Our costly complacency on corruption

Our costly complacency on corruption

The Australian Society of CPAs held its international public sector conference late last month. Discussions ranged widely among Australian and numerous overseas delegates. Most of the latter were from the Pacific or South-East Asia. Corruption was a topic of interest, possibly because a number of auditors were there. Audit is a powerful institution against corruption, especially fraud - but only one of what should be a suite of different mechanisms. Most jurisdictions, including the states and other countries in our region, have a better anti-corruption framework than does our federal government. It led to comments from several delegates about why the federal government seemed so complacent.

The point was raised after my talk on bringing public sector institutions out of the 19th and into the 21st century, and following a presentation by Griffith University's Professor A. J. Brown on whistleblowing programs. Readers may recall from the Informant last year that new federal whistleblowing legislation has been drafted but inexplicably delayed for years, and that despite parliamentary committee recommendations there is no overarching federal anti-corruption investigative body.

Hidden menace ... The recent focus on alleged graft within Customs distracts from the potential problem of wider corruption across the federal bureaucracy.

Hidden menace ... The recent focus on alleged graft within Customs distracts from the potential problem of wider corruption across the federal bureaucracy.Credit:Customs

The Australian Public Service has no cause for complacency. When I last wrote on the topic, I received numerous comments and emails from current and former public servants confirming that, in their view, there is corruption in the APS. Understandably, they were cagey about details. If the examples they had observed had been obvious, with documented evidence, there is little doubt that they would have been dealt with. However, it is much more common for people to see what looks like corrupt behaviour but have no ''smoking gun'' direct evidence. Without evidence, they can feel they have nowhere to go.

Corrupt public servants generally try to hide their trail. As one cynical accountant commented during question time, arguably there might be more corruption in the Commonwealth because federal public servants are smarter, and thus better at hiding their wrongdoing. It is very hard for a body to uncover clever corruption without independent investigative powers.


If corruption involves senior managers, they can not only hide evidence but also persecute anyone who might reveal it. That is why stronger whistleblowing protections and an independent investigative body are so needed.

There is no reason to suppose that corruption is rife in the APS - but, equally, without these mechanisms, there is no reason to believe it is absent. Establishment of an anti-corruption body would be a winning each-way bet for the public service. If there is little corruption and the body has a tiny workload, that will be good news. If it does uncover corruption, that too will be good, because it will stop it spreading and prevent taxpayers from being ripped off.

The lack of resources devoted to investigating corruption in the APS was illustrated by revelations last month that, due to ''chronic under-resourcing'', the Australian Commission for Law Enforcement Integrity had been forced to second staff to help with its oversight of the Australian Customs and Border Protection Service. Where had they come from? Unfortunately, some had come from Customs itself.

There is, however, a view among many senior public servants that stronger anti-corruption measures are not needed precisely because if there is corruption in the APS, Australia will be better off if it remains hidden. This view, although wrong, is not entirely baseless. One of the most widely cited measures of country corruption, Transparency International's Corruptions Perception Index, measures not actual corruption but how corrupt a country is perceived to be by selected experts. Hidden corruption is less likely to be perceived. So a country good at keeping a lid on corrupt activities by its public service will rate higher in the index. It is a view that would resonate with some members of the present government. If it were not for the NSW Independent Commission Against Corruption's investigations into former senior NSW Labor figures, the government would not be fighting quite as desperately to hold NSW seats.

It is possible - no matter how great the present level of denial might be - that a federal equivalent of the NSW commission would reveal a high level of corruption. In the short term, this would tarnish Australia's reputation. But consider how much better that would be than having hidden corruption grow until finally it erupts in a scandal so gross that nobody can sweep it aside.

I have also heard a view that anti-corruption bodies generate their own work. That is, in the absence of corruption, they will drum up cases so as to keep their staff occupied. The trouble with this view is that there is not a skerrick of evidence that this happens in the jurisdictions that do have such bodies. It is a false premise that some bureaucrats use to frighten ministers.

The third objection is that anti-corruption measures are expensive, that they cost more to put in place than the cost of the corruption itself. Again, to the extent this is true it is only in the short term. If people start to think they can get away with corruption, then it will spread, and over time the costs will be large.

The World Bank tries very hard to combat corruption because it is so closely correlated with poverty. Without measures to control corruption, it is hard for a country to make progress (see Strengthening governance: tackling corruption, World Bank, 2012). Although Australia has nothing like the corruption common in the very poorest countries, we also have a level of complacency about our national public service that is puzzling to our neighbours. They know that people are much the same, in whatever system, and if presented with temptation and no control or oversight, a percentage will lapse. That percentage is likely to be higher in very poor countries where the rewards are proportionately higher. Nevertheless, Australian public servants are people too, with all the virtues and failings of people everywhere. It is patronising and wrong to suppose that our public servants are universally better than those in other countries.

Nepotism and cronyism in selection and promotion is one of the hardest forms of corruption to investigate and monitor.

Our corruption, though, can take other forms. One particular concern raised after my last article on this subject was the extent of nepotism and cronyism in selection and promotion. This is one of the hardest forms of corruption to investigate and monitor. A complaint may be real, or just sour grapes on the part of an unsuccessful applicant. Selection and promotion ''on merit'' is not objective, because it depends on an interpretation of merit. This is difficult territory. It is, however, important because, if we count salary and full overheads, a corrupt selection decision can have costs of many millions of dollars over the life of the person unfairly put into a position - to say nothing of any misery they inflict on co-workers.

When Prime Minister Julia Gillard began her push into western Sydney last week, the Financial Review's Phillip Coorey quoted an anonymous Labor MP saying Gillard ''should make a major announcement or statement on corruption to tackle head-on the damage being inflicted on Labour in NSW by the ICAC inquiry into members of the former NSW state government''.

If this government is to gain the high ground in improving the quality of public administration, it should make a serious commitment to strong, independent anti-corruption bodies with real teeth to investigate. There are some senior figures still pushing for action on integrity. They notably include Labor senator John Faulkner. He gave an outstanding speech in December last year to an ''integrity in government'' conference, noting that in the ''roll-call of democracies committed to strengthening a global culture of transparency and accountability … Australia is a notable absentee''. The government should heed the warning that - without action - our integrity standards will sooner or later fail.

Stephen Bartos is the executive director of ACIL Tasman and a former senior public servant.


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