Review of Parliamentary Entitlements Committee Report April 2010
Chapter 6 - Governance
"Poor governance has significant negative effects. Governance through law, regulation and process makes power subject to performance and accountability and leads to better outcomes and conduct; which is why so much effort was put into better governance in the bureaucratic, union and corporate sectors, with great improvements resulting."62
Mr Andrew Murray
Former Senator for Western Australia
“Essentially, good governance requires that the actions of public officials are constrained by rules, and that public resources and authority are used to benefit the community as a whole”. The author, R. Verspaanonk, noted that one of the deficiencies of governance in Australia63 relates to the processes for determining, claiming, monitoring and reporting the entitlements of parliamentarians. In the Australian context good governance incorporates accountability, ethical use of public resources and transparency.
The committee was aware of significant improvements in recent years in governance arrangements around entitlements for senators and members. There has been increasing public reporting of expenditure on entitlements; there is an established process for handling allegations of misuse of entitlements; and parliamentarians are held accountable for their use of resources through the certification process for their monthly management reports. The following recommendations aim to strengthen these existing governance arrangements.
The committee’s terms of reference require it to address issues such as “improving transparency in the use of taxpayer-funded entitlements”. The committee noted the announcement by the Special Minister of State (the minister) at his press conference of 8 September 2009 that as soon as practical, a complete reporting regime for all Finance expenditure on entitlements for or connected with senators and members or former parliamentarians would be developed. The committee considered that there should be a legislative basis for the reporting regime.
The committee considered that broadening the range of information disclosed on entitlements and expenditure and improving public access were significant steps towards making the parliamentary entitlements framework more transparent. The committee recommends an additional measure requiring all senators and members to provide a link on their official parliamentary websites to their own expenditure reports on the Finance website. This measure would give constituents easy access to information about a particular parliamentarian’s expenditure.
The committee also considered that the Remuneration Tribunal should publish reasons for its decisions when publishing determinations of parliamentary remuneration.
The committee noted the financial information provided by the chamber departments in their annual reports about the services provided to senators and members. The reports offer high level information that does not attribute expenditure to individual senators and members. In the interests of greater transparency, the committee recommends that the presiding officers be encouraged to provide regular public reporting of expenditure on services provided to individual senators and members wherever possible.
- That the government’s decision to publish details of all expenditure on parliamentary entitlements administered by the Department of Finance and Deregulation be underpinned with a legislative basis.
- That all senators and members be required to provide a link on their official parliamentary websites (at www.aph.gov.au) to their individual expenditure reports on the Finance website.
- That the presiding officers be encouraged to publish on a regular basis details of expenditure on services and facilities provided to individual senators and members by the chamber departments.
The committee’s terms of reference state that “the review will provide advice and recommendations to government addressing issues such as defining, in regulations and/or legislative instruments, key terms and the scope and any limits on entitlements use”.
On 16 December 2009, the minister wrote to the committee advising of the difficulties the government had encountered with the definition of ‘electioneering’ drafted in response to the ANAO report. The minister asked the committee to consider alternative options to meet the requirements of the ANAO report’s recommendation No.4.64
The value of defining key terms in legislation was raised in submissions from the Department of the House of Representatives and Finance. Finance, in its submission to the committee, proposed that the terms parliamentary, electorate, and official business, which are used as eligibility criteria for over 50 separate entitlement provisions, be replaced with a single defined term covering business needs that may be supported under these entitlements. The lack of definitions in the current framework has attracted criticism in successive ANAO performance audit reports.
The committee acknowledged the interpretative and administrative difficulties that arise from leaving key terms within the current framework undefined. It further noted that the question of defining key terms had been considered previously by both the Remuneration Tribunal determination and the executive. In 1997, the Remuneration Tribunal stated that:
The Tribunal considered the question of defining these concepts [of ministerial, parliamentary and official business] during the course of its annual review. It has decided, however, that it would be inappropriate (indeed improper) for it to define them to exclusion. Its position on this question essentially revolves around the due reticence which all in the executive arm of government must have that they do not impede the elected arm in the exercise of its function. While we can give an extensive list of examples of Parliamentary or electorate travel, any such list will not be exhaustive.65
In 2009, in response to the release of ANAO’s Audit Report No. 3, the government inserted a definition of electioneering into the Parliamentary Entitlements Regulations 1997. This had the effect of limiting the content of printed material that could be produced at Commonwealth expense under the printing and communications entitlement. But the definition proved difficult to administer because of its inherent subjectivity. Following robust public debate, the definition was removed from the regulations. The committee was reluctant to recommend a course of action that carried the risk of similar administrative difficulties in the future.
Against this background, the committee concluded that reaching agreement on statutory definitions of parliamentarians’ business would present intrinsic difficulties. The committee considered that the subjectivity attached to formulating definitions in a political environment made it unlikely that any definition adopted would be accepted by all senators and members, or resolve the ambiguities in the current framework. Rather, enshrining key business definitions in legislation could increase the risk that they would be contested and might lead to vexatious litigation.
The committee expressed concern that narrow definitions could restrict parliamentarians in performing their duties, and might well be breached inadvertently because of the broad and unpredictable nature of the job of a parliamentarian. The committee also noted that the broader improvements in transparency that have recently been introduced by the government were likely to have a positive effect on parliamentarians’ use of their entitlements.
For these reasons, the committee decided not to attempt to draft new definitions, favouring a move away from narrowly defined terms and towards a focus on the government identifying, through the use of broad categories, those activities that would be publicly funded. It noted the need for any formal description of identified activities to include a mechanism that would allow the descriptions to evolve over time to reflect changes in parliamentary activity and technological change. While identified activities would still be open to contest, the committee considered the associated risks to be lower than those of finite statutory definitions.
A description of funded activities might encompass, in relation to a senator or member’s electorate or constituents:
- participating in public debate, attending meetings or events, including speaking events, fetes, commemorative day services, sporting and cultural events, meetings of community clubs and organisations, community social functions, and openings of new private and public infrastructure
- communicating with constituents, including producing and distributing information
- representing the interests of constituents, discussing or debating the senator’s or member’s policies, or those of his or her party, or another party
- advocating to government organisations on behalf of constituents, providing references for constituents, and
- providing donations, or participating in charity events or activities, or presenting flags.
Activities associated with the electorate or constituents that would not be funded from entitlements might include: producing and distributing how-to-vote material, encouraging a person to become a member of a political party; and soliciting subscriptions, volunteers, goods or services or other support.
There will always be some element of incidental crossover between parliamentary, electorate, party and personal business, no matter how careful the parliamentarian is to keep them separate. Some submissions to the review argued that use of benefits for party political activity should be totally banned. The committee considered, however, that an absolute prohibition on incidental party political or personal use would be unrealistic and impractical. Provisions are made to facilitate the business of being a member of parliament, and an effective entitlements scheme will recognise that there will be some incidental use for other purposes.
The current administrative arrangements for investigating allegations of misuse of parliamentary entitlements are set out in an administrative protocol. The protocol was tabled in parliament on 31 October 2000.
The ANAO considered the current arrangements for responding to allegations of entitlements misuse and recommended that Finance develop a more robust and transparent approach to allegations of entitlements misuse. It also recommended that the government examine options that would, amongst other things, enable accountability processes (such as certification) to be mandated.66
The committee’s terms of reference require it to consider possible improvements to the protocol for handling allegations of misuse of entitlements and to report on mandating accountability. The committee reviewed the current protocol and considered that changes should be made to clarify that the only threshold test for investigating a complaint is whether the complaint is credible. In addition, the committee recommended amendments to describe more clearly the current procedures for investigating a complaint and make minor changes to remove out of date references.
That the government ask the Department of Finance and Deregulation to amend the Protocol for Handling Allegations of Alleged Misuse of Entitlement by a Member or Senator to:
- clarify that the only threshold test for investigating a complaint is whether the complaint is credible
- reflect the existing practice under which the Special Minister of State writes to a senator or member about an alleged minor misuse of entitlements, and
- reflect the existing practice that a high level departmental advisory committee will notify the Special Minister of State of a decision to refer a matter to the Australian Federal Police at the same time as the referral is made.
PROTOCOL TO BE FOLLOWED WHEN AN ALLEGATION OF ALLEGED MISUSE OF PARLIAMENTARY ENTITLEMENTS IS RECEIVED
A Protocol was approved by the then Special Minister of State, on 23 June 1998, following an exchange of correspondence with the Attorney General. Underlying the change was the intention to establish an ‘arm’s length’ process to ensure allegations made in relation to senators and members were handled in a way which could not invite a perception of partisanship. On 12 August 2003, the then Special Minister of State agreed that the Protocol would also apply to senators’ and members’ staff (employed under the Members of Parliament (Staff) Act 1984).
The process is as follows:
1. CONSIDERATION OF THE ALLEGATION BY THE DEPARTMENT OF FINANCE AND DEREGULATION
1.1 When an allegation is made, or there is evidence which suggests that an MP has misused an entitlement, the Department of Finance and Deregulation (the department) will examine its internal records to ascertain whether the allegation is credible.
1.2 If the allegation is not credible, the department will take no further action. If the matter is credible, the department will take the further action described in clauses 2 and 3 below.
2. MINOR MATTERS
2.1 If the matter is relatively minor, the minister will invite the senator or member to provide an explanation. For allegations that involve a staff member of a senator or member, the minister will invite the employing senator or member to provide an explanation.
2.2 Following consideration of the response provided by the relevant senator or member, the minister may either decide to take no further action, or to pursue the matter further (including seeking a voluntary repayment from the senator or member).
3. DEPARTMENTAL COMMITTEE
3.1 In the event of a more serious allegation the department will refer the matter to a high level departmental committee (the committee) chaired and convened by the Secretary of the Department (the secretary).
3.2 The committee may or may not decide to seek an explanation from the senator or member.
3.3. The committee may seek the advice of the Secretary of the Attorney General’s Department as to whether the matter warrants referral to the Australian Federal Police:
3.3.1 If the Secretary of the Attorney General’s Department recommends such referral, the secretary may refer the allegation to the Australian Federal Police.
3.4 If the matter is referred to the Australian Federal Police:
3.4.1 the secretary will then notify the minister of the decision and provide appropriate background material to the minister, and
3.4.2 the Attorney-General’s Department will then notify the minister responsible for the Australian Federal Police.
3.5 Any further action would then be a matter for the Australian Federal Police.
The committee considered that most accountability problems could be addressed if the name of any member who had not substantially complied with a request for information within a reasonable period (for example, 28 days) were to be tabled by the minister. The committee considered that this mechanism would also be consistent with the principle of transparency in relation to the administration of the entitlements regime.
Currently, a primary accountability tool is the request for senators and members to certify their management reports and travel declarations by stating that they have examined the transaction details in the reports and that the entitlements were used in accordance with the relevant legislation. The ANAO noted in its report that there had been occasions when members had not certified their management reports. The committee therefore considered that reports should be regularly tabled in parliament setting out each senator’s and member’s compliance with certification requirements; the report should include any explanation the parliamentarian had given for non-compliance.
That the Special Minister of State, on the advice of the Department of Finance and Deregulation, table in the parliament:
- the name of any sitting or former senator or member who has not substantially complied with a request for information about an alleged entitlement misuse within a reasonable time (for example, 28 days)
- the outcome of the investigation into the complaint, and
- regular reports setting out each senator’s and member’s compliance with the requirement for certification that entitlements have been accessed in accordance with the relevant legislation, including any justification given by the senator or member for non-compliance with the requirement.
The committee’s terms of reference require that “in formulating advice and recommendations, the review should have regard to...production of postal vote applications under the printing entitlement”.
The 2009 ANAO report67 on entitlements focused particularly on the printing entitlement and observed that:
The use of the Printing Entitlement for election campaigning activities (for which the Commonwealth Electoral Act 1918 (Electoral Act) already provides public funding) was apparent from both the nature of items printed using the entitlement in the period leading up to, and during, the 2007 election campaign.
In its response to the ANAO report, the government, inter alia, removed the entitlement to print ‘How to Vote’ cards and placed a limit on the number of Postal Vote Applications (PVAs) which could be produced under this entitlement.
Postal voting provisions are contained in the Electoral Act. A postal vote is cast before election day by post. Two hundred PVAs, with Australian Electoral Commission (AEC) reply paid envelopes are automatically issued to all federal senators and members, and restocking of up to a total of 500 can occur in order to cater for constituents who might come to an electorate office seeking a postal vote application. On request, PVAs can be provided to independent candidates and state/territory members’ offices, with an initial issue of 200 and a limit of 500. PVAs are also available from the AEC website once an election has been announced. The PVA must be printed off from the website, completed and then either faxed or posted to the AEC.
The Electoral Act was amended in 1998 to permit PVAs to be incorporated into other material sent to voters. This allows a candidate or political party to include electioneering material with the PVA form. PVAs can also be returned to an address other than the AEC (often a political party) which then forwards the PVA to the AEC.
The committee considered that the use of the printing and communications entitlement to print and distribute PVAs should cease, given the service provided by the AEC.
That the government remove the entitlement for senators and members to use their printing and communications entitlement to produce and distribute postal vote applications.
The committee observed that the printing and communications entitlement generates significant concern, particularly around its use during election periods. In its 2009 performance audit report, the ANAO raised concerns about the use of parliamentary entitlements for election campaigning activities, and noted that the framework for the printing entitlement required attention. Access to this entitlement is an advantage of incumbency (that is, for sitting senators and members). The committee, mindful of the issues raised in the ANAO report, recommends that the printing and communications entitlement not be available during an election campaign period.
The committee noted three decisions made since the 2007 federal election in relation to the printing and communications entitlement:
- reductions in the amount of the printing component of the entitlement (from $150,000 to $75,000 per annum for members and $20,000 to $12,500 per annum for senators)
- the introduction of a requirement that all material printed using the entitlement must carry a statement disclosing the source of funding, and
- the introduction of greater transparency through the public reporting of expenditure.
The committee concluded that, in addition to those three measures, in order to minimise publicly funded advantage of sitting parliamentarians over other candidates, the printing and communications entitlement should not be used during an election period. Specifically it recommends that the entitlement become unavailable from the date of the prime minister’s announcement of a federal election. Printing and communications can and will of course continue, for example using funds provided under the Commonwealth Electoral Act 1918 or party funds.
The committee considered whether it would be appropriate for restrictions to take effect from an earlier date, for example six or twelve months prior to the latest possible date for an election, but concluded that such a restriction would have the potential to impair senators’ and members’ communications to an unacceptable degree.
The committee considered recommending a partial restriction on the entitlement during election periods, but was disinclined to support an arrangement that would require subjective judgments and possibly lead to disputes at a sensitive time in the electoral cycle.
That the government:
- remove access to the printing and communications entitlement from the date of the announcement of a federal election to the day after the corresponding polling day, and
- undertake a future assessment of the use of the entitlement and, if there remains cause for concern, consider mechanisms for removing access to the entitlement for a period prior to the announcement of a federal election.
In its review of the administration of the Members of Parliament (Staff) Act 1984 (MOP(S) Act) employees in 2003, the ANAO noted that the risk of staff employed by parliamentarians being used for duties relating to party political business increases in the periods leading up to, and during, general elections and by-elections.
Analysis by the ANAO in 2003 showed significant increases in travel expenditure by the staff of parliamentarians prior to the 1998 and 2001 elections. Analysis provided to the review committee regarding the 2004 and 2007 election periods showed high volumes of travel allowance claims by personal employees (that is staff employed by parliamentary office holders such as ministers, shadow ministers and whips under Part III of the MOP(S) Act) for travel to the city in which their employers’ campaign headquarters were based. A majority of the personal employees who made travel allowance claims did so for a significant proportion of the election period (see Appendix 5).
Once parliament is prorogued ahead of an election, some of the duties of personal employees cease or are reduced. This is particularly the case for staff employed to assist in the running of parliament. For other personal employees, limitations on government activities during the caretaker period might see only a marginal decrease in portfolio-related work. The committee did not therefore consider it reasonable that salaries for personal employees should cease, although the government might wish to examine the payment of overtime during the election period to ensure it falls within entitlement.
The claiming of travelling allowance by personal staff when they travelled independently of their employers to the city in which their employer’s party headquarters was located, however, created the not unreasonable perception that staff were engaged in party political business at public expense. The committee concluded this should be no longer permitted.
That the government, from the date of a prime minister’s announcement of a federal election until the day after the corresponding polling day, remove access to travelling allowance for staff employed under Part III of the Members of Parliament (Staff) Act 1984 when they undertake travel independently of their employer to the city in which their employer’s party’s campaign headquarters is based.
64. Recommendation No. 4:
ANAO recommends that, having regard for the public funding of election campaign expenses that is provided to political parties and candidates through the Commonwealth Electoral Act 1918, the Department of Finance and Deregulation, consulting as appropriate with the Australian Electoral Commission and/or the Chamber Departments, prepare options for Ministerial consideration that would pursue the necessary further reform to the entitlements framework so as to effectively address the risk of entitlements being used to meet costs associated with Parliamentarians:
- campaigning for their party, their own re-election and/or the election or re-election of other candidates; or
- campaigning against the election or re-election of another party or candidate.
Chapter 5 – Remuneration
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