Chaos on Capital Hill: Carol Mills and the Department of Parliamentary Services

The head of any other department, under similar circumstances, would have been pressured to leave by now.

The Parliamentary Services Department and its embattled secretary, Carol Mills, have been in the spotlight again. The latest trigger was a swingeing report by the Australian National Audit Office, Managing Assets and Contracts at Parliament House (February 2015). The report arose out of earlier concerns from members of the Senate finance and public administration legislation committee over the department's disposal of heritage assets and its contract management practices. The ANAO report can be added to the earlier findings of the Senate privileges committee, which had examined Mills' questionable conduct over the use of CCTV. Combined with the adverse publicity surrounding Mills' nomination for the position of clerk of the British House of Commons, which was vigorously attacked by clerk of the Senate Rosemary Laing, evidence is mounting that the department's leadership is in serious trouble. This continuing crisis in turn reflects poorly on Parliament's own accountability structures.

The ANAO recognises that the department's asset and contract management systems are still works in progress. It is less than three years since the Senate finance and public administration legislation committee made over 20 wide-ranging recommendations to reform the department's management. These findings coincided with Mills' appointment from the NSW public service, where she had led several government departments, and she now had a clear mission to introduce sweeping reforms.

Nonetheless, even allowing for the short time frame, the ANAO criticises many aspects of the department's current performance. The Senate committee's chairman, opening a hearing on the report, described the findings as "damning". The retiring Auditor-General, Ian McPhee, when pressed, admitted the report was "at the more critical end of the reports we produce". He and his audit team were unable to come up with any significant departmental successes to balance the catalogue of failures.

The disposal of heritage assets had earlier become a focus of public scandal after the then Labor senator, John Faulkner, had discovered that two antique billiard tables were sold off cheaply to departmental officials without a proper heritage assessment. Any subsequent reforms of managerial systems would therefore be expected to have given high priority to improving the processes surrounding disposal of assets. The ANAO discovered, however, that the department was unable to demonstrate "broad or systematic" consideration of cultural or heritage values in its capital works program or in storing or disposing of assets. For example, the ANAO reviewed 24 assets that were disposed of in 2013-14 but in only two cases could find clear evidence of a heritage assessment before disposal. Even where formal assessments were conducted in relation to the heritage impact of minor capital works, the results were not recorded centrally. This omission impeded the development of a consistent and transparent set of guidelines on heritage values.

The general area of contract management also revealed a surprising absence of clear procedures and documentation. Given the number of services provided by the department that are outsourced to private contractors, all contracts need to be properly drawn up and supervised. In spite of a new contract management framework including a range of policies, procedures and systems, "systemic gaps and weaknesses have led to inconsistent, and at times non-compliant contracting processes" across the department. In particular, the ANAO refers to "out-of-date guidance material, inadequate training and poor record-keeping practices". These deficiencies ultimately undermine the department's "ability to demonstrate effectiveness of its contracting activities and financial accountability". While the department has improved performance measures for cleaning and catering, retail licensing is poorly managed in terms of policy and forward planning.


The ANAO makes several recommendations on contract management, which amount to a total revamp of all its procedures, from guidelines and training, through developing business cases and value-for-money assessments, to improved performance indicators and better record-keeping and transparency. The department has agreed to all the recommendations.

As well as bearing major responsibility for the department's performance, Mills has been further exposed to criticism by a number of personal actions that brought her into conflict with senators. One concerned the use of Parliament's CCTV to identify a whistleblower who gave information to Faulkner. In examining Mills' role in the incident, the Senate privileges committee did not find her guilty of contempt, largely because of ambiguity in the relevant code of practice. However, the committee did determine that Mills had seriously misled an earlier estimates committee hearing over the date on which she had first heard about the incident. This amounted to "a serious breach of accountability and probity".

To the obvious outrage of senators, Mills chose a more recent estimates hearing to attack the privileges committee's finding in public, saying the committee had relied too heavily on advice from the Senate clerk, Laing, and had paid insufficient attention to alternative advice bought by the department from the Australian Government Solicitor (at a cost of more than $80,000). She also said she had been denied natural justice by not being given the opportunity to respond to the findings before they were finalised. Her objections are open to challenge, particularly given the legal autonomy traditionally claimed by parliamentary privileges committees. Moreover, on the documentary evidence provided by the committee, the charge of misleading the Senate seems clear-cut. Whatever the merits of the issues, Mills' open defiance of the Senate will not help her own cause or that of her department.

Another aspect of Mills' conduct that provoked senators' anger is her role in the letting of a contract for photographs to celebrate Parliament House's 25th anniversary. A Sydney photographer, Anne Zahalka, told a magazine she had already been invited to do the work some months before the decision was formally made and announced. Under questioning, Mills admitted to having earlier mentioned the commission to Zahalka, a Sydney neighbour of hers, during a local street party. However, she strongly denied any inference that she had improperly secured an advantageous commission for a personal acquaintance.

In an appendix to its report, the ANAO gives a timeline of departmental actions involved in this commissioning process. The process as recorded appears to be consistent with proper procedures, which allow for commissions of this size ($30,000) to be granted without a formal tender, though no reason is recorded for approaching only Zahalka. The report makes no reference to any private communications between Mills and Zahalka, making it difficult to judge whether Mills exerted undue personal influence over the commission. According to the ANAO, the absence of relevant records undermines the transparency of this decision (as with many other procurement decisions). It would have been "prudent" for the DPS secretary to have "documented an approach to manage any potential conflict of interest arising from prior acquaintance with Ms Zahalka". Mills can claim to have been cleared of the corruption charges made by senators. But, at the very least, she has failed to properly manage a conflict of interest.

Mills therefore stands responsible for managing a department that has been exposed as seriously deficient in its heritage management and contracting procedures. She has also been found guilty of misleading a Senate committee and of mismanaging a blatant conflict of interest. At the same time, she is seriously at odds with the clerk of the Senate and with two Senate committees.

The secretary of any normal department in similar circumstances would surely have been pressured to resign or at least to take leave. However, the DPS, as part of the legislative branch of government, is outside the purview of the Public Service Act. Its secretary is responsible not to a minister but to the two presiding officers (the Senate president and the House of Representatives speaker) acting jointly. The public service commissioner plays only a minimal role acting as a distinct parliamentary service commissioner. The DPS's external accountability regime is therefore significantly more relaxed than that of mainline government agencies, a factor that may help to explain its more casual approach to internal accountability and process.

In such a context, good governance relies heavily on ethical values and strong interpersonal relations.

The department must also cope with an inherent conflict between managerial and professional values. Historically, before the separate DPS was established, the management of parliamentary services was the responsibility of the clerks, whose prime focus was on the formal business of their respective chambers and offering procedural advice to the presiding officers, paying less attention to overseeing services. Indeed, this combination of roles persists in Britain's House of Commons, which gives more weight to criticisms of Mills' possible appointment as House of Commons clerk last year. She evidently lacked relevant professional experience as a parliamentary official. (As a result of last year's upheavals, the House of Commons governance committee has now recommended creating a separate executive position to oversee parliamentary services.)

Parliaments worldwide are experiencing tensions between, on the one hand, the clerks and their professional staff, who are imbued with the values of parliament itself, and, on the other hand, the managers who have been brought in to impose greater efficiency and effectiveness on what have become large and often unwieldy organisations. As in many other similar institutions that have been subjected to managerial reforms – such as hospitals, universities, museums and law courts – the professionals resent the managers, who have little feel for the overriding mission, while the managers despise the professionals, who cannot appreciate value for money.

The conflict is inevitable and cannot be resolved, only managed with mutual understanding and goodwill. Again, the premium is on good interpersonal relations and trust. When these break down, as they appear to have done on Capital Hill, everyone loses.

Richard Mulgan is an emeritus professor at the Crawford School of Public Policy at the Australian National University.