THE Joint Committee of Public Accounts and Audit has tabled its report into probity and ethics in the Australian public sector, finding the sector too often fails to comply with both the intent and the requirements of legal and regulatory frameworks.

“Complying with the letter of the law while ignoring the intent does not cut it,” Committee Chair, Julian Hill MP said.

“Too often the public sector is falling short of the high standards of professionalism required of it. Risk tolerance for non-compliance is unacceptably high and ‘getting things done’, even if it involves cutting corners, has sometimes become more important than complying with the law.

“In particular, it was concerning to hear during the inquiry that even when officials were found acting contrary to finance law, multiple witnesses and entities referred to a ‘lack of malintent’, to having ‘acted in good faith’, and ‘delivering on decisions of government’. This is plainly and unambiguously wrong.

“Officials in the Department of Health even received corporate ‘congestion busting’ awards for former Minister Greg Hunt’s hospital grants project which breached finance laws. Public money was paid without any apparent legislative authority and in blatant defiance of legal advice.

“Frankly, the committee wishes that breaking finance law was indeed innovative and a new situation, but unfortunately the evidence in this and numerous other inquiries make clear it’s not," Mr Hill said.

“The committee has observed over many years, including through this inquiry, a pattern of persistent resistance to accountability across the public sector. Agency heads do not consistently have frameworks in place to be reasonably confident their officers are acting according to the letter and the intent of the law, and thus demonstrating probity.”

To foster an Australian Public Sector that acts with probity and integrity, the committee concluded that a focus on three critical and interdependent aspects of the system is necessary: frameworks, culture, and accountability.

“The key, however, to ensuring the public sector acts with probity and integrity is overwhelmingly not the rules per se—it is ethical leadership: the ‘golden thread’ that binds and animates the system in a positive direction. Ethical leadership must be demonstrated at all levels, especially by accountable authorities and senior officers,” Mr Hill said.

The Committee made 11 recommendations, including recommendations that seek to embed assurances with regard to probity and ethics in public sector accountability systems and mechanisms.

Under the recommendations, the Australian Public Service Commission (APSC) is to develop guidance with a definition of culture and metrics to build, measure and assess organisational culture as it applies to probity. Further, there should be a new requirement for all entities to develop and maintain an overarching Integrity Framework.

The report can be downloaded from the inquiry website.

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THE Joint Standing Committee on Treaties (JSCOT) has tabled a report recommending the ratification of the Nairobi International Convention on the Removal of Wrecks (Nairobi Convention).

Committee Chair Josh Wilson MP said, “Australia is a country with a significant coastline and shipping industry. Joining the Nairobi Convention would provide economic, environmental, and human safety benefits for Australia. Through this Convention, Australia would be able to remove or have removed wrecks in its Exclusive Economic Zone. This includes objects that are lost at sea that pose a danger to navigation.”

“Ratifying this treaty is important because of the increasing risk of wreck incidents," Mr Wilson said. "This is due to the rise in e-commerce and the use of bigger container ships that travel more frequently at full capacity which face greater pressures to quickly load and unload.”

As part of the Convention, registered ship owners of States Parties are held financially liable for any wrecks they create and those over 300 gross tonnage must have insurance or other financial security to cover the cost of removing the wrecks.

As part of its inquiry, the committee held a public hearing and addressed key issues such as the economic benefits of the Convention, underwater cultural heritage, the application of the Convention to the territorial sea, shifting wrecks, insurance issues and the offshore oil and gas industry.  

The committee supported ratification and recommended that binding treaty action be taken for this treaty as well as the following minor treaty action which is also contained in the report:

• Amendment to Appendices I and II of the Convention on the Conservation of Migratory Species of Wild Animals.

The report can be found on the committee website, along with further information on the inquiry.

For more information about this committee, visit its website.

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THE Parliamentary Joint Committee on Intelligence and Security (PJCIS) has tabled its annual review of six Australian intelligence agencies.

The review, covering the 2021-2022 period, found that amidst a changing strategic environment where espionage and foreign interference has overtaken terrorism as Australia’s principal security concern, Australia’s intelligence agencies largely worked in an effective, and increasingly collaborative, manner.

"The committee found that, on the whole, agencies performed their roles well, particularly considering the challenging operational environment faced by agencies over the reporting period," Committee Chair, Peter Khalil MP said.

The Committee made one recommendation. Noting the rapid pace and ambition of elements of the Australian Signals Directorate’s (ASD) REDSPICE program, the committee recommended that ASD provide the committee with an additional update six months after each ASD submission to the review of administration and expenditure, for the duration of the REDSPICE program.

"The work of Australia’s intelligence agencies is becoming increasingly complex and challenging," Mr Khalil said. "ASD’s defence of Australia in the cyber realm will be significantly boosted by the REDSPICE program, which is intended to deliver forward-looking capabilities essential to maintaining Australia's strategic advantage and capability edge over the coming decade and beyond.

‘It is important, given the significant investment involved, that the committee be kept up to date with the maturity of the REDSPICE program," Mr Khalil said.

The committee’s report can be found via the committee’s webpage: Parliamentary Joint Committee on Intelligence and Security – Parliament of Australia (aph.gov.au)

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THE FORMER Federal Government breached finance law by failing to undertake any value for money assessments before awarding a (then) $35 billion Defence contract, current value still unknown, according to the Joint Committee of Public Accounts and Audit.

The Joint Committee of Public Accounts and Audit has tabled its final report for its Inquiry into the Defence Major Projects Report (MPR) 2020-21 and 2021-22 and Procurement of Hunter Class Frigates.

The committee’s interim report for the inquiry in June 2023 dealt with cost, schedule, and capability performance assessments in both MPRs and other common themes including the impacts of COVID-19, Defence projects of interest and concern, and issues around risk management and capability forecasting.

This final report has considered the future of the MPR itself and highlighted key issues and concerns with the ongoing Hunter Class Frigate program.

On the $??,000,000,000 Hunter Class Frigates procurement

The committee was deeply concerned that no value for money assessment was ever undertaken by Defence or the former Government on the Hunter Class Frigates’ tenders, despite which the National Security Committee of Cabinet decided to proceed with a (then) $35 billion procurement of a ship from BAE Systems that was not a mature design.

Perplexingly, clear failings in the procurement identified by ANAO were only belatedly accepted by Defence after the committee initiated this inquiry and Defence conducted its own internal review.

Committee Chair Julian Hill MP said, "Ministers are not supposed to be rubber stamps or daleks, and there are two possibilities as to how this happened: 1) either no one noticed that no value for money assessment was undertaken or 2) they did know but didn’t care and blithely decided to proceed with a (then) $35 billion procurement anyway.

“Ultimately as this was a Cabinet process via the National Security Committee of Cabinet no one will ever really know what happened; whether there was a conspiracy or predetermined decision that BAE win the prize, or whether it was simply shocking incompetence by this group of Ministers in the then government.”

Further issues raised in the audit that were of significant concern to the committee included:

• the absence of any explanation why 10 percent was mysteriously knocked off the price from all tenderers in the evaluation and advice to government – the committee’s report reaches blunt conclusions on this point:
  • “While the committee would love to think the Commonwealth could just buy everything for 10 percent less than a tendered price, it’s a patently ridiculous proposition and vague claims there might be an “efficiency dividend” raise reasonable questions about the competence of officials involved. Indeed, it is not apparent to any member of the committee whether there has ever been an Australian shipbuilding project for such a major new capability that has run under budget.”
• the Hunter Class Frigate itself was assessed by Defence experts as a mature design when it had in fact never been built or even fully designed;
• key documents regarding the decision-making process went and remain missing.

Mr Hill said, “Defence must reassess how it determines maturity in future large-scale acquisitions, particularly as foreign governments will always be keen to sell expensive military hardware to Australia. A balance is needed between that approach and acquiring ‘off-the-shelf’ military capability.”

The committee makes five recommendations in relation to the Hunter Class Frigate program. Four of these request updates from Defence on changes arising from its internal review, progress with the project, how it will assess design maturity in the future, and its new recordkeeping framework.

The committee is also recommending that the Commonwealth Procurement Rules now explicitly require a value for money assessment in a tender evaluation plan as a default option which must then be cleared by the Department of Finance.

Future of the MPR

The committee said it regarded the MPR as an important accountability mechanism that should continue for the foreseeable future, albeit with potential adjustments.

Mr Hill said, "Although other external accountability and assurance mechanisms for scrutinising Defence activities exist, the MPR provides a structured level of scrutiny across major capability projects that would not be provided through these other processes.”

"The discipline of the MPR has positive impacts on Defence’s internal management of major projects.”

The committee noted the tension between national security considerations and need for ANAO to provide transparency to the Parliament and is recommending that a confidential submission and related briefings with Defence, where information cannot be published, now be provided by ANAO as a supplement to the MPR. 

The report can be downloaded from the inquiry website.

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