Icac's independence 'threatened' by NSW funding model
The independence of the New South Wales anti-corruption watchdog is threatened by the fact politicians sign off on its funding, with some of the arrangements legally “contestable”, the auditor general has said in a landmark report.
The auditor general on Tuesday released its review of the funding arrangements of four NSW integrity agencies including the Independent Commission Against Corruption (Icac).
The report found the model contained “several areas of ambiguity” that highlight “threats to the independence of the integrity agencies” due to the role of cabinet in signing off on funding allocations.
“The current approach to determining annual funding for the integrity agencies presents threats to their independent status,” the auditor general, Margaret Crawford, wrote in her report into integrity agency financing.
Funding applications made by the Icac are considered by both the Department of Premier and Cabinet and NSW Treasury before they are ultimately approved by the cabinet expenditure review committee.
“There is no independent advice on Icac’s funding requirements and there is no transparency to parliament about the reasons for decisions made about Icac’s budget,” Crawford wrote.
“The absence of these safeguards in the current financial arrangements creates a threat to Icac’s independence and has the potential to limit its ability to fulfil its legislative mandate.”
Crawford wrote that Icac had submitted budget proposals seeking increases in funding “in several recent years”, some of which had been “rejected without reasons being provided”.
“There are no formal mechanisms available to Icac to question or challenge these decisions,” she wrote. “The process available to Icac to request additional funding outside the annual budget creates further risks to its independence.”
The release of the report comes after the NSW premier, Gladys Berejiklian, appeared last week before Icac during its investigation into the former Wagga Wagga MP Daryl Maguire.
During her evidence, Berejiklian revealed she had been in a secret relationship with the disgraced former MP for several years. Legal experts have suggested the premier likely breached the ministerial code of conduct by failing to disclose the relationship.
While Berejiklian has fiercely denied any wrongdoing, her involvement in the inquiry prompted the leader of the conservative Shooters, Fishers and Farmers Party, Robert Borsak, to flag on Tuesday the introduction of a bill in the state’s upper house which would increase the independence of Icac’s funding.
The draft bill, which is supported by the Labor opposition, would give parliament more oversight over how the agency is funded and appears to largely tie in with the auditor general’s recommendations.
Crawford wrote in the report that aspects of the funding of agencies such as Icac, the Electoral Commission, the Law Enforcement and Conduct Commission and the NSW ombudsman “create tensions with their independent status”.
“Work done by the integrity agencies can potentially have a negative impact on the NSW government or individual ministers or senior public servants,” Crawford wrote.
“As a result, there is a risk that the previous or planned work of the integrity agencies could influence the decisions made about their funding. The existing safeguards to this risk are not sufficient. Decisions about funding for integrity agencies are not transparent and there are no mechanisms for the agencies to question or challenge decisions made.”
The auditor general found that the legal basis for state government decisions to limit appropriation funding to integrity agencies including Icac was “contestable”.
The NSW government’s long-running policy of applying efficiency dividends to government agencies means the cabinet expenditure review committee “makes decisions about any limits it wishes to apply to government
agencies’ access to the appropriations” funding approved in the budget.
Crawford noted that while there were no limits imposed in the past financial year, the Department of Premier and Cabinet “informed the integrity agencies of estimated limits on appropriation funding for each of the next nine years”.
The legality of that policy was open to “competing interpretations”, Crawford said.
While the Department of Treasury argued it was open to the premier to “restrict the integrity agencies’ access to appropriation funding”, the auditor general said an “alternative approach” would argue that because integrity bodies were funded by a specific part of the budget, decisions about their funding should be different from other departments.
Icac has long been asking the Berejiklian government to increase its funding. Last year, the watchdog’s chief commissioner, Peter Hall, told a parliamentary inquiry funding cuts proposed by the government would leave the agency with a $4m shortfall that would have an “immediate and serious” effect on its ability to fight corruption.
Similarly, last month a Liberal and National party-dominated parliamentary committee released a report recommending Icac’s funding be overhauled to ensure it is independent, properly resourced and not subject to the whims of government.
The NSW opposition leader, Jodi Mackay, offered bipartisan support for any legislation needed to ensure Icac’s financial independence.
“We accept the three recommendations of the auditor general,” she said on Tuesday. “We have always maintained that those integrity agencies should be well-resourced as integrity agency … It’s really important that that is an independent funding model.”