By Sumeyya Ilanbey and Annika Smethurst
The Andrews government improperly awarded a Labor-affiliated union a multimillion-dollar contract to deliver a training program that the anti-corruption commission found was an abject failure in a scathing report that criticised ministerial staff for inappropriately pressuring independent bureaucrats.
The Independent Broad-based Anti-corruption Commission found on Wednesday that staff in the health ministers’ and Premier’s Private Office (PPO) breached their ethical obligations by pressuring health department officials to award a contract to the Health Workers Union (HWU) to train hospital staff to deal with violence against health workers.
The report by the watchdog found Premier Daniel Andrews, who was lobbied by union boss Diana Asmar for the funding, announced an additional $2.2 million for the union before the election but could not recall key details when grilled by investigators.
IBAC cleared Andrews, former health ministers Jill Hennessy and Jenny Mikakos, and ministerial and department staff of corrupt conduct, but provided a damning assessment of the centralisation of power under the premier’s watch and a “significant erosion” of ministerial accountability.
“The union was given privileged access and favourable treatment,” IBAC said in its report tabled in parliament on Wednesday. “The combined effect of these failings and unethical conduct resulted in a contract that should not have been entered into with the union and an outcome which was not in the public interest.“
Andrews on Wednesday stressed that there were no findings against anyone and rejected any suggestion that his office undermined the independence of ministers. He said it was a probe into a one-off incident that occurred five years ago.
“The anti-corruption commission has looked at a series of matters from some years ago, and have found no corrupt conduct,” he told reporters.
“That’s just a fact. I can’t change what happened four or five years ago. [But] we can to make sure that the highest standards are met in the future. That’s the fundamental responsibility that I have.”
Operation Daintree, revealed by The Age in November, investigated for three years how the Department of Health and Human Services (DHHS) awarded the HWU a $1.2 million contract on the eve of the 2018 election without a competitive tender process because of significant pressure from ministerial staff, the premier’s office and Asmar. This is the fourth known IBAC probe in which Andrews has been interviewed.
Mikakos, who became health minister after the 2018 election, described staff from the premier’s office pressuring the department as inappropriate, the report stated, and that it appeared the contract was signed to placate Asmar and looked like a “way … of injecting funds into the HWU”.
She said she would not have entered into the contract because she felt uneasy about trade unions providing training given the findings of the Royal Commission into Trade Union Governance and Corruption.
Before the 2014 election, the then-Labor opposition made a series of commitments to address violence in healthcare settings. Asmar met staff in the premier’s office and Hennessy’s office in early 2018 on the proposed training program to lobby the government to fulfil that pledge.
Throughout that year, political staff pressured the department to award the contract to the union, according to IBAC’s report, despite the union’s newly formed training entity not being a registered training organisation or having relevant experience in providing training to healthcare workers.
The report described the scheme as another example of the “phenomenon of grey corruption that is of increasing concerns to integrity bodies”.
Political staff initially proposed to the union that it partner with the TAFE sector to deliver the training, but IBAC found Asmar was unwilling to engage with that model. The investigation report found an adviser to the health minister helped the HWU shape the unsolicited proposal that the union deliver the training, before it was submitted to the department for approval.
A key focus of IBAC was a private meeting between the premier, Asmar and others on October 4 because it related to a 2018 election commitment that effectively extended funding to a contract that was improperly awarded.
Asmar told investigators that Andrews promised her an election commitment to fund security officer training for 1000 workers, which the premier announced standing alongside the union boss on October 23. But in his interview with IBAC, Andrews said he could not recall what was discussed in the private meeting or the $2.2 million election pledge he announced at the press conference.
“The premier had no recollection of what he discussed with Ms Asmar, no recollection of any discussion with his advisers that led to this announcement and no awareness that they and the minister for health’s adviser had discussed a detailed proposal,” the report said.
Premier Daniel Andrews, then health minister Jill Hennessy (third from right) and union leader Diana Asmar (right) announcing the $2.2 million election commitment ahead of the 2018 election.Credit:
“It is highly likely that the premier was informed of the commitment proposal as formulated by his advisers and conveyed the substance of the intended commitment to Ms Asmar when he met her before making the announcement. During his examination, the premier ultimately accepted that he may have done so.
“The premier initially said in his evidence that the announcement did not involve a commitment to any particular provider. He was then played a video clip of his announcement that showed the commitment as being one in partnership with the HWU. The premier had no memory of that commitment”.
IBAC concluded that Andrews’ announcement “constituted a pre-election commitment favouring the union” and that Mikakos told investigators she believed the $1.2 million contract and the $2.2 million pledge were “interrelated” and both needed to be delivered in a timely manner.
However, the agency said it could not prove that the premier was aware of the serious probity concerns that had been raised about the training program contract.
Andrews made the election commitment for the training program seven days before the tender had been finalised, a sign that political staff believed the awarding of the contract to the union was a fait accompli.
The contract was executed just hours before the government entered into caretaker period on October 30.
The union’s training body – the Health Education Federation – only trained 83 of the planned 575 staff between October 2018 and March 2020, when the training ended because of the COVID-19 pandemic.
IBAC found the quality of the training was poor: 60 per cent of hospital staff who attended the training believed the trainers were not organised or prepared, while nearly 80 per cent believed the trainers did not have in-depth knowledge of occupational violence and aggression, nor were they providing a program that was relevant to the health sector.
Hennessy with Andrews in 2018.Credit: Scott McNaughton
The commission criticised the department in the report for succumbing to pressure despite its significant concerns about the proposal, including the union’s capacity to deliver the training program – a conduct that the commission said fell short of the standards required of public servants.
“The decision by DHHS to contract with [the union] without undertaking a competitive procurement process was driven by a belief of senior staff in that department that that was the minister’s and government’s preference, and by ongoing pressure from the ministerial adviser and secretary of the union,” the report states.
“There were serious concerns about the standard of training provided by [the union] under the contract. However, intervention in 2019 and early 2020 by another adviser in the new health minister’s office, on occasion at the request of a senior adviser in the PPO, dissuaded DHHS from taking steps to terminate the contract.”
When department officials tried to cancel the contract, staff from the premier’s office intervened to keep it intact, IBAC found.
The commissioner was critical of the centralisation of power in the premier’s office and said the probe was a “further illustration of the significant deterioration in the observance of more traditional rules and conventions, which have affected the role and independence of ministers and their departments”.
It also described the scheme as another example of the “phenomenon of grey corruption that is of increasing concerns to integrity bodies”.
Soft or grey corruption, IBAC said in its report, involves bending or breaking rules in a way that unfairly favours allies of decision-makers. The watchdog said it corroded standards of public governance, and, if left unchecked, increased the risk of corrupt criminal offending.
IBAC said its finding of centralisation of power was based on the testimonies of the two former health ministers – Hennessy and Mikakos – with the latter describing the premier’s office as “having its tentacles everywhere”. The handover meeting between the two women had “principally focused on how interventionist the PPO and premier had been in the health portfolio”, Mikakos said.
Former health minister Jenny Mikakos was scathing of the centralisation of power under Andrews. Credit: Joe Armao
Hennessy told investigators she had no detailed understanding of her adviser’s role in developing the $2.2 million election commitment and that there had been a “significant expansion” of the premier’s office since she was first elected in 2010.
“Former minister Hennessy observed that the growth in the PPO reflected a ‘greater centralisation that has occurred in government … across many Westminster systems … a centralisation of decision-making and media management’,” the IBAC report states.
“In her submission on the draft report, Ms Mikakos referred to the interventions of the PPO in relation to the management of the [HWU] contract as being ‘inappropriate’.
“[She] said that the Westminster tradition of ministerial responsibility was meaningless when ministers and their staff could be directed by others in government as to how to oversee their departments.”
IBAC said the probity risks posed by unsolicited proposals were compounded in this instance because of the conflict between the government’s interest in procuring the most suitable supplier and Labor’s interest in helping an affiliated union. Asmar is a vocal figure in the Labor Party, to which her union pays $80,000 a year in affiliation fees.
Mikakos, who resigned in late 2020 after Andrews assigned responsibility for the failure of hotel quarantine to manage the COVID-19 pandemic to her, told investigators the premier’s office would “move heaven and earth” to keep the union movement happy, citing the outcomes for unions during enterprise bargaining negotiations.
IBAC made 17 recommendations, with a focus on improving the standards and the accountability of ministerial advisers and staff in the premier’s office.
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