ICAC financial dispute muddies the legal waters

Chris Merritt                 22 October 2021

Published in the Australian Newspaper

It must be wonderful to run ICAC and know that parts of the NSW media are in your pocket. Even after this week’s setback for the commission at the hands of the Auditor-General, much of the media simply looked the other way.

Given the ICAC-driven focus on the private life of Premier Gladys Berejiklian, what they missed was significant: the long-running financial dispute between ICAC and Berejiklian’s government is as good as over.

And it looks like ICAC is losing. A letter signed by ICAC chief commissioner Peter Hall shows the commission is not happy with the way things are going and adheres to a position that has not found favour with Auditor-General Margaret Crawford.

Now consider the timing. This coincides with ICAC’s public hearing into Berejiklian’s private life and her close personal relationship with Daryl Maguire, a former politician who has made several admissions.

ICAC’s own actions show that it considers the financial dispute to be so significant it could give rise to an apparent conflict of interest. This appears to explain why a retired judge, Ruth McColl, was brought in to preside over the public hearings involving Berejiklian’s relationship with Maguire.

Bringing in McColl as an acting commissioner was exactly the right move. She has a reputation for great personal integrity and her presence is evidence of an intention by Hall and the other commissioners to ensure that the hearings are not affected by an appearance of bias.

That is admirable. But now that their actions show they are aware of the risk, the real issue is whether their response is sufficient.

If McColl’s appointment was due to concern about an apparent conflict of interest that could affect ICAC’s commissioners, the community is entitled to know when the commission believes that conflict arose, how long it is likely to persist, and whether it affects others.

Remember, the commission’s staff have been eavesdropping on Berejiklian and Maguire for years — before and after the financial dispute arose.

For more than a year, ICAC has been in dispute with the government over who gets to decide how much public money should go to the commission. ICAC wants a new system that sidelines Berejiklian’s department and NSW Treasury. It has also argued that those departments should have no role in designing the new funding model.

ICAC’s preferred funding model is outlined in its submission last November to the public accountability committee of state parliament. The effect of that model would be to ensure that the commission’s base funding could never be cut.

But it could rise if parliament accepted proposals from reviews which could be triggered by ICAC and would not be conducted by departments that answer to the government.

Instead, ICAC wants to bypass ministerial responsibility and have these reviews conducted by an “eminent person” or by some “transparent and independent process”.

The effect would be to establish ICAC as something approaching a new branch of government that would have far greater financial independence than the judiciary.

This seems to have cut little ice with the Auditor-General. The first recommendation of her report, released on Tuesday, is prefaced by an acknowledgment that “the government of the day is responsible for the financial management of the state”.

She does call for a new funding model that addresses potential threats to the independence of ICAC and the other integrity agencies. For ICAC, so far so good.

But the commission’s defeat soon became apparent.

The key point of the Auditor-General’s report is its acknowledgment that the government of the day is responsible for the financial management of the state. This, according to the report, means the new funding system should be drawn up by Treasury and the Department of Premier and Cabinet.

“In our view, the executive’s involvement in making decisions on appropriations for the integrity agencies is in accordance with the legislative framework for appropriations and Westminster conventions in which decisions about appropriations are initiated by the government of the day and ministers are accountable for the expenditure of public money,” the Auditor-General wrote.

This, after all, is what the concept of responsible government is all about. Governments are responsible to parliament for their decisions.

ICAC’s disappointment is apparent in Hall’s response to the Auditor-General after he was sent an advance copy of the report on October 12.

Hall wrote: “While a new funding model for the commission is clearly required, the commission does not consider the Department of Premier and Cabinet or NSW Treasury should be involved in implementing such a funding model for the commission as proposed by recommendation 1 in the report.”

That letter, which is reproduced in the Auditor-General’s report, indicates that this dispute is not over. ICAC has lost this round, but Hall’s letter confirms that the commission does not accept the recommendation from the Auditor-General.

So if the funding dispute continues, the commission will eventually need to decide whether the appearance of a conflict of interest means it needs to offload future investigations against Berejiklian and her government to acting commissioners like McColl.

Hall and the other commissioners are clearly committed to ending ministerial responsibility for ICAC’s funding arrangements. But they are also keenly aware of the need to avoid the appearance of bias.

There is another way. It might be time to endorse the concept of responsible government and throw in the towel.