Parting Company
The Work of the Committee
I thank the committee and secretariat for their work in relation to this inquiry.
It was an important inquiry because it relates to public confidence in Government and more specifically the conduct of former ministers, the suitability of the standards they have to abide by and the ability or resolve of the Prime Minister to deal with breaches.
I agree with the report's contents and fully support the recommendation made. However, I feel obliged to go further than the committee has on a few issues.
Dr Parkinson’s Perfunctory Investigation
The Committee found that the investigation into whether or not the ministerial standards had been breached by Ms Bishop and Mr Pyne did 'not appear to be particularly extensive' and provided some details in relations to its inadequacies.
The Committee is polite in its findings.
Under the Westminster System it is a Cabinet Minister, or in this case the Prime Minister, that bears the ultimate responsibility for the actions of their ministry or department. If misdeeds are found to have occurred in a ministry, it is the minister that is held responsible.
Senators and Committees have a tendency to not hold secretaries directly to account.
The politeness of the Committee towards Dr Parkinson may also have stemmed from the fact that Dr Parkinson was in the process of moving on to other pastures and most people, including myself, are inclined to wish people well on their way.
However, I cannot in good faith, or in properly representing my constituents, not express my concerns that the investigation into any breach of the Statement of Ministerial standards was poorly executed, incomplete and reflects extremely poorly on Dr Parkinson.
Secretaries of departments are given the responsibility, authority and resources to discharge their duties. Furthermore, they are extremely well remunerated (Dr Parkinson was paid more than $900,000 per annum). Secretaries must be held accountable and past conventions shielding them from parliamentary criticism are somewhat dated and no longer in line with community expectations, particularly in respect of activities in which they are directly involved or have statutory responsibility for.
As such, I will not be restrained in my criticism of a most perfunctory inquiry that Dr Parkinson has led.
Dr Parkinson had his staff investigate what relevant material was in the public domain. His staff spent about eight days doing so. Dr Parkinson said at hearing:
I think it was the fact that I was doing a variety of things and I was seeking people to gather whatever information was available about what Mr Pyne had said publicly and what other members of parliament had said, and whether there was anything else on the public record.
And yet two highly relevant and key statements that were in the public domain were not included in the report.
The Australian Financial Review reported that on the 5 July 2019 EY had put in a 26 June 2019 email:
EY is ramping up its defence capability ahead of a surge in consolidation activity and the largest expansion of our military capability in our peacetime history - $200 billion over 10 years out to 2026.
We’ve engaged Christopher Pyne to assist with this.
Large domestic defence players are looking for mergers to bulk up. Big multi-national players are also shopping for acquisitions to scale their onshore delivery capability.
Christopher Pyne is also here to help lead conversations about what South Australia needs to do to meet the challenges and opportunities this huge defence investment will bring.
It also reported that Mr Pyne sent a text (to the Australian Financial Review) on the same day (26 June 2019) stating:
I’m looking forward to providing strategic advice to EY, as the firm looks to expand its footprint in the Defence Industry.
In response to my question about why these statements were excluded, Dr Parkinson stated 'No particular reason'. That was a woefully inadequate and unsatisfactory answer. Better is to be expected of him both in his conduct of his inquiry and in his response to the Committee.
Furthermore, in the course of his investigation Dr Parkinson did not speak with people from either EY or Palladium. He also indicated that, during his investigation he did not use a notebook to record evidence, rather his notes were recorded as 'annotations on a blank sheet of paper' which after reviewing he ultimately determined were 'not appropriate for release'.
The investigation appears to be either a demonstration of a lack of competence, which goes to ability, or a carefully crafted sham which purports to be an investigation but was in reality a political fix, which goes to character. I suspect it goes to the later.
The report epitomises what many people see as a public services cancer whereby the Australian Public Service Code of Conduct is cast aside and replaced with a new code which states, 'Protect the Minister'.
Having not followed it closely, I am not in a position to fully analyse Dr Parkinson public service career. None the less, I am confident it has been highly esteemed and effective. I am unaware of any significant controversy centring on his public service performance. What I can say however, most disappointingly, that instead of leaving the public service on a high, producing this report and standing by it under questioning by the Committee on his last day in public office sees him leave public office at something of a professional nadir.
A Probity Issue That Must be Addressed
Mr Pyne’s decision to negotiate (08 April 2019) and accept a new job (20 April 2019) in the Defence sector whilst still the Minister for Defence, and then taking up that Defence consultancy role (07 June 2019) within two weeks of leaving the ministry (29 May 2019) is a most egregious affront to the public’s expectations of the standards to which Ministers should adhere to, although I concede that this is does not constitute a technical breach of the Statement of Ministerial Standards (but it highlights what are clearly flaws in the standards).
Had this been the conduct of a Minister in a Labor Government, I have no doubt given Mr Pyne’s political history, he would have been at the forefront of the condemnation of such action. It would appear that, at the very least, his political instincts and more importantly, his integrity and ethics were diminished in the latter months of his service as a Minister.
Mr Pyne, in his capacity as the Minister for Defence Industry and then the Minister for Defence will have been briefed on the areas where the Australian Defence Force had issues or required improvements, where there were gaps in industry capability or capacity, where Defence is seeking to go in terms of future capability and will have also been briefed by numerous Defence suppliers. The information he received he cannot unknown.
That begs the question as to how Mr Pyne will form up honest and frank advice for EY whilst at the same time compartmentalising information he knows from his time as Defence Industry or Defence Minister. Either he short changes EY, or perhaps even guides them incorrectly knowing he is privy to information that would cause him to otherwise advise differently, or he breaches his obligations under the Statement of Ministerial Standards by utilising information which is not in the public domain (to the benefit of EY and, on account of the remuneration they provide him, ultimately Mr Pyne).
A breach of this kind, whilst reasonably likely, is undetectable and therefore unenforceable. It gives rise to a concern that was not even considered through Dr Parkinson’s investigation.
Mr Pyne’s employment may also give rise to probity claims against the Commonwealth from companies that compete with EY, claiming EY had an advantage over them.
The fundamental issue is that the breach of probity is not provable. The situation in which Mr Pyne, EY and the Commonwealth now find themselves should never have been allowed to occur. I suspect that the only way to properly address this concern would be to disallow EY from competing for any Defence related contracts until a reasonable period of time has passed.
Recommendation
In the interests of maintaining probity in the Defence domain EY should be prevented from tendering for Defence work for 18 months from the time that Mr Pyne joined the firm.
A Standards Overhaul
The Committee recognised that there were a number of problems with the Statement of Ministerial Standards in respect of enforceability.
Both Mr Pyne and Ms Bishop had different recollections about the manner in which the code was presented to them when becoming a minister and the enforceability of it.
My recollection is that when you become a minister—or, indeed, a parliamentary secretary—you get sent a document to complete about your financial arrangements, which also contains a copy of the ministerial code of conduct. You obviously study that. If you didn't, you wouldn't be very sensible. You fill out the form and then you sign it and send it back. In the action of doing that, that is, in my view, a contract that you have created with the Prime Minister at the time—whether it was Howard, Abbott, Turnbull or Morrison, as I served all four of them—that you will abide by the ministerial code of conduct. You have divulged your financial arrangements to the Prime Minister and if that changes, in terms of your financial arrangements, you're required to continue to update it. I took that at the time as establishing a contract with the Prime Minister to abide by the ministerial code of conduct.
Ms Bishop was asked about the manner in which the Statement of Ministerial Guidelines was originally discussed with her and her views on the legal status of them in the following exchange with the Chair:
CHAIR: To ask you a question of fact: has Mr Morrison ever communicated to you that he considers the Statement of Ministerial Standards voluntary?
Ms Bishop : I've not had that discussion with him at any time, as I recall, but I point out—
CHAIR: Did Mr Turnbull, which is perhaps more relevant to your period in government?
Ms Bishop : When Mr Turnbull was Prime Minister, I was not planning to retire from the cabinet.
CHAIR: The ministerial standards go to your period as a minister and your post-ministerial roles. I will ask again: did Mr Turnbull ever say to you that he thought the Statement of Ministerial Standards was voluntary?
Ms Bishop : I don't recall having a conversation with then Prime Minister Turnbull about the standards.
CHAIR: Did Mr Abbott ever indicate to you that he considered that the Statement of Ministerial Standards was voluntary?
Ms Bishop : It's my word, meaning 'not legislated'. I didn't have a conversation with anybody else about my understanding of the guidelines. I was making, I thought, a statement of fact that they are not legislated and thus don't carry the force of law. So I'm not aware of the penalty, for example, that would apply to former ministers if there were a breach.
CHAIR: Did you ever have a conversation of any kind with Mr Turnbull about his expectations under the standards?
Ms Bishop : I don't have any recollection of having a discussion about the particular standards; no, I don't.
CHAIR: Or Mr Abbott?
Ms Bishop : I don't recall any conversation with Mr Abbott about them. There may have been a discussion at cabinet, but I don't have any recollection of a one-on-one discussion with either then Prime Minister Turnbull or then Prime Minister Abbott.
These excerpts demonstrate inconsistency and make it clear that there is no formal standard process by which Ministers are introduced to the standards nor their legal status. At best this represents process failure and at worst the lack of importance Prime Ministers are now assigning them.
A proper process must be established to ensure Ministers are informed of their obligations. The standards must also be legally enforceable, either by means of contract or by way of legislation/regulation.
Recommendation
There should be standard processes for incoming Ministers to be informed of the Statement of Ministerial Standards.
Recommendation
The Ministerial Standards should also be legally enforceable, either as a written contract between the government and the Minister or by way of Legislation and/or Regulation.
Senator Rex Patrick
Senator for South Australia