequent travellers. The Member
accumulated reward points for use of accommodation while on
parliamentary business, and the costs were paid by the Parliament.
He subsequently used these points for private travel.
In this case study, the Member obtained a significant private benefit as a result of the
expenditure of public funds.
Conceivably though, a Member could use his or her own credit card to purchase goods
or services that would ordinarily be acquired using parliamentary funds provided to that
particular Member. In such a case, the Member would bear the initial responsibility for
payment, later seeking reimbursement from the Parliamentary Accounts Section. This
would save the public purse the cost of any interest associated with the incurring of such
expenses. Arguably then, the Member might be permitted to keep the benefit of any
reward points accumulated as a result of his or her purchase.
The issue of whether reward points accumulated on personal credit cards or schemes
should be retained by the particular Member for private use, when the reward points
have been earned as a result of purchases of goods and services for official purposes, is
a matter which should be determined by the Parliament. In doing so, Parliament should
have regard to practices in comparable organisations and those adopted by the rest of
the public sector.
Recommendation
47. Parliament should consider a uniform approach to all forms of reward or bonus schemes,
with a view to expanding the application of and otherwise amending the relevant
guidelines.
Committee travel
The Guide fails to address the issue of travel undertaken by parliamentary committees.
This is largely because such travel is not perceived as an individual Member entitlement.
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The Speaker or President approves travel undertaken by committees, based on
submissions. Committees are usually expected to produce a report upon their return as
evidence of the work undertaken.
Committee members undertaking committee travel receive a daily allowance to cover
meals, entertainment and other personal expenses. The Committee Clerk, who
accompanies the committee members on overseas trips, is the usual custodian of a
committee credit card. The committee credit card is for expenses other than Members'
personal expenses.
The ICAC observed:
§
a lack of clear and accessible guidelines on the administrative processes for
committee travel
§
an absence of guidelines on the travel entitlements of committee members
§
the appearance of an expectation on the part of some Members that they are
entitled to overseas trips because they are a committee member
§
the power imbalance between committee members and Committee Clerks causes
difficulty in the controlled use of parliamentary credit cards.
To illustrate:
Case Study 9
A parliamentary committee travelled overseas. A number of the
committee members applied inappropriate pressure on the Committee
Clerk to use the committee's credit card to incur private expenses
associated with tourist activities. The Committee Clerk relented and
considerable costs were incurred, both at the point of sale and in
reconciling and recouping costs from committee members many
months later.
The ICAC was informed that after committee accounts have been reconciled, committee
members may be asked to reimburse the Parliamentary Accounts Section for the private
costs paid by the Committee Clerk on the committee credit card. Typically, this is not
until many months have passed and the Parliament has already paid the credit card
account. Committee members therefore have effectively the benefit of an interest free
loan for the period between the incurring of the costs and the repayment of those costs
by the individual Member.
Recommendations
48. Clear guidelines covering administrative processes on committee travel should be
published. The guidelines should address:
a) the use of parliamentary credit cards with specific attention on the types of
expenditure not permitted
b) the records required to be retained by the Committee Clerk
c) procedures for reconciling committee accounts, including time limits for reconciling
and recouping costs.
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49. Guidelines should be produced for committee members explaining their rights, duties
and obligations in regard to travel as members of parliamentary committees.
50. The details of all committee travel undertaken by Members should be published annually
to encourage transparency and accountability in relation to decisions about travel and
travel arrangements. For each trip taken the details should include:
a) the dates and destinations involved
b) a list of all Members travelling
c) the purpose of the trip
d) whether a report was produced or if there was some other output.
51. Submissions seeking approval for travel should specify anticipated outputs by which the
committee's efforts can be judged.
52. There should be a reasonable time limit for the submission of reports from a committee
returning from an overseas trip.
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C ULT UR E
In his 1991 Report on Investigation Concerning Neal and Mochalski , the ICAC's first
Commissioner, Mr Ian Temby QC observed:
§
it might well be thought that Members should be required and permitted to swear an
oath which is aimed at the people generally, as well as at the Sovereign.
§
Parliament should consider developing a Code of Conduct.
§
little was done to instruct or advise new Members as to how they should carry out
their "distinct and sometimes competing roles". Political parties did a certain amount
and new Members turned to more experienced Members for counsel. Otherwise they
merely learnt on the job.
§
it was unlikely that our elected representatives could faithfully say they received an
appropriate level of training and guidance from all necessary areas, and thus they
were obliged to address this deficiency.
§
the Parliament is such an important institution that more should be done by it to
help ensure Members do the right thing.
During the ICAC's most recent analysis of parliamentary systems, the ICAC observed:
§
the Oath of Allegiance taken by Members does not include a commitment to the
people of New South Wales to act in their interests and does not reflect the
responsibilities of a Member.
§
the absence of a Code of Conduct for Members has supported a culture which does
not appear readily to accommodate the key notions of accountability, openness and
transparency, value for money and integrity in the use of public resources.
§
there is no on-going training or education program for Members and staff on their
roles, rights and responsibilities. There is no formal, comprehensive induction
program for Members or their electorate staff to educate them in the policies,
practices and procedures which relate to the entitlements and responsibilities of
Members and their staff, or the pitfalls of non-compliance. Members and their staff
are not provided with ethics training.
§
The prevailing culture within Parliament appears to be one in which primacy is often
given to the interests of Members, including a propensity to keep secret the
entitlements of Members and not to make public their usage of entitlements, rather
than observe their public obligation to obtain value for money. Existing structures,
systems and some personnel contribute to the perpetuation of this culture.
Initiatives suggested by the ICAC in the past with regard to these matters have not been
given a high priority. The low priority given to these matters suggests that in the absence
of a crisis, parliamentary priorities tend not to be directed to establishing more effective
controls.
However, now that Parliament has adopted a Code of Conduct, renewed efforts should
be taken to address the other concerns raised by the ICAC. Sufficient linkage should be
created between the Code of Conduct, the Oath or Oaths of Office and any induction or
training given to Members, their staff and the administrative personnel within
Parliament. This would constitute a package of measures intended to ensure public
confidence in the institution of Parliament and in its Members.
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Oath of Allegiance
Section 12 of The Constitution Act 1902 provides that no Member may sit or vote until
they have taken an oath of allegiance. An affirmation may be taken in lieu of an oath.
The importance of the Oath of Allegiance is that it is a public undertaking given by a
person to become a Member of Parliament, one of the highest public offices obtainable.
The Oath of Allegiance presently takes the form:
I, do swear that I will be faithful and bear true allegiance to Her Majesty
Queen Elizabeth, Her Heirs and Successors according to law.
So help me God.
The present form of oath does not mention a duty to serve the people of New South
Wales or abide by the Code of Conduct. To emphasise this obligation to the public, and
the requirement to be bound by the Members' Code of Conduct, the Oath could be
reworded to include such an obligation.
It is likely that any proposal to change the Oath taken by Members will raise issues
associated with allegiance to a Sovereign and whether Australia should become a
republic. Consequently, such a reform may become a political issue. The ICAC is
mindful of this point, but believes that the public interest compels consideration of a new
form of oath for Members. One way of avoiding such an issue would be to add a further
oath to that already provided in the Constitution Act 1902.
Recommendation
53. Members should take an oath that includes an obligation to well and truly serve the
interests of the people of New South Wales and to abide by the Members' Code of
Conduct.
Members' Code of Conduct
The path to the adoption of a Code of Conduct for Members has been long. Following
the ICAC's Report on Investigation into The Metherell Resignation and Appointment ,
June 1992, and subsequent court action taken by The Hon Nick Greiner to overturn the
finding of corruption made against him, the Court held, inter alia, that in the absence of
an objective standard, for example a Code of Conduct for Members, it was not possible
to judge whether their particular behaviour was corrupt, unless it was also illegal. This
meant there was a significant gap in the jurisdiction for the ICAC in respect of Members.
Most other public sector and local government authorities have codes of conduct, which
meant that the Parliament was out of step with modern public sector management. In
response to the Court's finding, Parliament amended the Independent Commission
Against Corruption Act 1988 in 1994 to provide for the formation of ethics committees
for each of the Houses of Parliament which would have responsibility for:
§
preparation of a draft code of conduct for their respective Houses and for drafting
amendments to any such codes already adopted
§
carrying out educative work relating to ethical standards applying to Members of
their respective Houses
§
giving advice on ethical standards in response to requests for advice by the
respective Houses, but not in relation to actual or alleged conduct of any particular
person.
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The Independent Commission Against Corruption Act 1988 was amended further at that
time to expand the definition of corrupt conduct to include conduct by a Member that
could constitute or involve a particular breach of an applicable code of conduct. This
made the importance of a code of conduct for Members more apparent. The existence of
such a code means that the ICAC can make a finding of corruption under the
Independent Commission Against Corruption Act 1988 if a Member breaches the Code
of Conduct, even if the conduct is not otherwise illegal.
Both Ethics Committees were required to present a draft code of conduct for
consideration of the respective Houses no later than 29 October 1996. This did not
occur and it was not until 5 May 1998 that the Legislative Assembly adopted a code of
conduct. The Legislative Council adopted the same code of conduct, but not until 1 July
1998. The Members' Code of Conduct that was adopted differs significantly from the
draft preferred by the relevant committees (see Appendix B for Members' Code of
Conduct).
Apart from giving the ICAC an objective measure against which to assess the conduct of
Members, the Code of Conduct has another purpose, to regulate or direct Members'
behaviour. The mere existence of a code of conduct cannot bring about a change in
behaviour. The degree to which a code of conduct is implemented and enforced can.
This requires a commitment from those concerned, in terms of resources and effort, to
make a code of conduct work. There must be a decision on the part of those to whom a
code of conduct applies that they will make it work. That is the challenge before
Members now. Will the Code of Conduct merely exist as a yardstick by which behaviour
can be judged to be "good" or "bad" in forums such as the ICAC? Or will the Parliament
earnestly endeavour to implement the Code of Conduct so that it permeates the very
fabric of the institution and assists in restoring and enhancing public confidence in the
Parliament and its Members?
The Code of Conduct is not enshrined in legislation. It has been adopted by resolution
of each of the Houses. The Cabinet Office has advised Officers of the ICAC that, as a
general principle, because the Independent Commission Against Corruption Act 1988
requires the Parliament to have a Code of Conduct for its Members, the Code of
Conduct is unlike ordinary resolutions and will continue to apply even when Parliament
is prorogued.
The Code of Conduct is deficient in a number of respects.
The preamble to the Code of Conduct states, inter alia, that:
Members acknowledge their responsibility to maintain the public trust
placed in them by performing their duties with honesty and integrity,
respecting the law and institution of Parliament, and using their influence to
advance the common good of the people of New South Wales.
On one view of the law, the preamble does not have the effect of creating obligations.
However, the Code of Conduct proceeds to prescribe the obligations of Members.
(Clause) 1. Disclosure of conflict of interest
(a) Members must take all reasonable steps to declare any conflict of
interest between their private financial interests and decisions in which they
participate in the execution of their office.
[Parts (b) and (c) of this Clause are not reproduced here.]
The emphasis in this part of the Code of Conduct is on private financial benefit.
Members may have friends, families or favoured causes whose interests may give rise to
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a conflict of interests for the Member by virtue of their relationship, and these may not
only be limited to pecuniary interests. The Code of Conduct does not appear to
contemplate or capture these circumstances.
In Local Government, councillors are precluded from speaking or voting on any matter
in which they, or associated persons, have a pecuniary conflict of interests. The Local
Government Act 1993 defines associated persons as including, among others, close
relatives and business partners. There is no such provision in the circumstances covered
by Clause 1 of the Code of Conduct.
Neither does this part of the Code of Conduct address circumstances in which Members
may be capable of considerable influence but do not formally participate in the decision
making process.
Recommendation
54. The Ethics Committees of each House should consider the appropriateness of the
phrases "private financial benefit" and "decisions in which they participate" used in
Clause 1 of the Members' Code of Conduct and recommend clarification of their meaning
by appropriate amendment.
(Clause) 2. Bribery
Members must not promote any matter, vote on any bill or resolution, or
ask any question in the Parliament or its Committee, in return for payment
or any other personal financial benefit.
This section limits the test for a bribe to "payment or any other personal benefit". The
ICAC's experience, indeed international experience shows, that bribes can also take the
form of benefits or advantage to family members, friends or even favoured causes. An
example of the last category may be funding for elections. The Clause in its present form
does not provide adequate protection against such circumstances.
Recommendation
55. The Ethics Committees of each House should consider the appropriateness of the
phrase "payment or any other personal benefit" used in Clause 2 of the Members' Code
of Conduct and recommend an appropriate amendment to clarify its meaning.
(Clause) 5. Use of confidential information
Members must not knowingly and improperly use official information which
is not in the public domain, or information obtained in confidence in the
course of their parliamentary duties, for the private benefit of themselves or
others.
The test in this clause is whether there is a private benefit for the Member or others.
Conceivably, information could be used when it is difficult to substantiate a direct
private benefit, such as information leaked to discredit an opponent party's policy
proposals or even an opponent in an electoral or parliamentary contest. There may be a
benefit to the Member's own political party, but it may be difficult to substantiate that
any particular Member received a private benefit.
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Recommendation
56. The Ethics Committees of each House should consider the appropriateness of the term
"private benefit" used in Clause 5 of the Members' Code of Conduct and recommend an
appropriate amendment to clarify its meaning.
(Clause) 6. Duties as a Member of Parliament
It is recognised that some Members are non-aligned and others belong to
political parties. Organised parties are a fundamental part of the democratic
process and participation in their activities is within the legitimate activities
of Members.
During the ICAC's Investigation into Parliamentary and Electorate Travel: First Report,
April 1998 , difficulty arose with the ambiguity of the term "parliamentary purposes". It
was argued by a number of witnesses that this included attendance at party political
conferences, as these were forums for making policy which Parliament would ultimately
debate. This section of the Code of Conduct would appear to have been included to
validate such activities.
However, together with recent amendments to the Parliamentary Remuneration Act
1989, this section has the effect of enabling public resources to be diverted for party
political activities, as discussed previously in this report.
The ICAC believes that "legitimate activities" should be defined as activities whose
principal purpose is for parliamentary or electorate benefit.
Recommendation
57. The Ethics Committees of each House should consider whether the term "legitimate
activities" in Clause 6 of the Members' Code of Conduct should be amended to define
these as activities whose principal purpose is for parliamentary or electorate benefit.
Ministerial Code of Conduct
Prior to adoption of the Members' Code of Conduct by both Houses of Parliament, a
separate Code of Conduct applied to Ministers. The ICAC is advised that, in accordance
with a previous determination of the Premier, the Ministerial Code of Conduct has been
subsumed by the Members' Code of Conduct for the time being. A new Ministerial Code
of Conduct is being developed by the Premier's Department.
The ICAC is concerned that Ministers are not presently governed by a Ministerial Code
of Conduct. Further, the adoption of a Code of Conduct by all Members should not
result in a diminution in the standards of behaviour expected of Ministers, whose duties
are more extensive than those of other Members, and whose access to and control of
public funds is far greater than is the case for those Members. A comparison of the
former Ministerial Code of Conduct (see Appendix D) with the inaugural Member's Code
of Conduct clearly shows the former was much more prescriptive than the latter. For
example, much more assistance is given to Ministers about dealing with conflicts of
interests than is given to other Members in the recently adopted Code of Conduct.
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Ministers have greater responsibility than other Members. In addition to the matters
already mentioned, they:
§
make decisions with far reaching consequences on a daily basis
§
have access to highly confidential information; and thus
§
have greater relative power and influence, greater potential to affect the public,
authorise expenditure and deal with publicly owned assets.
It is therefore appropriate that additional measures be prescribed concerning the
conduct of Ministers.
The Members' Code of Conduct is not an adequate replacement for the Ministerial Code
of Conduct, as it permits a lower level of disclosure of conflicts of interests and a lower
threshold of responsibility.
Recommendation
58. As a priority, a new Ministerial Code of Conduct should be implemented. This code
should reflect the greater responsibilities and duties of Ministers compared to other
Members.
Induction and training
Members
Currently, upon entering Parliament, Members are given up to two days induction or
briefing. Contributions are made at group briefings by various members of the
parliamentary staff, such as the Clerk of the Legislative Assembly, Clerk of the
Parliaments and the Financial Controller. During the briefings, Members are issued with
the Guide and various other information booklets. When new Members enter Parliament
after a by-election, they receive individual briefings.
The induction system for new Members is not entirely formalised. Presently, check lists
are being finalised to ensure consistency for all Members in the induction.
As stated previously, the Members' induction program lacks an ethics component.
Similarly, there is no ongoing training or education program for Members on their roles
and responsibilities, including their use of entitlements.
The lack of ethics training for Members is regrettable given the potential for ethical
dilemmas associated with the work of Members. It is understood that no training has
been given to Members in the Members' Code of Conduct adopted initially some six
months ago.
Parliament House staff
Parliament House staff receive an induction package upon commencing employment.
Staff from the two Houses of Parliament have different induction packages. There is no
formal induction course and most training in relevant systems is provided on the job.
A code of conduct is provided in the induction package. However, staff are not required
to sign the code or any other documents relating to ethical issues such as confidentiality,
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nor is there any formal training in the code or its application to the work to be
performed.
Electorate officers
The induction process for electorate officers is the same process for Parliament House
staff, with the exception that electorate officers receive an additional two days induction
covering general orientation issues and computer training.
Recommendations
59. There should be a structured and comprehensive induction program for Members, their
staff and administrative personnel within Parliament. This should include components on
ethical behaviour, legal obligations of Members and dilemma resolution.
60. Specifically, as is their function under the Independent Commission Against Corruption
Act 1988, the Ethics Committee of each House should jointly develop an education
program to examine and explain the ethical standards and legal obligations applying to
all Members. Consideration should also be given to whether continuing education of
Members through refresher and update courses is appropriate.
61. Induction and education programs for Members, their staff and administrative personnel
should cover their respective Codes of Conduct. These programs should include
information about the options available when reporting suspect behaviour.
62. Refresher training sessions should be undertaken to remind Members, their staff and
administrative personnel of the conditions attached to the use of Members' entitlements
and allowances. Consideration should also be given to undertaking this refresher training
at the beginning of each Parliament.
Internal reporting
The ICAC has observed that the relationship between parliamentary staff and Members
in relation to administration is a source of problems and tension, due to an unequal
balance of power which strongly favours Members. This imbalance places constraints on
the institution of Parliament in dealing with suspected abuse of entitlements by
Members. Staff may be understandably reluctant to confront Members who have an
anomaly in relation to the use of an entitlement. Some Members also resist accepting
advice, or responding to requests from staff and use their superior position adversely
towards staff.
There is an absence of an effective internal reporting mechanism for staff. The ICAC
found that staff are not familiar with the provisions of the Protected Disclosures Act
1994. The Clerk of the Assembly and Clerk of the Parliaments are the administrative
leaders of the respective Houses. They are the key interface between the administration
and Members in terms of rectifying anomalies or problems in the use of entitlements.
Ultimately, it is they who must ensure that problems found by administrative staff in the
use of entitlements by Members are appropriately resolved. It is their responsibility to
ensure that safe and effective procedures are in place for all staff to report suspected
corrupt conduct, maladministration or substantial waste of public resources.
Leadership needs to be shown by senior managers in relation to the reporting of any
such behaviour. That leadership should be backed by programs or strategies to rectify
power imbalances and encourage public officials within Parliament to carry out their
duties properly and impartially.
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Recommendation
63. Parliament should review its internal reporting mechanisms to ensure they readily
facilitate the reporting of suspected corrupt conduct, maladministration or substantial
waste of public resources. Specifically, consideration should be given to developing
strategies to overcome the power imbalance that currently favours Members over
electorate and parliamentary administrative staff.
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APPENDIX A
NSW Premier’s press release
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APPENDIX B
Member’s Code of Conduct
Preamble
§
The Members of the Legislative Assembly and the Legislative Council have reached
agreement on a Code of Conduct which is to apply to all Members of Parliament.
§
Members of Parliament recognise that they are in the unique position of being
responsible to the electorate. The electorate is the final arbiter of the conduct of
Members of Parliament and has the right to dismiss them from office at regular
elections.
§
Members of Parliament accordingly acknowledge their responsibility to maintain the
public trust placed in them by performing their duties with honesty and integrity,
respecting the law and the institution of Parliament, and using their influence to
advance the common good of the people of New South Wales.
The Code
1.
Disclosure of conflict of interest
(a) Members of Parliament must take all reasonable steps to declare any conflict of
interest between their private financial interests and decisions in which they
participate in the execution of their office.
(b) This may be done through declaring their interests on the Register of
Disclosures of the relevant House or through declaring their interest when
speaking on the matter in the House or a Committee, or in any other public
and appropriate manner.
(c)
2.
A conflict of interest does not exist where the member is only affected as a
member of the public or a member of a broad class.
Bribery
Members must not promote any matter, vote on any bill or resolution, or ask any
question in the parliament or its Committees, in return for payment or any other
personal financial benefit.
3.
Gifts
(a) Members must declare all gifts and benefits received in connection with their
official duties, in accordance with the requirements for the disclosure of
pecuniary interests.
(b) Members must not accepts gifts that may pose a conflict of interest or which
might give the appearance of an attempt to corruptly influence the Member in
the exercise of his or her duties.
(c)
Members may accept political contributions in accordance with Part 6 of the
Election Funding Act 1981.
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4.
Use of public resources
Members must apply the public resources to which they are granted access
according to any guidelines or rules about the use of those resources.
5.
Use of confidential information
Members must not knowingly and improperly use official information which is not
in the public domain, or information obtained in confidence in the course of their
parliamentary duties, for the private benefit of themselves or others.
6.
Duties as Member of Parliament
It is recognised that some Members are non-aligned and others belong to political
parties. Organised parties are a fundamental part of the democratic process and
participation in their activities is within the legitimate activities of members of
Parliament.
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APPENDIX C
Parliamentary Ethics Adviser
The Legislative Council desires to inform the legislative Assembly that is has this day
agreed to the following resolution:
1.
That this House directs the President to join with the Speaker in appointing Mr Ken
Robson to the position of Parliamentary Ethics Adviser.
2.
That the position be established by way of a contract of employment for a term of
12 months, which may be renewed upon a further resolution being passed by both
Houses.
3.
That the position be held part-time.
4.
That the function of the Parliamentary Ethics Adviser be to advise any Member of
Parliament, when asked to do so by that Member, on ethical issues concerning the
exercise of his or her role as a Member of Parliament (including the use of
entitlements and potential conflicts of interest).
5.
That the Parliamentary Ethics Adviser is to be guided in giving this advice by any
code of conduct or other guidelines adopted by the House (whether pursuant to
the Independent Commission Against Corruption Act 1988 or otherwise).
6.
That the Parliamentary Ethics Adviser’s role not include the giving of legal advice.
7.
That the Parliamentary Ethics Adviser be required to keep records of advice given
and the factual information upon which it is based.
8.
That the Parliamentary Ethics Adviser be under a duty to maintain the
confidentiality of information provided to him in that role and the advice given,
but that the Parliamentary Ethics Adviser may make advice public if the Member
who requested the advice gives permission for it to be made public.
9.
That this House only call for the production of records of the Parliamentary Ethics
Adviser if the Member to which records relate has sought to rely on the advice of
the Parliamentary Ethics Adviser or has given permission for the records to be
produced to the House.
10.
That the Parliamentary Ethics Adviser meet with the Standing Committee on
Parliamentary Privilege and Ethics annually.
11.
That the Parliamentary Ethics Adviser be required to report to the Parliament prior
to end of his annual term on the number of ethical matters raised with him, the
number of Members who sought his advice, the amount of time spent in the course
of his advice, the amount of time spent in the course of his duties and the number
of times advice was given.
12.
That the Parliamentary Ethics Adviser may report to the Parliament from time to
time on any problems arising from the determinations of the Parliamentary
Remuneration Tribunal that have given rise to requests for ethics advise and
proposals to address these problems.
President
Legislative Council
24 September 1998
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APPENDIX D
Ministerial Code of Conduct
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ACKNOWLEDGEMENTS
PROJECT TEAM
Robert Berman
Nicole Connolly
Nadja Diessel
Leigh Elliott
Peter Stathis (Team Leader and co-author)
Giselle Tocher (co-author)
INTERNAL REVIEW
Sue Bolton
Mark Davis
Melissa Dryden
Anthony Johnson
Robert Lang
Andrew O’Connor
Helen Wells
Nick Wolanin
ASSISTANCE OF THE FOLLOWING IS ALSO ACKNOWLEDGED AND
APPRECIATED
The Audit Office of New South Wales
Council on the Cost of Government
NSW Parliamentary staff
Premier’s Department
The Cabinet Office.
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