The Australian National Audit Office released its audit of the Howard Government’s advertising processes last week. In the dry and understated way of auditors, it is absolutely savage. It makes the famous Regional Partnerships report that went off like a bomb during the 2007 election campaign look like a model of best practice.
But what is even more damning is what isn’t explicit in the report: that several senior Liberal Party mates were given millions of dollars of taxpayers’ money with no evidence they would provide value for money and no way of checking afterward whether they had provided it.
When I first wrote about the Howard Government’s micro-management of advertising, I talked about the Ministerial Committee on Government Communications, the all-powerful body of backbenchers and Prime Ministerial advisers chaired by the Special Minister of State that controlled even the most innocuous advertising to ensure it served the Government’s political interests. While there is discussion of problems within the bureaucracy’s own processes like not signing contracts until long after work has begun, it is the MCGC that the audit report focuses on.
In the Commonwealth, you can’t use taxpayers’ money without appropriate authority and you can’t spend it without making sure taxpayers are getting the best value for money. There are laws, regulations, guidelines, Chief Executive Instructions and other paraphernalia by the truckload for this to ensure that these requirements are complied with. And no one is supposed to be able to get around them.
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But the ANAO report, which focuses on three advertising campaigns — the “alert not alarmed” fridge magnet one, a private health insurance campaign and the infamous Workchoices campaign — is a long litany of how these requirements were ignored by the Howard Government. It is a detailed 200 page answer to anyone who would ever try to claim that the Howard Government was a competent financial manager or observed the basics of accountability and transparency.
The key issue is that the MCGC had no authority to spend money on advertising. That lay with individual ministers and the bureaucrats with delegated powers to spend money. But the MCGC made many decisions about advertising campaigns, often overriding advice from bureaucrats. As any public servant who worked under the Howard Government will tell you, the MCGC’s word was final. If it didn’t like the ad campaign a department had spent hundreds of thousands of dollars developing because it didn’t suit the Government’s political agenda, the campaign was binned. If it wanted a campaign that served the Government politically, it got one, no questions asked.
In effect, MCGC was therefore spending money with no authorisation. The ANAO obtained explicit advice from the Australian Government Solicitor that this was the case. This was disputed by former special minister of state Gary Nairn, who argued that the MCGC was an “advisory committee” only and that public servants didn’t have to take its advice — a statement that anyone who dealt with it would regard as laughable. Nairn also argues that because the relevant portfolio ministers attended each meeting of the MCGC, that in effect ensured the decision was being made by someone with authorisation to do so.
The ANAO, very politely and indirectly, questions Nairn’s version of events. “As part of its analysis,” the report says in a footnote, “the ANAO examined the complete records of 63 of the 66 MCGC meetings held in respect of the campaigns that were part of this audit and extracts of the records of the remaining three meetings. The ANAO found no evidence that portfolio Ministers attended MCGC meetings.”
The problem with this process was that, when bureaucrats and Ministers on the advice of bureaucrats make major expenditure decisions, they have to demonstrate they are obtaining value for money, that the selection process was rigorous and that, in short, they weren’t giving millions of dollars to mates in the private sector. When the MCGC made decisions, no such requirements were observed.
When it came to the Workchoices advertising campaigns, which cost more than $120m, MCGC ensured the Liberal Party’s closest friends in the advertising industry got in on the action. None of the tenders for the Workchoices campaigns were put to the market — they were either offered by invitation or given directly to a firm without tendering. Only one of the eight major contracts was the subject of a proper assessment as is required under the web of accountability requirements.
On 13 July 2005, MCGC selected Jackson Wells Morris as its public relations consultant after inviting it and three other firms to tender for the contract, without any input or assessment from officials. At that stage, former Howard adviser Grahame Morris was still part of JWM. The then-Department of Employment and Workplace Relations later claimed in its annual report that JWM had won through an open tender process, a claim it has been forced to retract. The value of this contract was more than $815,000.
On 9 August 2005, MCGC selected Dewey & Horton as its advertising consultant after a select tender process to four firms picked by MCGC. There was no assessment by officials of the tenders or pitches to the Committee. Dewey & Horton is headed by Ted Horton, a long-time Liberal Party advertising guru, part of what the Liberal called “the Team” that led the party’s election campaigns. The value of this contract was nearly $5.9m.
In September 2005, the Department of Employment and Workplace Relations was startled to receive an invoice for advertising work by Brandmark. Without consulting the Department, Dewey & Horton had subcontracted work to Brandmark, which is not normally permitted under Commonwealth contracts without prior arrangement. The Department was ordered by the Department of Prime Minister and Cabinet to pay the invoice for nearly $50,000.
Brandmark was headed by Mark Pearson, another long-time Liberal ad man and member of “the Team”. Pearson’s firm has scored big with the Howard Government’s GST advertising contracts.
Jackson Wells Morris also subcontracted work, to another Liberal Party figure, IR hardliner Warren Stooke, and to one other firm, worth more than $130,000. On that occasion, DEWR was aware of the subcontracting, although the ANAO concludes that the Department “took no steps to ensure that contractual requirement for the engagement of subcontractors were observed.”
For the Workchoices campaign, no evaluation strategy was in place to check whether the taxpayer got any value from the expenditure the Government was making on their behalf. DEWR only had “tracking research” which, as the ANAO tartly notes, “is no substitute for effective evaluation.”
In short, a junior minister, a bunch of backbenchers and Tony Nutt from the Prime Minister’s Office simply doled out the cash without any recorded evidence or independent assessment, and left the bureaucrats to pay the bills.
Lindsay Tanner and John Faulkner got rid of the MCGC when they got into government and handed control of advertising back to the Department of Finance instead of PM&C. They also put in place arrangements for the Auditor-General to vet ad campaigns to determine if they are partisan. On accountability, this Government is light years ahead of its appalling predecessor.