Gunner’s rule: Economic cracks widen, accountability vanishes

Just half a year into the Gunner Government’s four-year term, in May 2017, former Labor MLA and university law lecturer Ken Parish wrote: “The Gunner Government’s end of semester report card gives it a fairly miserable failing D grade in the subject accountability and transparency.” The government had significantly watered down very good recommendations by the Select Committee for Opening Parliament to the People. The most serious decision was to halve the available time for parliamentary scrutiny of the government’s Budget by the Estimates Committee from 60 hours to just 30. This is Part Three of an analysis by DON FULLER.

PICTURED is Treasurer Nicole Manison delivering the 2018 Budget: Cracks had begun to widen.

The two CLP MLAs, Lia Finocchiaro and Gary Higgins, were deemed to be the official “Opposition” and given the resources that accompany Opposition status, but the government reduced parliamentary oversight and scrutiny by allocating insufficient resources to other MLAs.

It rejected a key recommendation by the “opening Parliament” committee  that it give the Auditor-General the power to conduct performance audits on departments and agencies. This is a responsibility given to every other Auditor-General in Australia, except the NT. Territorians have no proper system at all for gauging departments’ efficiency or effectiveness in spending taxpayers’ money.

As departments and agencies are not legally required in the NT to report on their efficiency and effectiveness, most do not bother to do so.

In 2019-20 Commonwealth funding to the NT is estimated at $4,389 million. This is around 66% of the government sector revenue.

It is therefore surprising, as Mr Parish notes, that the Commonwealth has not required the Northern Territory to establish the appropriate standards of fiscal accountability that occur elsewhere in Australia.

Donghai Airlines promotion: Note the caption “Opening up Australia’s primitive secret exploration tour”.

In June 2018 it was reported that Donghai Airlines had begun operating flights between Darwin and Shenzhen.

The government claimed it was unaware that the owner had been named in court hearings over the alleged bribing of an official in Hong Kong.

The government was accused of failing to disclose the cost of the partnership to Territory taxpayers and for how long the agreement would run even though previous subsidy agreements between the NT government and private airlines involved “millions”.

This included the CLP Government giving Air North $700, 000 for the Darwin to Alice Springs link in 2015 and the previous Henderson Labor Government giving Jetstar $3m to establish an international hub in Darwin.

A further $2m was given to the airline in 2009 for marketing purposes. Jetstar cancelled the routes in 2013.

Mr Parish said he did not buy the Government’s line that the cost of the partnership is commercial in confidence information. These can be redacted: “We are entitled to information about how much of our money the NT Government is giving to it as an inducement to fly here.”

Further evidence of problems with accountability and transparency emerged in September 2018 when it was disclosed that a report by the Auditor-General found that the government had handed out billions of dollars in grants without proper record keeping and without a government-wide oversight procedure in place.

The audit found that while the government knew the oversight of the grant system was flawed, by 2018 an improved monitoring system had still not been implemented. It was still not clear what amounts were being paid and for what reason.

The Auditor-General stated that while she was unable to determine the total amount of money paid out since 2014 because of improper record keeping, it was expected to be in the billions of dollars!

The audit was conducted around the time that the Gunner Government was calling on the Commonwealth Government to provide more funding from GST revenue. At the same time, NT debt levels began to escalate to record levels.

The Auditor-General, Julie Crisp, reported: “Existing processes are prone to human error due to a lack of programmed [information technology] checks and oversight.

“Agencies experience difficulty reconciling grant activity with expenditure and there is an inability to generate meaningful reports on grants issued across the NT Government.”

Ms Crisp found the Department of Chief Minister — which administers a large portion of grant funding annually — did not have modern systems in place to monitor the grants.

This is a startling statement given the importance of government accountability and transparency involving taxpayer funding.

The then Deputy leader of the Opposition, Mrs Finocchiaro (pictured), called the audit “deeply concerning … particularly given the perilous state of the Territory’s budget and burgeoning debt levels.

“Territorians would expect that awarded public monies would be appropriately acquitted, and that grants and subsequent spending is monitored and reviewed.

“This report poses a series of further questions in relation to the Gunner Labor Government’s so-called open and transparent rhetoric, particularly in relation to spending by the Department of Chief Minister,” Mrs Finocchiaro said.

Amid increasing concerns about Government accountability and transparency the Northern Territory Office of the Independent Commissioner against Corruption (ICAC) was established on November 30, 2018.

Within a relatively short time, this office itself was involved in accusations of bias and incorrect process.

The Commissioner Ken Fleming QC stepped down from his role overseeing the investigation into the police shooting death of Indigenous teenager Kumanjayi Walker.

Mr Fleming had faced criticism that he could not approach the investigation impartially after saying at a protest rally in Alice Springs: “One of the most important messages today is Black Lives Matter. Anybody who says contrary to that is guilty of corrupt behaviour.”

Many were left wondering why Mr Fleming had been allowed by the Chief Minister to accompany him to Alice Springs in response to the incident, and were left asking whether the Chief Minister had a sufficient understanding of the role required by an independent head of the NT ICAC.

In a relatively short time after this event ICAC reported that whistleblowers faced reprisals in NT Government workplaces.

As a result the Commissioner flagged new guidelines for NT Government agencies. There was also a call for government managers to be at the forefront of substantial change needed to improve accountability and transparency responsibilities.

This suggests little had been achieved by the Gunner government in building an ethical, professional, responsible culture within the departments and agencies they were responsible for.

Where there has been an apparent disdain and dislike of such responsibilities at the highest level of Government leadership it is not likely that more junior members of staff will take these matters seriously.

Many are worried that this has been, and continues to remain, a major problem for government in the Territory.

It has also been reported in this context that serious allegations of “real corruption” within the NT Public Service have been reported to ICAC.

Speaking to ABC Darwin the NT’s first ICAC Commissioner said he hoped to launch broad investigations into some of the “really concerning” allegations, made through the ICAC website, as early as possible.

Mr Fleming believed it would quickly become clear that his office was under-resourced.

However, Northern Territory Treasurer Nicole Manison would not commit to providing more resources for the new anti-corruption body.

[ED – Just this week a painstaking investigation by the ICAC, setting a high bar for conduct of politicians, led to the resignation of the Speaker.]

Meanwhile major problems of budget management inexorably progressed towards the current record deficit.

By end of November 2018 commentators were pointing to a “grim outlook” with the annual deficit expected to surpass $1.5 billion. It is now said to be $7 billion.

In delivering the Mid-Year Financial Report to Parliament the Treasurer pointed to large cost blow-outs of more than $350 million in un-budgeted spending and operational expenses.

Nicole Manison justified this by claiming it was necessary to keep people employed in the construction industry.

However, the Treasurer seemed unaware of the impact such a Budget was likely to have on wider business confidence and private investment in particular, already in steep decline.

While this was due to the completion of the Inpex project, it was also noteworthy that private investment was down a further 15% from earlier projections.

Rather than considering the need to reduce very high levels of expenditure, particularly in un-budgeted, unplanned areas, Ms Manison attempted to deflect the blame on to the Commonwealth: “No Government has ever experienced the unprecedented reductions in GST that we have seen in the last two years,” she said.

“You can see the changes we’ve had with the GST … is having a big impact.”

Something had to happen: Enter in November 2018 the Fiscal Strategy Panel, chaired by John Langoulant (pictured, Linkedin), whose string of top position in the world of economy includes being WA State Advisory Council president and director at the Committee for Economic Development of Australia.

The Gunner Ministry appeared to have a limited set of ideas on what should be done.

The panel’s interim report released on December 14, 2018, confirmed that the Territory faced serious financial challenges and was in the unsustainable position of borrowing to fund recurrent activities and interest costs.

While the report acknowledged a reduction in the Territory’s GST revenue was an important reason for the financial position, importantly the report also criticised the Gunner Government for maintaining a culture of persistently exceeding approved budget targets due to un-budgeted and unplanned expenditure.