Auditor-General Report No. 48 2019–20
Introduction
3.1
This chapter considers Report No. 48 (2019-20), Management of the Australian Government’s Lobbying Code of Conduct – Follow-up Audit (the 2020 report). The 2020 report was a follow-up audit which assessed the implementation of a previous audit report - Report No. 27 (2017-18) Management of the Australian Government’s Register of Lobbyists (the 2018 report).
3.2
Both audits examined the administration of the Lobbying Code of Conduct (the Lobbying Code) and the Register of Lobbyists (the Register). At the time of the 2018 report, the Lobbying Code and the Register were administered by the Department of the Prime Minister and Cabinet (PM&C). The follow-up audit followed a machinery of government (MoG) change which transferred responsibility for the Register and the Lobbying Code to the Attorney-General’s Department (AGD).
provides a brief summary of the findings of the 2018 and 2020 reports;
discusses issues with interagency communication and planning with respect to the MoG change;
discusses AGD’s management of the implementation of the 2018 report’s recommendation; and
discusses ways in which future MoG changes might be improved.
Chapter overview
3.4
The Committee’s inquiry into this report found that throughout the MoG transfer of the Register and the Lobbying Code, there were a number of key areas for improvement. This included issues with the transfer of the Register’s IT system, a lack in interagency communication and planning, and improvements needed to internal governance and oversight. Recommendations are made on these issues at the end of this chapter.
3.5
The Committee also recommends a broader change to ensure that guidance given to government entities on MoG changes is improved and that responsibilities are more clearly defined and understood.
Background and audit findings
3.6
In its submission, AGD noted that:
The Lobbying Code’s purpose is to promote trust in the integrity of government processes and ensure that contact between lobbyists and Australian Government representatives is conducted in accordance with public expectations of transparency, integrity and honesty ... Any lobbyist who acts on behalf of third-party clients for the purposes of lobbying Australian Government representatives must register their details and comply with the requirements of the Lobbying Code.
The 2018 report
3.7
The 2018 report examined PM&C’s management of the Lobbying Code. It made one recommendation, which was that PM&C review the appropriateness of current arrangements in supporting the achievement of the Lobbying Code’s objectives, by:
implementing a strategy to raise awareness of the scheme among lobbyists and Government staff;
assessing risks to compliance with the scheme and providing advice to Government on the sufficiency of the Lobbying Code’s management framework; and
developing a set of performance measures to better inform stakeholders with respect to the Lobbying Code’s policy objectives.
3.8
Although formal responsibility for managing the Lobbying Code passed from PM&C to AGD in May 2018, final transfer of management of the Register was delayed for a year so that PM&C could complete improvements to the IT system used to manage the Register.
The 2020 report
3.9
The 2020 report examined the transfer of the Lobbying Code and in particular looked at how well AGD had implemented the ANAO’s 2018 report recommendation.
3.10
The 2020 report found that AGD had not effectively implemented the recommendation from the 2018 report. In particular, it found that:
AGD ‘did not develop a communications or stakeholder engagement strategy for the Code’ and that consequently ‘AGD’s effectiveness in communicating regulatory requirements to lobbyists cannot be assessed’;
AGD ‘did not systematically consider or manage risks that impact the ability or willingness of regulated entities and individuals to comply with the Code’; and
AGD ‘did not develop an evaluation framework for assessing the regime’s success in meeting objectives and did not develop performance measures’.
3.11
The 2020 report therefore contained two recommendations:
that AGD establish processes for the implementation of the 2018 report’s recommendation; and
that it ‘evaluate the sufficiency of the current regulatory regime for lobbying and provide advice to Government about whether the regime is able to achieve the regulatory objective of promoting public trust in the integrity of government processes’.
3.12
AGD agreed with both of the 2020 report’s recommendations.
3.13
In the wake of the 2018 report the Government considered whether it was appropriate to legislate the scheme in a manner similar to the Foreign Influence Transparency Scheme. The Government ultimately decided against such a move. Consideration was again given to this option after the 2020 report. However, AGD advised that its ‘primary focus … will be about administrative and operational enhancements to the existing code’.
Issues with the transfer of the Register’s IT system
3.14
The AGD submission noted that upon PM&C’s completion of the upgrades to the IT system which managed the Register, and as the final element of the MoG change, management of the IT the system was transferred to AGD. AGD immediately experienced technical issues with the new system:
The department experienced a number of technical issues after the new IT system was deployed. The most significant of these issues were bugs in the automated workflows which resulted in an inability to publish accurate information on the public Lobbyist Register. Lobbyists were also unable to update their details on the Lobbyist Register, as the Lobbying Code requires on a bi-annual basis.
3.15
Consequently, according to AGD, its focus turned to remediating the IT system – initially via an interim solution involving manual processing of some Register management data:
The department’s focus after the transfer of the Lobbyist Register was to address continued technical issues while managing the mandatory update periods required under the Lobbying Code as effectively as possible. In doing so, the department prioritised the development and implementation of a replacement, interim IT solution.
3.16
At the same time the department began the development of a long-term solution, ‘the development of a long-term fit-for-purpose IT system that would assist in implementing the recommendation from the 2018 report’.
Weaknesses in interagency communication and planning
3.17
The audit found that throughout the MoG transfer of the Register and the Lobbying Code there have been weaknesses in communication between the two departments, and insufficient planning for the transfer.
3.18
AGD highlighted the 12-month delay between the transfer of responsibility for the Lobbying Code to AGD and the transfer of administrative responsibility for it:
PM&C administered the Lobbying Code from 2008 until a revised Administrative Arrangements Order in May 2018 made the Attorney-General responsible for whole-of-government integrity policies and activities, including the Code. However, PM&C retained responsibility for the day-to-day operation of the Lobbyist Register until 10 May 2019, to allow it to develop a new supporting IT system. Upon completion of the new IT system, responsibility transferred to the department.
3.19
The ANAO noted that conflicting statements had been made on responsibility for the code by PM&C and AGD during the 12-month delay:
[I]t seems to have come out in some Senate estimates as well, where neither seemed to be taking responsibility during that period for the code or the register.
3.20
The 2020 report went into greater detail about this apparent lack of clarity with respect to oversight of the Lobbying Code :
The extended period of one year involved in transferring the Register IT system from PM&C to AGD led to differing views about which department held accountability for the Code and the ANAO recommendation, during the period May 2018 to May 2019.
On 22 October 2018, a PM&C officer responded to a question about the Code before the Senate Finance and Public Administration Legislation Committee by stating, ‘That would be a question now that should go to the Attorney-General’s Department as a policy issue.’
On 23 October 2018, an AGD officer responded to a question about the Code before the Senate Legal and Constitutional Affairs Legislation Committee by stating ‘as we haven’t taken that function over yet, we’re just not aware of it. It’s PM&C at the moment. You go through them ... It’s an operational question in relation to how the code and the register operate, and, at this point, we are not operationally responsible for the register.’
When answering a question in the House of Representatives on 9 September 2019, the Attorney-General advised Parliament that ‘Responsibility for the Australian Government Lobbying Code of Conduct and the Register transferred from the Department of Prime Minister and Cabinet to the Attorney-General’s Department on 10 May 2019.’
3.21
In addition to the apparent confusion over responsibility for implementing the 2018 report’s recommendation, the MoG transfer was hampered by a lack of formal planning. According to the 2020 report:
AGD did not conduct a due diligence exercise within the first five to ten days for the elements of the MoG relating to the Code, develop an implementation plan with milestones or specify a completion date for administrative arrangements. PM&C and AGD have advised that they did not consider the MoG to be complex or contested.
3.22
AGD advised that it had no formal plan in place for the transfer of the Register:
We didn’t have a written plan. Some of it was because there was a lack of clarity about when PM&C would have finished its changes to its systems to transfer across, but we should have had - and I think in future, having learned the lesson, we will have - more of a written agreement about what was happening ... it was an evolving situation. I think it was something where the issues that inhibited the transfer became more apparent over time. We would, with hindsight, have had a plan in writing, but we did not. We had regular conversations with PM&C but didn’t set out a written understanding with them.
Internal governance and oversight
3.23
The inquiry highlighted weaknesses in AGD’s internal governance with respect to the transfer of responsibility for the Lobbying Code and with it the recommendation from the 2018 report.
3.24
The 2020 report noted weaknesses in AGD’s oversight of the implementation of the 2018 report’s recommendation, noting that the department focused only on the IT problems associated with the transfer to the exclusion of the audit report:
Divisional responsibility for the Code within AGD was clearly established. The Executive Board (Board) and Senior Management Committee (SMC) had visibility of the Code, however this was focused on technological issues associated with the transfer of the Register rather than the implementation of the ANAO recommendation. Progress against the recommendation was reported to the [Audit and Risk Management Committee], but the commencement of this process was delayed.
3.25
In its submission AGD noted that it has only recently begun to consider the recommendation:
The department has begun establishing governance processes to ensure it implements the recommendation of the 2018 report. In particular, the department is finalising an implementation plan [that] sets out the milestones and deliverables that will assist in meeting this recommendation.
3.26
Deputy Auditor-General Ms Rona Mellor emphasised that regulators need to pay attention to internal governance issues to ensure that they are effective as regulators:
… internal regulation requires the same thought process about whether or not compliance is achieved or else how do you know that your internal regulation is successful? … Our expectation is that, whatever the source of the regulation—whether it’s legislation, whether it’s a rules set of some kind—the owner of it understands whether it’s successfully being implemented.
3.27
AGD advised that although its work on this issue is still in progress, it expects to complete it within the year:
The ANAO recommended an evaluation framework and performance measures. We have given some thought to that already and have a preliminary draft. We’ve started to make some changes to the register system already for collection of metrics about numbers and time frames, for example, but we’re working on those performance measures, including the time it takes us to respond to inquiries, deal with breaches and set performance measures around that. But that is a work in progress.
Need for clarity in transfer guidance
3.28
It also emerged in the course of the public hearing that there is a gap in the MoG guidelines maintained by the Australian Public Service Commission (APSC) with respect to the handling of Parliamentary Committee and ANAO recommendations in the course of a MoG transfer.
3.29
According to the ANAO:
The June 2016 Machinery of Government Changes: A Guide for Agencies does not address the need for agencies to consider in their planning and implementation of machinery of government changes the transfer of responsibility for actioning ‘in-progress’ or not yet completed recommendations from ANAO audits or Parliamentary inquiries. This is a gap in the guidance that is developed by the Department of Finance and Australian Public Service Commission.
3.30
The ANAO said that in the course of providing detailed information on the functions being transferred the guide does mention audits:
The guide does address, in paragraph 9, the responsibility of the losing agency to provide the gaining agency information following a detailed examination of all aspects of the functioning being transferred, including unfinished audits.
3.31
However, the results of this audit indicate that there may be a need for clearer advice from the APSC on the handling of Committee and ANAO recommendations in the course of MoG changes.
Committee comment
3.32
This audit report and AGD’s response to it highlighted the importance of interagency communication and good internal governance arrangements during transfers of responsibility between departments.
3.33
As a result of the focus on developing a long-term IT solution which can implement the 2018 report’s recommendation, the recommendation is yet to be finalised. However the 2020 report highlighted that more attention could and should have been paid to the original ANAO recommendation in AGD’s internal governance committees.
3.34
The Committee acknowledges AGD’s commitment that it will implement the recommendation and encourages it to do so as soon as possible.
3.35
The inquiry also revealed a gap in the APSC’s guidance on how Parliamentary Committee and ANAO recommendations are treated in the process of machinery of government changes. The Committee considers that this guidance should be updated to provide greater clarity to agencies as to how to implement recommendations made to other departments prior to transfers of responsibility.
3.36
While acknowledging the priority accorded to ensuring the IT system and Register were working, the Committee is concerned by the slow progress in developing a communications and engagement strategy to raise awareness of the Code. AGD acknowledged that this is key to improving compliance by encouraging registration.
3.37
The Committee recommends that the Attorney-General’s Department provide a written update on the implementation of the recommendations from the 2018 and 2020 audit reports. The update should include details on:
post-transfer IT system issues;
the Lobbying Code of Conduct’s communications and stakeholder engagement strategy;
the risk management strategy for the Lobbying Code; and
AGD’s progress in developing an evaluation framework for assessing the Lobbying Code’s success in meeting its objectives.
The Committee requests that the department provide this update within 6 months of this report.
3.38
The Committee recommends that the Australian Public Service Commission update its guidance to government entities on machinery of government changes in light of the Auditor-General’s Follow-up Audit into the Management of the Australian Government Lobbying Code of Conduct. This should be done with a view to giving greater clarity on responsibility for the implementation of recommendations made by Parliamentary Committees and the ANAO that are affected by machinery of government changes.