Introduction
Ms Bishop and Mr Pyne still have questions to answer about their new jobs outside of parliament.
While PM&C’s investigation into Ms Bishop’s and Mr Pyne’s post-ministerial activities found no evidence of wrongdoing, their actions still don’t pass the pub test. The apparent overlap between their previous portfolios and their new roles at Palladium and EY makes many Australians concerned.
The Jacqui Lambie Network therefore agrees with the committee’s recommendation that the Prime Minister should request the incoming Secretary of Prime Minister and Cabinet to reopen the investigation into Ms Bishop’s and Mr Pyne’s conduct in relation to the Ministerial Standards.
However, much more needs to be done to ensure that ministers and parliamentarians are acting with integrity, both when they’re in office and after they leave parliament. The regularity of potential breaches of the Ministerial Standards suggests there may be overly cosy relationships between special interest groups and the federal parliamentarians who make decisions that impact their bottom line, and not enough penalties for when they do the wrong thing.
This committee should therefore advocate for much broader reforms that address the systemic risks of ‘soft’ corruption that currently exist in the federal parliament:
(1)
The Statement of Ministerial Standards should be expanded to apply to all parliamentarians within a year. The standards should be designed to ensure that parliamentarians can’t use the information and networks they gain while in office for their own -- or anyone else’s -- private benefit.
(2)
The codes of conduct should be strictly enforced and independently administered, with salient sanctions for misconduct that can be imposed on individuals and corporations that hire former Ministers in breach of the revolving door ban.
(3)
Parliamentarians should be required to publish extracts from their diaries, detailing meetings held with actors who wish to influence government decision-making, to give the public visibility over who they have been meeting with and when. Diaries should be published retrospectively, with the meetings for one month released at the end of the following month.
(4)
Orange pass holders should be required to register as lobbyists, and should face restrictions on their access to Parliament House if they are found to have breached any relevant code of conduct.
(5)
The Prime Minister should consider whether ‘gardening leave’ (a small, temporary payment for a period after leaving office) is appropriate for ex-ministers who must wait eighteen months before seeking employment in industries relating to their former portfolios.
(6)
The federal parliament should establish a strong anti-corruption commission that has adequate power and resources to investigate potential misconduct of parliamentarians and public servants.
Australians deserve better checks and balances on the post-ministerial activities of federal politicians
Ethical guidelines for ministers are outlined in the Statement of Ministerial Standards, which is administered by the Prime Minister. The Standards state the Prime Minister’s expectations of his ministers with regards to potential conflicts of interest, the receipt of gifts, employment after holding office, and other activities that might affect their ability (or the perception of their ability) to uphold the public interest in their official duties.
Section 2 of the ministerial standards places an 18-month ‘revolving door’ ban on former ministers, which prevents them from taking up a lobbying role in an area that they were officially involved with prior to leaving parliament.
While the ban is a good idea in theory, the current provisions face enforcement challenges:
Firstly, it is up to the Prime Minister to determine that one of his or her former ministers have breached the ban. This may lead to a conflict of interest if the Prime Minister has an incentive to protect the reputation of former cabinet ministers.
Secondly, there are no sanctions for former ministers or their new employers if they do the wrong thing. This means that former Ministers who are not in receipt of public funding are free to operate largely on an ‘honour system’, and the potential for a reputational impact is the only potential penalty for misconduct.
The honour system underpinning the Ministerial Standards has failed to prevent behaviour that most Australians would find inappropriate. The apparent lack of enforcement of the ban suggests that the current mechanisms for investigating a potential breach and implementing appropriate sanctions aren’t working. The cases of Julie Bishop and Christopher Pyne have highlighted the issues with the revolving door ban in recent months, but there are many examples from both sides of politics of potential breaches of the code that never incurred a formal sanction.
Without real penalties for misconduct, the incentive to breach is determined only proportionate to the reward for the breach and the reputational risk of discovery of the breach. If it is accepted that the probability of discovery will always be less than certain, then it is a statement of fact that there will be instances where the reward for a breach is sufficient to rationally incentivise the breach event. But if there is likely to be no penalty for a breach at all, there is no incentive -- other than a former Minister’s moral conscience and concern for their public image -- to incentivise adherence to the ministerial standards.
Unfortunately, the number of cases where the revolving door ban appears to have been breached suggests that appealing to former Ministers’ sense of moral duty is not enough.
Without adequate enforcement of the revolving door ban, there is a risk that former ministers could utilise their relationships with sitting parliamentarians, and any privileged information they have of their previous portfolios, to unduly benefit their new employers. There is also a risk that the promise (explicit or otherwise) of a lucrative job in the private sector after holding office could sway sitting members’ decision-making on issues of importance to the Australian public.
There is therefore a case for independent enforcement of the code, with strict penalties for breaches that undermine the public interest. The Parliament may also wish to consider whether the standards ought to be legislated formally, to improve their durability and remove some interpretative discretion from the government of the day.
Lobbying regulations are inadequate
There are other problems. Enforcement of the Lobbying Code of Conduct is weak, and Australians have little visibility over lobbying activity at the federal level.
While the Commonwealth government maintains a Lobbyists’ Register, only lobbyists who act on behalf of third-party clients are required to be listed. In-house lobbyists, such as people who work for the government relations arm of a large company that tenders for government contracts, are not required to be listed on the lobbyist register. Even third-party lobbyists may not all be on the register. The lobbying code of conduct relies on lobbyists self-nominating to be listed, or government officials identifying and reporting potential breaches.
These issues, combined with the Commonwealth’s lax regulations on political donations and the absence of an anti-corruption body with teeth, limit public transparency and accountability over the relationships between special interest groups and parliamentarians.
The Ministerial Standards should be updated to align with public perceptions of propriety, and expanded to all parliamentarians
The Ministerial Standards exist to protect the public interest. They should reflect the expectations of the public with respect to the appropriateness of certain actions. A failure to align the standards with the public’s opinion of what should constitute a standard would fail to both protect the public interest and protect the reputation of the ministers bound by the standards in the eyes of the public.
Aspects of the Ministerial Standards are lacking compared to other Australian jurisdictions. For instance, the Standards allow ministers to accept in their official capacity ‘customary official gifts, hospitality, tokens of appreciation and similar formal gestures’, so long as the gift is under the allowable limit and the minister follows the relevant procedures for accepting and disclosing gifts. In contrast, ministers and assistant ministers in Queensland may not accept any gift that may compromise their impartiality or create a conflict of interest. Queensland ministers and assistant ministers are also subject to independent checks by the state Integrity Commissioner, to ensure they comply with the Code.
Most Commonwealth parliamentarians aren’t subject to any code of conduct, because the Ministerial Standards only apply to ministers. A broader and stricter code of conduct for all parliamentarians would set the standards for ethical behaviour around potential conflicts of interest, particularly with regards to hospitality, gifts and secondary employment. A parliamentarian code would also improve public accountability over elected officials.
Federal codes of conduct should be independently administered, and there should be salient sanctions for misconduct
Codes of conduct should be independently administered
The Jacqui Lambie Network disagrees with the committee’s statement that the case for independently administering the ministerial standards has not been made. The design or application of the rules for parliamentarians must be the responsibility of an independent body, to ensure that their application is applied equally, without favour, and independently.
For so long as the ministerial standards are administered by the Department of the Prime Minister & Cabinet, and the rules are also determined by the Prime Minister, then both the design and application of the rules are set by the same effective power.
This represents a conflict of interest that would be intolerable in any other field or industry. In the present arrangement, the Prime Minister has the responsibility to design the ministerial standards, assign ministerial portfolios, police the standards during the minister’s tenure, appoint the secretary of the Prime Minister’s department, request the investigation of any allegation of a breach of the Prime Minister’s standards, charge the appointed secretary with investigating the allegation, and disclose the results of that investigation. Any vagueness or otherwise in the standards that requires interpretation requires the person responsible for their administering to seek clarification from the Prime Minister on how they should be interpreted.
It is true, as the committee states, that it is up to voters to judge the Prime Minister on his or her willingness to uphold the principles of the ministerial standards. However, it’s likely that the lack of sanctions for breaches merely contributes to Australians’ declining trust in government and public officials, rather than generating acute political pressure for the Prime Minister to act. In addition, any incident in which the minister in question is a former representative of the current Prime Minister’s former cabinet presents a political imperative to clear the former Minister, to avoid political damage to the Prime Minister in the aftermath.
The Network is of the view that the lack of independent oversight of the ministerial standards has contributed to the enforcement issues relating to the ‘revolving door’ ban, as demonstrated by the lax investigation into the post-ministerial employment of Ms Bishop and Mr Pyne. In the absence of a national anti-corruption commission with teeth, an independent body should be created to monitor, investigate, and respond to breaches of the standards.
There should be salient sanctions for breaching the standards
Opportunities to apply penalties to former Ministers who breach the ministerial standards are minimal. Enforcement of the rules is weak, and the sanctions for misconduct are small.
As a result, former Ministers who are not in receipt of public funding are free to operate largely on an ‘honour system’, and no breach of that honour system can be penalised in a way other than reputationally. As a result, the revolving door ban can be safely ignored by former ministers who wish to take up a lobbying role in an industry that relates to their former official duties. There are many instances where this appears to have occurred, including with regards to the post-ministerial employment of Ms Bishop and Mr Pyne. This sort of activity has broad implications for the public interest and trust in government.
Given the seriousness of these issues, there is a case for increasing the penalties for such misconduct. Fines payable by former ministers who are found by an independent body to have breached the revolving door ban may be necessary to encourage them to follow the rules.
Former ministers who are independently found to have breached the revolving door ban should have their access to Parliament House restricted until the breach has been resolved. This would limit the ability of former Ministers and their employers to unduly benefit from a breach of the revolving door ban by utilising the former Minister’s connections and knowledge of privileged information.
The former Minister’s new employer should not gain undue advantage over its competitors by hiring them in breach of the code. Fines and restrictions should therefore be imposed on employers who knowingly hire a former minister in breach of the ministerial standards. Where a breach is independently shown to have occurred, sanctions should be enforced by parliament at the levels that apply to contempt of parliament.
It may also be necessary to limit access to Parliament House for other employees at the former Minister’s new firm while a breach remains unresolved. This would ensure that the knowledge and networks held by the former Minister aren’t used inappropriately to benefit their new employer.
The former Minister’s new employer could also have their access to government tenders restricted while a breach in the revolving door ban remains unresolved. This would ensure a level playing field in competitive processes that can be lucrative for firms that secure a government contract.
Parliamentarians should be required to publish their diaries
The opportunity to ‘bend the ear’ of our elected officials is invaluable to members of the public and special interest groups who wish to have their say on legislation that matters to them. But parliamentarians can’t possibly meet with everyone who might be affected by policy change. That’s why it’s important they consult with a variety of stakeholders so they can hear all sides of the story when policy change is underway.
In addition, parliamentarians should be accountable for their conduct in relation to donors who contribute large amounts to their parties, to minimise the risk that wealthy special interest groups can buy access and influence at the expense of the public interest.
Parliamentarians should therefore be required to publish their diaries, as is currently required of Ministers in NSW, the ACT and Queensland. Ensuring that voters know who their elected officials are meeting with, and when, will improve accountability over special interests’ access to parliamentarians, and rein in their influence over political decision-making. Publishing diaries would also allow voters to see whether or not their elected representatives are meeting with a wide variety of stakeholders.
To avoid the process becoming overly cumbersome, disclosures can be done periodically and regularly on a monthly schedule, with the previous month’s entries made public at the end of the following month. Diaries should be published online and tabled in Parliament, and any deliberate omission would represent misleading the Parliament and carry the standard penalty for such a charge.
If a breach of any relevant code of conduct is suspected by an independent body to have occurred, parliamentarians should be required to immediately hand over their diaries to the relevant authority.
There should be better transparency and accountability of lobbying activities
The Lobbying Register requires every individual listed to adhere to the Lobbying Code of Conduct, which seeks to regulate the activities of lobbyists in a way that promotes public trust and does not allow for improper influence.
The current Lobbyist Register requires only the registration of those lobbyists who engage with government on behalf of a third party. This narrow definition captures only a small share of overall lobbying activity, leaving the bulk of the industry unregulated and undisclosed. As a result, in-house lobbyists, representatives of peak bodies, unions and company executives are not bound to adhere to the same ethical professional standards as those engaged on their behalf. This creates two sets of standards for people engaging in otherwise identical activity.
To solve this issue, and improve transparency of lobbying activity, all sponsored passholders should be required to register as lobbyists.
Sponsored, or “orange” passes allow the passholder access to the Parliament without requiring the passholder to sign the visitor register. In order to receive a pass, the passholder must be sponsored by a member of Parliament and sign a declaration that the pass is required due to them requiring ongoing unrestricted access to the Parliament as part of their regular business.
Linking the register of passholders with those who are on the Lobbying Register makes intuitive sense. If a person requires a sponsored pass for their regular business, there are compelling grounds to assume that person requires access to the Ministers who work within the Parliament. Any individual who requires meeting with Ministers for their professional work should be bound to engage with these Ministers in a way consistent with professional, third-party lobbyists.
The linking also allows the Parliament to impose an effective penalty for individuals found to be in breach of the Lobbying Code of Conduct, if required. Revoking a lobbyist’s orange pass would effectively restrict their access to the Parliament, which the individual has already nominated as necessary for their regular and ongoing business to be performed. Such measures could also be employed to restrict the access of former Ministers who have been independently found to have breached the revolving door ban in the ministerial standards.
The Prime Minister should consider implementing ‘gardening leave’ for former ministers
‘Gardening leave’ would be a temporary payment for former Ministers who are subject to the revolving door ban. It would extend the existing provisions for redundancy payments for some parliamentarians.
Such leave would serve as recognition that the rules relating to post-ministerial employment represent a restriction on a person’s right to trade. Compensating a former Minister for the value of this time spent outside of work in some way may represent a fair compromise against more stringent application of the post-separation restrictions. It could also reduce the incentive for former ministers to bend the rules when seeking employment after leaving parliament.
It is critical that, should gardening leave be a preferred model to pursue, the penalty for breach of the Ministerial Standards by an individual in receipt of said leave would be both the cessation of the leave payment, as well as some penalty above and beyond the withdrawing of this funding. The restriction would be ineffective for former ministers approaching the conclusion of the 18-month post-ministerial restriction on their employment were this not the case.
There may be concerns that gardening leave would constitute an overly generous approach to former Ministers facing the revolving door ban. The provisions would need to balance public expectations of the entitlements afforded to parliamentarians with the potential public benefit that may arise from compensating former Ministers who face restricted employment opportunities for eighteen months.
The Commonwealth needs a national anti-corruption commission with teeth
The Jacqui Lambie Network agrees with the committee’s view that the federal parliament needs a strong national integrity commission. The Commonwealth is a laggard in this regard: every state and territory in Australia has an integrity or anti-corruption commission (or is in the process of setting one up). Federal parliamentarians aren’t somehow more morally pure than their state or territory counterparts. If the states need an integrity commission, the Commonwealth probably does too.
The design of a future anti-corruption or integrity commission will be critical to its success or failure. The commission should be able to act on tips from whistleblowers, the public and the media. It should be empowered to investigate both corrupt conduct and systemic corruption risks, and publish its findings. And it should be required to refer any criminal conduct to the Commonwealth Director of Public Prosecutions. Importantly, the commission will also require adequate funding to ensure it has the resources to conduct full and proper investigations where appropriate.
These changes are needed to ensure lobbyists and elected officials act with integrity
The public should be comfortable in the knowledge that ministers are ultimately responsible to the public interest, not the Prime Minister.
The Prime Minister cannot appoint a member of Parliament to the Ministry if they are not first democratically elected by the public. As such, the ultimate decision on whether a person can be trusted to serve in a ministry is not a decision for the Prime Minister. Ministries are public office, and the power exercised is derived from public legitimacy. Ministers administer programs that affect the public, allocate public funding to public projects, and enact public policy in pursuit of public benefit.
This means that there is a responsibility attached to positions of public trust such as government ministries that requires each person who holds that position act in a manner which defends and promotes public trust. But if standards established by the Prime Minister relating to the behaviour of ministers are not aligned with public expectations, then ministers could be simultaneously acting in a way consistent with the ministerial standards, as well as inconsistent with public expectations for appropriate behaviour. It is apparent that this occurrence is routine.
The prima facie case that the behaviour of a few former ministers in their post-ministerial careers is falling afoul of public expectations sits uncomfortably with the continued failure of the ministerial standards to find any breach of said standards. This implies that either the standards are too weak, or their administering is too weak, or both. What is proposed here is that it’s both. What is required is a recognition that public expectations should form the basis for the ministerial standards, and that their administering should be subject to the same test.
Instead of generating public pressure for the Prime Minister to act, all the current system achieves is rapidly falling trust in government. Public confidence in government and politics as an institution is a common resource. Any diminishing of the reputation of a party, politician, minister or government quickly erodes impacts on the value of the common resource of public faith in the integrity of the institution more generally.
Politicians should not police the actions of other politicians, as any collapse in trust of one politician has a flow-on effect on the integrity of every other politician that sits in judgement. Politicians do not set their own salary, regulate their own donations regime or administer their own expenses for the same reason. The logic of this argument is already well-established and has been acted on in the above areas by investing this responsibility in an apolitical, independent third party.
This is why it is critical that the ministerial standards - which are important, despite their reputation - are administered independently, by a body that is not comprised of politicians. This body should be given a set of standards that retain the intent of the current standards but are also empowered with the tools required to effectively ensure their adherence.
The alternative is the continued erosion of public faith in the seemingly simple proposition that our leaders are in it for regular Australians, not just themselves.
Senator Jacqui Lambie
Senator for Tasmania