• John McDonnell

ICAC is the wrong answer to maladministration


Former NSW Premier Gladys Berejiklian announcing her resignation on Friday

On Friday Gladys Berejiklian resigned as premier of NSW and member for Willoughby. She quit because the NSW Independent Commission Against Corruption announced that from 18 October it will conduct a four-week inquiry into the former premier’s conduct.


The terms of reference for the investigation are that:

  • ICAC is investigating the suspected corrupt allocation of about $35.5 million in taxpayers’ money: $30 million to the Riverina conservatorium of music at Wagga Wagga and $5.5 million to the local clay-shooting club.

  • ICAC is also investigating whether Berejiklian, while NSW treasurer, allowed or encouraged corrupt conduct by her ex-boyfriend, the disgraced former Liberal MP for Wagga Wagga, Daryl Maguire, in respect of those allocations.

  • ICAC says it is investigating whether, between 2012 and 2018, Berejiklian engaged in conduct that “constituted or involved a breach of public trust” by exercising public functions relating to her public role and her private personal relationship with Maguire.

Without making any judgement as to whether these allegations can be substantiated, it is worth noting that they all start with an allegation of maladministration. If the process for approving the grants to the conservatorium and the gun club were legal including an absence of any reach of administrative law, then there is no corruption. All that can then be alleged is that Ms Berejiklian exercised poor judgement, to the extent that she exercised any judgement at all.


This is the problem with bodies such as ICAC.


They receive complaints about the administration of things such as grants and proceed to second guess the political decisions, often in situations where there is no material harm done. This often involves impugning the reputations of innocent third party witnesses in the course of hearings, as occurred in the case of Arthur Sinodinos.


There has been concern about this aspect of ICAC activity in South Australia recently, which has led to an amendment of that jurisdiction’s ICAC legislation.


In South Australia, as in NSW, there were examples of over-reach by the commission, which mainly affected innocent public servants, who although they were proved to have done nothing wrong, were left with indelible stains on their reputations and occasionally huge legal expenses.


The response by the parliament has been to pass a law that limits ICAC to the investigation of criminally corrupt conduct.


The downside of this revision is that the SA ICAC can no longer investigate matters such as conflict of interest or maladministration that do not constitute criminal conduct. These matters are now the province of the Ombudsman. This is a second-best response.


It is possible to eliminate the charges involving misallocation of public monies, by moving away from after-the-event reviews - such as Auditor General reports and ICAC investigations - in the direction of public enquiry and reports before money is allocated.


This is what the predecessor to the Productivity Commission (the Industry Commission) used to do in the Fraser and Hawke years. The Industry Commission used to conduct enquiries into all aspects of industry assistance and evaluate whether they were the best use of scarce resources. They would take public submissions and make determinations about the economic costs and benefits of proposed measures. It was then up to the politicians whether they took the Industry Commission’s advice but since this advice was made public and the political response was public, voters could make their own judgements on whether politicians were adequately protecting their interests.


In these circumstances, politicians could only make wrong decisions, they couldn’t make corrupt ones. And the public were the final arbiters of whether a government was guilty of bad administration.


More importantly, innocent people did not have their reputations sullied because someone disagreed with their judgement.