Scandals and ‘soft’ corruption: How integrity became a Victorian election issue

Daniel Andrews was unusually contrite when Victoria’s integrity agencies handed down a damning report last month excoriating the rotten culture of the Labor Party. The Victorian Premier apologised for the “shameful and absolutely disgraceful” behaviour of his former ministers after an investigation into branch stacking and the misuse of publicly funded staff.

He declared he would accept all 21 recommendations of “Operation Watts”.

For a leader who has consistently dodged questions on accountability, and weathered a steady trickle of political controversies over eight years in office, perhaps it had finally dawned that voters are prepared to punish politicians who fail to act with integrity.

But in the wake of the federal election, where teal independents romped into parliament on the back of a strong anti-corruption and climate change platform, concerns are growing inside Labor that the Andrews government has come too late to its realisation, and that simmering integrity concerns might boil over ahead of November’s state election.

Daniel Andrews after the release of an IBAC report into branch stacking.Credit: Paul Jeffers

It’s been a rocky eight years. Labor has been accused of unwarranted secrecy around its controversial health decisions and quarantine hotels; it has been involved in branch-stacking scandals, deals with unions and cosy barroom chats with development lobbyists. Andrews and his Labor colleagues have racked up negative reports from integrity agencies, but until now the opprobrium has not stuck.

Part of the problem, says IBAC commissioner Robert Redlich in an interview with The Age, is that the powers granted to his watchdog organisation are still not commensurate to the task.

“There has not been sufficient recognition given to the importance of exposing soft corruption,” he says.

This includes practices such as pork barrelling - using public money for private political gain - and using publicly funded electoral staff to do internal party work to advance the interests of one or another faction. If politicians put political expediency ahead of the public interest, says Redlich, “then we’re on a slippery slope”.

It’s not just Labor that has been dogged by integrity scandals. Opposition leader Matthew Guy, who had clearly read the tea leaves from the federal election, made honesty in government a major theme ahead of the November state poll. But his pitch was seriously undermined this week after The Age revealed his chief of staff asked a wealthy Liberal donor to make more than $100,000 in payments to his private marketing business in addition to his taxpayer-funded salary.

Integrity is turning into a major issue in the November state election campaign.Credit:

It was once a political truism that integrity and transparency are not vote-changers. Now they could be the issues in an election year.

But this confronts the two major parties with a conundrum: they must be seen to be acting to clamp down on corruption, including “soft” or “grey” corruption, but that would fundamentally interrupt a business-as-usual approach to politics.

It has taken a long time for Victoria to get to this point, but voters now appear concerned about issues such as the strengths and weaknesses in our integrity laws and rules, and how much transparency there really is about how our politics work.

Parliamentary scrutiny

In 2018, Daniel Andrews won a landslide victory on his reputation as the “can do” Premier who kept his promises and built things. In some ways a disrespect for process and consultation was an electoral positive. (As planning minister in the Baillieu government, Matthew Guy prided himself on having a similar image.)

Today Andrews, who is close to becoming Labor’s longest-serving premier, faces questions over the growing list of scandals and his tendency to overlook process and the public release of information. The refusal to publish the advice of Chief Health Officer Brett Sutton during lockdowns, the lack of consultation around the Suburban Rail Loop, and the repeated denials of freedom of information requests are threatening to become a defining feature of his government.

The government initially fought the Ombudsman’s investigation into the red shirts scandal, then it took her to the High Court to prevent her from publicly investigating, before a damning report found Labor misused almost $400,000 in taxpayer funds to fight the 2014 election campaign.

The government’s decision-making is centralised and secretive. The Premier’s Private Office (PPO), with its almost 90-strong battalion of advisers, is unaccountable to Parliament but arguably wields more power than the Labor caucus, ministry and public service.

Redlich, Ombudsman Deborah Glass and integrity experts say they are increasingly worried about the lack of accountability. It is also why Redlich and Glass, in their joint Operation Watts report detailing Labor’s rotten culture, went so far as to describe Victoria as a “laggard rather than a leader in parliamentary integrity”.

“If you have enormous numbers of advisers and they’re performing a function, that inevitably means they’re performing functions that will intrude into what previously was the responsibility of individual ministers and their advisers,” Redlich tells The Age.

“That sphere of influence has spread and means the risk arises that the individual ministers don’t exercise the same level of independence and authority they had, and the Premier’s private office exercises greater authority.”

Andrews isn’t the architect of this culture. A number of integrity experts say its roots can be traced to the Kennett government of the 1990s. But Andrews has benefited from and perpetuated it. He was schooled in the Labor Party’s brutal factional system and it’s a standard he has also set over the past 12 years as Labor leader.

Take, for instance, the government’s approach to the supremacy of the Parliament.

At the end of every parliamentary sitting week, bills in the lower house - where the government commands a thumping majority - are guillotined, meaning a vote is passed regardless of whether it has been properly debated. Information provided by the parliament shows just 1 per cent of bills goes through a consideration-in-detail process, part of the Westminster system that ensures proposed laws are thoroughly scrutinised. In the upper house, where the government does not have a majority, 79 per cent of bills have gone through the committee process.

Non-government MPs in the lower house cannot introduce private members’ bills, government backbench MPs cannot say much beyond their talking points, and the Opposition is rarely able to compel the government to produce documents. Hundreds of “questions on notice” remain unanswered.

The Andrews government often claims executive privilege over sensitive documents and refuses to release them to Parliament. Then Special Minister of State Gavin Jennings was suspended from Parliament for six months in 2016 for failing to produce documents relating to a range of projects. In 2017, a parliamentary committee inquiring into gaming licensing was blocked from receiving documents related to the issuing of gaming licences after the Attorney-General intervened.

In September 2020, at the height of Victoria’s long COVID-19 lockdown, the Legislative Council resolved to compel the government to produce the evidence that underpinned the government’s decision to impose a curfew. More than eight months later, the government responded by refusing to release relevant documents, citing executive privilege.

Melbourne during lockdown.Credit: Getty

In a rare public assessment, the clerk of the Victorian Legislative Council, Andrew Young, criticised the withholding of documents.

“This practice of claiming executive privilege and withholding documents is problematic as there is no independent assessment as contemplated by the House, meaning the government regards itself as the sole arbiter of its own claim,” Young wrote in a 2019 submission to a Tasmanian parliamentary committee.

Voters are, thus, kept in the dark. Currently, the NSW Parliament is scrutinising how former deputy premier John Barilaro was given a $500,000 trade job in New York. The Perrottet government has been handing over documents requested by the parliamentary committee investigating the saga. It is unclear if the Victorian parliament could have pursued a similar issue because the government claims executive privilege or cabinet-in-confidence and denies access.

The integrity machinery

Victoria has fallen behind other states and territories on some – but not all – integrity fronts, according to multiple integrity experts. Centre for Public Integrity research director Dr Catherine Williams says the Andrews government’s lobbying regulations, and the power of its integrity’s commission, lags Queensland and NSW. And when the Queensland government implements a suite of reforms proposed by recent and forthcoming reviews, the Sunshine State will have the country’s best integrity regime, according to A.J. Brown from Transparency International in Australia.

Victoria was late to embrace the idea of a dedicated anti-corruption watchdog, the Baillieu Coalition government only establishing the Independent Broad-based Anti-corruption Commission in 2012, years after similar moves in NSW (1988) and Queensland (2002).

Even then, the original IBAC was slammed by integrity think tank the Accountability Roundtable as a “toothless tiger” because it was only allowed to investigate “serious corrupt conduct”, precluding it from investigating more grey areas, including misconduct in public office, conflicts of interest or MPs breaching codes of conduct.

The Andrews government increased the jurisdiction of IBAC in 2016, removing the requirement for corrupt conduct to be “serious” and adding the ability to investigate misconduct in public office. Yet it remains more limited than the NSW ICAC, which has broad powers to investigate any allegation upon suspicion of corruption, including alleged breaches of the NSW ministerial and MPs’ codes of conduct. Victoria’s IBAC would have been unable to investigate, for example, former NSW premier Gladys Berejiklian, who was probed by ICAC over whether she breached public trust or encouraged corrupt behaviour during her relationship with Daryl Maguire.

Throughout his first four years as commissioner, Redlich largely avoided the media and remained tight-lipped about the relative strengths and weaknesses of the state’s anti-corruption watchdog. But in exclusive comments to The Age he has called on the government to revisit the commission’s powers and lower the threshold for investigations in line with ICAC.

“We should not have a threshold which requires us to have a reasonable suspicion that a relevant offence has been committed before we can investigate,” Redlich says. “Very often when it comes to IBAC, whilst it’s plain enough there is unethical behaviour worthy of investigation, unless the material goes so far as to substantiate or meet that threshold, we must dismiss it.

IBAC commissioner Robert Redlich and Victorian Ombudsman Deborah Glass detail the findings of their agencies.Credit: Paul Jeffers

“In many of our investigations we do not find ... that a relevant offence has been committed, but we uncover fundamental institutional failings, and that’s the importance of integrity commissions.”

Redlich also wants the Parliament to amend the IBAC Act so people named in investigations cannot tie reports up in courts using the natural justice process. He still believes, though, that Victoria’s far more stringent requirements for public hearings are superior to the ICAC model.

“I do feel it’s important before you expose someone publicly to an examination … you have to be satisfied you’re not going to unreasonably damage their reputation or health and wellbeing,” Redlich says.

The lobbyist code

Among the biggest contributors to integrity-related controversies are politically-connected lobbyists representing corporate interests to the government.

Victoria’s code for lobbyists, introduced in 2009, has long been regarded by experts as ineffectual. Unlike NSW and Queensland, Victoria’s rules are not enshrined in legislation and Victorian ministers are not required to keep public diaries of their meetings and contacts with lobbyists.

Those rules came under the spotlight in late June, when Andrews appointed Pascoe Vale MP Lizzie Blandthorn to the sensitive role of planning minister. This, despite Blandthorn’s brother John Paul Blandthorn being a director of Labor-linked lobbying firm Hawker Britton, which represents major development, construction and infrastructure clients.

Integrity experts, including Monash University associate professor Yee-Fui Ng, say Victoria’s regulation of lobbying is weak compared with NSW, Queensland and overseas jurisdictions such as Canada and the US and is set to fall further behind, given even tougher new laws promised in recent weeks by the Queensland and NSW governments.

The only penalty for a lobbyist contravening the code in Victoria is that they might lose their registration. In July, the government confirmed that no lobbyist had been deregistered in 13 years since the code came into effect.

Last month, following the release of the Coaldrake review of accountability issues in Queensland’s public sector, that state’s Labor government pledged that staff meetings with lobbyists will be published and cabinet documents - including submissions, agenda and decision papers - will be released within 30 days instead of 30 years.

The Andrews government has, however, taken bold steps in one area: political donations. In 2018 it introduced what it claimed to be the strictest donation laws in the country. This year’s election will be the first contested under the new rules, including donations capped at $4000 (indexed to $4210) over four years, and “real time” (about three weeks) public disclosure of all donations over $1000 ($1080).

Yet experts point to gaping holes. There is no cap on donations at local government level, and no cap on spending, leaving Victoria one of only two states in the country without spending caps. Ng says the lack of a spending cap “generates an arms race for parties trying to outspend each other”.

“Spending caps would also level the playing field for less well-funded and smaller parties, and independents,” she says.

Victoria’s high moral ground

Counter-intuitively, some historians and political pundits argue that Victoria’s integrity shortcomings are, in part, the result of a cleaner political culture here than in other states. Integrity experts often note that major reforms tend to come in response to scandals.

The Queensland Crime and Corruption Commission (CCC) was introduced after the Fitzgerald inquiry exposed widespread corruption under the Bjelke-Petersen government. Proposed lobbying laws in NSW, meanwhile, are a response to an ICAC report warning of corruption linked to lobbyists.

It’s often argued that governance in Victoria has traditionally been a cut above the states to our north and west. The Rum Corps in NSW and a frontier ethos in Queensland, for example, are often cited as cultural backdrops conducive to corruption.

“Political culture is important,” says Brown. “One reason why Victoria and the federal government have been relatively slow to the party on integrity reforms is because, in the past, the culture and practices of governance have often been at a generally higher standard than in other jurisdictions.”

Not all agree with the “Victoria is different” argument. Either way, once in place, anti-corruption bodies and tough rules around lobbyists and donations tend to generate their own scandals by exposing them.

In Victoria, IBAC is arguably in catch-up mode, and recommendations from recent investigations have the potential to have big implications for the state’s integrity regime if accepted by the government.

John Woodman, the key figure in the Operation Sandon inquiry.Credit:

Operation Sandon, an IBAC investigation into allegations of corrupt conduct involving councillors and property developers in the City of Casey in Melbourne’s south-east, exposed fundamental failings in Victoria’s planning and lobbying laws. Redlich is highly likely to recommend strengthening Victoria’s lobbying laws and transparency when he hands down his report, which has been held up in the courts.

“There needs to be a legislated code of conduct for lobbying,” Redlich says. “Transparency by ministerial advisers and ministers, so there is some record kept on who meets whom.”

The government is highly likely to adopt those recommendations. Minister for Government Services Danny Pearson said the government would “take appropriate action” when IBAC publicly releases the Sandon report.

“The government believes that reforms to lobbying rules are needed,” Pearson told The Age. “Victorians deserve to have confidence in the public institutions, politicians and political parties that serve them.”

Cutthroats and culture

Behind the scenes, some senior insiders – including ministers – point to the Watts report as evidence of IBAC and Ombudsman purism, arguing that the agencies spend too much energy chasing matters that do not amount to serious corruption. They argue electorate staff are intrinsically political; that party members are an essential conduit into the electorate. They ask whether integrity agencies, experts and journalists in ivory towers really understand the cut-throat practicalities of politics.

Redlich says this is a cop-out. And Glass offers a solution. The answer to integrity scandals, she says, is not another referral to police, IBAC or the Ombudsman of the sort political parties tend to resort to.

“The answer is for parliament – and I include all of its members from all parties – to get its own house in order,” Glass says. That is why she and Redlich recommended an independent parliamentary integrity commissioner and parliamentary ethics committee in the Operation Watts report, and other reforms for an “ethical framework”. “It’s a package of reforms that need to be considered together, not cherry-picked.”

But Labor’s longevity brings with it the political problem of the public perception of a government picked away at by scandal. Growing tension between the government and integrity watchdogs is palpable.

“The longer a government is in office ... the greater the likelihood that integrity issues will arise and that becomes an occupational hazard for the integrity agency, who must examine those issues,” Redlich says.

It’s one of the reasons IBAC is “giving serious consideration” to budgetary independence, removing its funding from annual budgetary decision-making, and will most likely make a submission on the matter to the government before November’s election.

It is not clear how the government will respond. Pearson said IBAC had broad powers and sufficient resources. Redlich has complained about the ability of people adversely named in his reports to hold them up in the courts. But the Victorian Inspectorate, which oversees IBAC, has given the government assurances that the current “natural justice” provisions are appropriate.

Pearson said the most recent budget provided IBAC with $32.1 million in additional funding, and an $8.6 million ongoing uplift to its annual base funding.

Redlich wants that funding to be independent of executive decision-making: for now, he must appeal to the Treasurer if he wants additional resources for an investigation. The Opposition is saying it is prepared to countenance the idea of an independent funding model.

“Governments should not intentionally or through process threaten the independence of agencies,” says veteran Liberal MP David Davis.

But integrity is not only a problem for Andrews. Matthew Guy was re-elected as opposition leader in September carrying baggage of his own from his time as planning minister, and from the lobster and Grange dinner with the alleged boss of the Victorian mafia during his last stint as opposition leader. More recently he has faced controversy over the attempt to solicit $8000 per month from a wealthy donor on top of the salary of his chief of staff Mitch Catlin.

From a recent spate of IBAC reports, Victorians can expect to see reform promises including, possibly, new rules on lobbyists, more restrictions on donations and greater transparency around ministerial diaries. But just as important and perhaps more difficult to achieve is a change in attitude.

In his refreshingly frank integrity review to the Queensland government in June, academic and former Goss government insider Dr Peter Coaldrake said that while governments in panic will forever add more apparatus to the machinery of integrity, the key to lasting positive change is culture.

“Good government is not necessarily a comfortable government,” Coaldrake explains to The Age. “Long-term government requires preparedness for self-criticism and introspection, and shifting gears.

“The quest for clean and open government, for accountability and transparency, should be a never-ending journey.”