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Australia

Oct 28, 2016

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Victorian MP Steve Herbert is holding onto his job like a dog with a bone after it was revealed that he used his taxpayer-funded car to ferry his two dogs between his country property in Trentham and his residence in Parkdale. The Corrections Minister, who also forgot to declare the Trentham property, has made it through one day of question time on Spring Street, but it will be only a matter of time before Premier Daniel Andrews sends him to the naughty corner. Herbert will find himself on the backbench and among an illustrious list of Australian politicians who have lost their jobs over such measly indiscretions that they will barely rate a mention in the history books.

This is not a list for the Bronwyn Bishops or the Jamie Briggs of the world, those who were forced to resign over legitimately bad rorts. This is the list for the doggie chauffeurs, the Paddington Bears and the scandals that are blown way out of proportion.

Canine companions 

The Victorian Corrections Minister has gone through three drivers in the last two years and is accused of using them to ferry his dogs between his house in Trentham (now revealed as his principal place of residence) and his house in Parkdale, which is actually in his electorate. The Herald Sun, which broke the story, reports that Herbert also asked drivers to take the dogs, named Patch and Ted, for walks. Prime Minister Malcolm Turnbull told 3AW’s Neil Mitchell: “It’s extraordinary, I’m amazed that he is still there, but it seems an extraordinary thing to do.”

The bottle of Grange

Bottles of wine can prove dangerous for Australian MPs, and it was a fine bottle of Grange that toppled former NSW premier Barry O’Farrell. The Liberal premier was forced to shuffle off after admitting that he had lied to the Independent Commission Against Corruption over the $3000 bottle given to him by Australian Water Holding’s Nick Di Girolamo. It was a significant gift, and having a “massive memory fail” at ICAC isn’t a good look, but in the context of the scale of corruption uncovered by ICAC, it was just a drop in the ocean of Grange.

Done his Dasher

In more recent times, Labor’s “junior senator from NSW” Sam Dastyari was also pushed to the backbench after it was revealed that a Chinese businessman had paid his $1670 bill for travel expense over his office’s allowance. After days of dodging the scandal, Dastyari fell on his sword, but it won’t be the last we hear from him.

The Paddington Bear scandal

In 1984 ALP special minister of state Mick Young was forced to stand down after the Paddington Bear scandal.

On the 5 July Young took an international flight into Australia landing at Adelaide airport, where he indicated on his Customs form that he had nothing to declare. However, much to the scorn and dismay of airport officials, it was discovered he had a Paddington Bear in his luggage. The soft toy in question was purchased as a gift for his wife, Mary, and sister-in-law Laurel Hughes.

The bear cost Young $1903 and his career.

Colour him sacked

In 1982 Michael MacKellar of the Fraser government along with then customs minister John Moore were forced to stand down after MacKellar falsely declared to Customs that a TV he had brought into the country was black and white.

It was later exposed that the offending TV was in fact colour, throwing the ALP into crisis mode. MacKellar stood down for had failing to declare the TV’s colour capacity and Moore stepped down for handling the disaster clumsily.

The sandwich shop scandal

 In 1993 ALP minister for industry, technology and regional development Alan Griffiths was sacked over suspicions of misconduct involving sandwich shop.

It was alleged that a sandwich shop he owned was going broke and that he had used Labor money to bail it out. The allegations were later disproved and dropped following an investigation, but the ALP asked him to step down anyway.

Victoria

Oct 6, 2016

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Infrastructure Victoria released its draft report on Tuesday, Victoria’s draft 30-year infrastructure strategy, with its evaluation of 130 plus projects. This is an important event because the hope is referring long-range planning to a statutory authority will help build consensus around infrastructure priorities.

There’s a host of recommendations in the report but, says Infrastructure Victoria, if it had to nominate the top three most important actions for government to take in the short to medium term, it would choose:

  • Increasing densities in established areas to make better use of existing infrastructure;
  • Introducing a comprehensive transport pricing regime to manage demands on the network; and
  • Investing in social and affordable housing for vulnerable Victorians to significantly increase supply.

Excellent work; those should be in any list of top priorities. They highlight three things that those who usually push for this new rail line or that new road usually ignore. First, there are forces in play that are more strategic than any particular “steel and concrete” project; second, the investment choices open to government are inter-linked; and third, the demand for infrastructure funding runs across all portfolios.

However within hours of the draft report being released, Premier Daniel Andrews ruled out imposing charges on existing roads. That immediately splashed cold water on the report because as The Age reported, “The creation of Infrastructure Victoria was an election commitment, which the Andrews government said would ‘take short term politics out of infrastructure planning’.”

But Andrews wasn’t the only one. Greens leader Greg Barber also reacted to Infrastructure Victoria’s damning assessment of the Doncaster heavy rail line promised by his party at the 2014 election. Here’s what the arm’s-length adviser says about this project:

“The economic analysis found that the BCR for Doncaster Hill heavy rail line is very low, at 0.1 – 0.2 with WEBs included. Low total project benefits in present value terms of approximately $500 million are the main driver for this result, particularly given the total costs are $3.1 billion to $4.3 billion in present value terms (discounted to 2025 at 7 per cent per annum). This suggests that the current bus service operating in the Doncaster area is performing well, and that adding a rail connection is not economically viable.”

Barber says the low BCR is “due mainly to them cutting and pasting the previous study, also designed to kill the project”. That doesn’t sound like someone who’s willing to accept reality (seriously, a benefit-cost ratio of 0.1 -0.2?!), much less willing to listen to the advice of the new independent adviser.

It was always a fond hope, of course, that the politics could be taken out of infrastructure planning. After all, the state is governed by elected politicians, not a board of senior business identities and bureaucrats. But it’s very disappointing that the Premier of Victoria, with an eye very much on the politics, killed such an enormously important idea as road pricing before Victorians even started considering the draft report.

Hopefully politicians will at least accord Infrastructure Victoria a legitimate role in assessing the economic value of particular projects. The state urgently needs some separation from a political process that’s so bankrupt even vapid ideas like Doncaster rail get taken seriously.

And hopefully other boosters of this project, who include the opposition and the Public Transport Users Association, will consider the evidence and review their position. They should contemplate what is is about their organisational culture that led them to actively support such a donkey.

*This article was originally published on Crikey blog The Urbanist

Victoria

Oct 4, 2016

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Here’s a startling headline from The Sunday Age yesterday: “Melbourne Airport rail link reconsidered during secret tourism talks“. There’s the whiff of bad behaviour in that headline, maybe even scandal. According to Fairfax’s august journal:

“A high-powered group of advisers set up by the Andrews government secretly reconsidered a rail link to Melbourne Airport as one of several ‘strategic investments’ to boost Victoria’s tourism prospects.

“Almost two years after the idea of train connection between Tullamarine and the CBD was shelved when Labor came to office, a cabinet-in-confidence document reveals it was briefly put back on the table as part of deliberations by a reference group chaired by infrastructure tsar Sir Rod Eddington.”

The Age is an enthusiastic promoter of a rail line from Melbourne’s CBD to the airport. The former Napthine government took the idea to the 2014 election but lost. The Andrews government has shown no enthusiasm for the idea to date, at least not in public; it says its focus is on other priorities like Melbourne Metro, Mernda rail extension, level crossing removals, and upgraded signalling.

But the news that a rail link was “secretly reconsidered” sounds super important. “Secret tourism talks”? “A cabinet-in-confidence document”? “A high-powered group of advisers”? Is there some intrigue here? Is something fishy going on?

Nah, not really. What The Sunday Age has got its hands on is just a report from a committee of industry players set up to advise the government on the development of its Victorian Visitor Economy Strategy. According to the newspaper:

“The document’s findings are among many discussed by the 12-member reference group, which also included Geelong Football chief executive Brian Cook, Melbourne Fashion Festival chair Laura Anderson, Asia Cup boss Michael Brown and TV presenter Catriona Rowntree.”

State governments have hundreds of advisory committees providing advice to ministers across the various portfolios. They suggest ideas to ministers and vet draft proposals, but that’s the limit of their power. Their views might be reported to cabinet as background when ministers bring proposals forward, but the committees are strictly advisory.

The 32-page Victorian Visitor Economy Strategy was published last July. Here’s the sum total of acknowledgement it gives the reference committee:

“[The strategy] is based on consultation and research undertaken as part of the Victorian Visitor Economy Review, including approximately 60 submissions, 55 individual consultations and the input of an external reference group.”

There’s nothing newsworthy here; the reference group is just one part of the wider consultation landscape. It’s neither surprising nor consequential that an industry reference group would propose an airport rail line in its wish list. Why wouldn’t it? After all, it expects the government will pay for it, not tourism operators.

The Sunday Age doesn’t give its readers access to the reference group’s report, but the newspaper’s coverage suggests it’s not an analytical document. I especially like the way it assesses tourist accommodation at Wilsons Promontory and on the Great Ocean Road as “below par”.

 The silliness of the newspaper’s story is that Infrastructure Victoria also “reconsidered” the idea of an airport rail link in its draft report. It’s a public report (released in May 2016) and an analytical assessment too. It even provides a whole-of-life estimate of the cost: between $1 billion and $5 billion, although likely to be “towards the top of the stated cost range”.

This is another case of Fairfax seeking to manufacture controversy from nothing, driven by the commercial pressure to appeal to the prejudices of its readers. I get that Fairfax might have to resort to clickbait to survive, but it shouldn’t sacrifice responsible journalism in the “serious” part of the paper.

It’s an unfortunate way to allocate 680 words to spinning the issue because an airport rail line would be a huge investment; it warrants being treated seriously. It would require a lot of public funding that wouldn’t be available for other worthy purposes.

I’ve discussed the substantive issue of whether or not a rail line is warranted before.

*This article was originally published at Crikey blog The Urbanist

Media

Aug 11, 2016

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As the nasty revelations about Roger Ailes continue to tumble out of the Murdoch empire in New York since his ousting last month, Melbourne-based Sir Rod Eddington must be nervously watching on from his Collins Street office.

You see, Sir Rod is the “lead independent director” of Fox News parent company 21st Century Fox and chair of its four-man audit committee, which also includes BHP Billiton chairman Jac Nasser.

If the company’s executive chairman, Rupert Murdoch, turned a blind eye as Ailes used his position at Fox News to harass numerous women and spend millions of dollars paying out victims or smearing enemies, then it really should be Sir Rod leading the charge at board level to get to the bottom of it and holding various parties to account.

Instead, as usually happens with governance issues inside Murdoch-controlled public companies, it is the family making the running — notably sons Lachlan and James taking down Ailes — with the non-executive directors watching on in silence.

Rupert has always been the biggest fan and defender of Roger Ailes within his global media empire and the wider Murdoch family, and still seems to think it is fine to pay him millions as a consultant. When his then-son in law Matthew Freud said this about Ailes in 2010:

“I am by no means alone within the family or the company in being ashamed and sickened by Roger Ailes’s horrendous and sustained disregard of the journalistic standards that News Corporation, its founder and every other global media business aspires to.”

Rupert replied at the 2010 News Corp AGM that Freud “couldn’t be more wrong”. With Rupert’s blessing, Ailes continued to run amok in the Murdoch workplace for another six years.

Having watched the denials about phone hacking, don’t expect Rupert to ever apologise for the behaviour of Ailes, which has so far been documented in this growing list of stories coming out of New York:

Given that the Murdoch family control the board of 21st Century Fox through their undemocratic gerrymander, it really should be external pressure on the so-called independent directors of the company that brings the full board into the equation.

Victoria

May 26, 2016

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Victoria’s upper house voted down a bill that would restrict and criminalise late-term abortion yesterday afternoon, after a push to institute an American-style Infant Viability Bill failed.

Democratic Labour MP Rachel Carling-Jenkins moved the bill, which would have rolled back abortion laws, including jail terms of up to five years for doctors who terminated pregnancies after 24 weeks. The bill also required that women “in distress” be provided with “holistic care”. If a woman faced a risk of death or “serious and permanent physical impairment” after 24 weeks, doctors would be required to deliver the baby in a unit with neo-natal facilities “with the intention of preserving the child’s life”.

Abortion is legal in Victoria up to 24 weeks, although abortions can be approved after that with the approval of two doctors on medical, psychological or social grounds.

While the defeat of the bill 27 votes to 11 could be seen as the end of the debate, Carling-Jenkins told the Legislative Council she wouldn’t be giving up:

“Finally, regarding the issue of this debate being settled — for there are many of those in this chamber who have claimed that this debate is settled — I agree with [Liberal member Richard] Dalla-Riva that this debate is not settled. It was not settled in 2008; it is not settled while the DLP holds a seat in this chamber.”

She also responded to critisicm of her religious views, saying that politics needed more Christians. “I am proud to be a Christian in politics; we need more Christians, more Catholics, more faith-filled and more spirit-filled people in politics.”

The Australian Medical Association was opposed to the bill, saying that it “interferes with medical care”:

“It criminalises a medical procedure, and doctors will face up to five years’ imprisonment if prosecuted.

“It dictates that certain medical services must be provided to all patients, regardless of a patient’s wishes or the treating doctor’s clinical discretion.”

AMA Victorian president Dr Lorraine Baker said in a statement:

“By attempting to legislate medical care, this Bill jeopardises good medical practice and decision making on a case by case basis. AMA Victoria urges the Victorian Parliament to vote down this Bill.”

Nationals MLC Damian Drum spoke in favour of the bill, saying that although the bill was flawed, it was better than the current situation. “So I think at the moment simply as a society we are having 50 cents each way on this, and we need some very, very clear guidelines.”

Directly after the debate Drum gave his valedictory speech, as he steps down to run for the Nationals in the Federal seat of Murray, vacated by the Liberals’ Sharman Stone.

Both Labor and the Coalition allowed a conscience vote, with Carling-Jenkins and fellow crossbenchers Daniel Young and Jeff Bourman from the Shooters and Fishers Party voting in favour. Three Labor MLCs voted in favour, and five Coalition members also voted for the bill. Bernie Finn, who has long campaigned against the legalisation of abortion, voted for the bill.

Abortion laws differ in each state, and only Victoria, Tasmania and the ACT have decriminalised terminations. In all other states abortion is a criminal offence unless specific criteria are met.

Abortion laws have become a battleground for Victoria’s crossbench; the Sex Party’s Fiona Patten successfully moved a bill to ban anti-abortion protesters from campaigning within 150 metres of clinics, which came into effect this month.

crikey15

Sep 22, 2015

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The Victorian Labor government has ridden to the rescue of university-funded website The Conversation, offering $1 million a year for the next three years after the federal government demanded it stand on its own.

The not-for-profit publisher, established in 2011 by former Age editor-in-chief Andrew Jaspan, lost 25% of its yearly funding in this year’s budget when then-education minister Christopher Pyne declined the site’s requests to extend its $1-million-a-year grant from the Education Department for an extra two years. Pyne argued that the funding was to help start up the website, and now it was established it should pay its own way. He cited The Conversation‘s aggressive expansion program as a reason why the site should be free from government handouts.

“It had a shelf-life of three years, at which time The Conversation is meant to be self-sustaining,” he said. “They were given $3.5 million — in that time they’ve expanded to Africa, the United States and the UK, and I expect that they are in a position where they will be self-sustaining otherwise they wouldn’t be able to expand overseas in the way they have.”

Jaspan, on the other hand, argued that the website helped unlock the value of the billions the government spends on academic research, at minimal extra cost. Jaspan said The Conversation, which is mostly funded by partner universities, would need government funding to be sustainable until at least 2017 — the Victorian government’s funding injection will bring it up to this self-nominated deadline. And Jaspan says its global expansion is not a sign of its current cashed-up status, but part of an aggressive strategy to raise revenues.

Yesterday, the website launched its fifth edition — the French site is its first non-English expansion. The global expansions, after a grace period, pay licensing fees to the Australian home operation, and they are required to be self-sustaining — paying for any staff out of funds raised in that jurisdiction.

Jaspan hopes the expansion policy will allow the website to operate without government handouts. “At the end of three years, we hope to move from five sites to maybe six or seven, or maybe more. Then, if they each contribute $100,000 or more [in licensing and affiliation fees] … we hope that in a few years we’ll have covered much of that million.”

Victorian Education Minister James Merlino said in a statement:

 “Our $3 million commitment will allow The Conversation to continue operating for the next three years while it works towards becoming self-sustaining. The Conversation has established itself an invaluable source of news and views from local and international academics and researchers, earning a large and loyal readership around the world.”

The release also cited the local jobs saved, noting 26 of The Conversation‘s 32 employees are based in Melbourne.

“We are mightily relieved,” Jaspan says. His discussions with the Victorian government started a little before the May budget as a plan B, should the federal government fail to deliver the goods. Jaspan says he found a receptive ear because The Conversation‘s existence in Melbourne and the state government’s plans to make the city a global knowledge hub align.

Currently around 60% of The Conversation‘s funding comes from partner universities and the CSIRO. Another chunk comes from readers — The Conversation is the only media company in Australia to be granted tax-deductible not-for-profit status. After the cut in the federal budget, the website launched a reader donation appeal, which raised around $400,000. This money, Jaspan says, has helped ensure the transition period between funding grants could be a time of growth rather than retreat. The website is currently advertising for several new roles.

Victoria

Jun 5, 2015

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When Victorian Minister for Energy and Resources Lily D’Ambrosio reopened the Hazelwood Mine Fire Inquiry last week on a crisp Tuesday morning in Traralgon, she promised the assembled crowd that Labor would “leave no stone unturned when it comes to getting to the bottom of what happened on that terrible day, when we had a fire in the Hazelwood mine”.

That “terrible day” was, according to the 2014 Hazelwood Mine Fire Inquiry, “on or about 9 February 2014”. The reopened Hazelwood Mine Fire Inquiry will investigate some vitally important issues, including the prospect that at least 11 premature deaths occurred in the Latrobe Valley during the mine fire due to exposure to toxic smoke. It will also address the vexed question of how Victoria’s brown coal mines will be rehabilitated.

However, the new terms of reference for the reopened inquiry look set to leave some of the largest and potentially most scandalous “stones” of the whole Hazelwood mine fire controversy right where they are.

Key questions not addressed by the new terms of reference include:

  • Can the public be sure that there wasn’t a fire already burning inside Hazelwood mine before the bushfire on the afternoon of Sunday, February 9, 2014?
  • Were employees and subcontractors of mine owner GDF Suez, and/or firefighters forced to work in unsafe conditions during the mine fire, leading to subsequent health problems?

A lot is at stake here, including the jeopardised health of thousands of people, and the potential deaths of one dozen individuals and counting. The firefighting effort alone cost $32.5 million, with the total cost of the mine fire well over $100 million. However, the ABC has reported that the reopened inquiry is not going to investigate the matter of GDF Suez’s potential liability for the mine fire.

Justice Bernard  Teague has not ruled out that the mine might have already been ablaze before it was threatened by bushfire embers on February 9 last year. “I’d like to know whether there was something that was suppressed,” Teague said. “My recollection was that there was some substance [to the allegations], but we couldn’t get hold of a person who would [testify publicly]. We couldn’t rule it out, but we just can’t examine it. I remember this [information] coming out, and GDF Suez said, ‘You give it to us, in a way that we can investigate, and we will deal with it’.”

Exactly how GDF Suez would “deal with it” was not specified.

Unturned stones

Both of the following allegations were published in my book The Coal Face in March this year:

  • Allegations by a number of anonymous GDF Suez workers, reported by CFMEU boss Luke van der Meulen, that there was already a fire burning inside the Hazelwood open-cut mine before the Driffield and Hernes Oak fires reached the mine’s eastern perimeters.

“The trouble is — and I reported this to the [2014] Mine Fire Inquiry — a number of our members told us that they were experiencing fires in the Morwell mine, well before the supposed fire jumped into the mine [on Sunday],” said van der Meulen. “But none of them will come forward. If you come forward on something like this you will probably lose your job.”

  • Allegations by an anonymous GDF Suez contractor that, during the mine fire, contractors with dangerously high carbon dioxide levels in their bloodstreams were forced to avoid CO2 testing stations by driving their trucks out through a “back gate”, and subsequently operated heavy machinery in an incapacitated manner on major public roads.

“Just to fill you in — I can only post so much, as told will lose [my] job,” one worker wrote.

“We are contractors that drive tilt trays and low loaders on a daily basis. We have to drive to the bottom of the open-cut [mine] for Coates Hire/Hazelwood Power etc. We are unprotected. Told to use back gate as our [carbon dioxide] readings are too high. Medical teams [at the front gate] will not let us leave. We have felt so light-headed, throwing up etc. etc., then we drive on road in heavy vehicles, putting other road users at risk […] If I don’t do this I will lose my job.

“As of today we have to hand phones in to Hazelwood Power security, if phone has camera. No photos to be taken on site. Think we need 60 Minutes, Today Tonight, etc. [ . . . ] don’t believe reports from … any government department, they tell lies. They don’t want the town to panic.”

In a subsequent message:
“‘Just got home from Hazelwood. Ended up in medical. [Carbon dioxide] readings were over the top. Ambos wanted to take me hospital. Officers in charge wouldn’t let me leave. Three heart attacks here today. ‘What happens at Hazelwood stays at Hazelwood,’ they are telling us. They are paying us off with Bunnings gift vouchers and hats to keep what is happening in Hazelwood ‘
under our hat’ lol. I’m over it.”

GDF Suez spokesperson Trevor Rowe has described the workers’ health and safety allegations above as “absolute rubbish” and “unverified“. However, Rowe has also confirmed that GDF Suez employees were banned from speaking to the media. Several GDF Suez employees have said that the penalty for speaking to journalists is losing their jobs. In such a situation, it’s impossible for workers’ various allegations to be verified without employees risking their livelihoods.

The Hazelwood Mine Fire Inquiry’s relaunched website includes the following information for people considering making a submission:

  • The Board will not accept anonymous submissions, but it will consider keeping submissions confidential (on a case-by-case basis);
  • If you wish your submission to be treated as confidential, please indicate this on the submission cover sheet, and state the reasons why you seek confidentiality. An Inquiry staff member will be in contact to discuss this further with you.

These terms are far from reassuring. For one thing, if the inquiry’s staff decide that a GDF Suez employee’s submission should not be kept confidential, what will happen to that submission? What protection will be offered to whistleblowers in such circumstances?

When questioned about these matters, D’Ambrosio responded: “Anonymity is a matter for the [Inquiry] panel to consider and my understanding is that people who are seeking their submissions to be treated as confidential can discuss this with the [inquiry] secretariat.”

According to Environmental Justice Australia lawyer Ariane Wilkinson, there are protections in place for whistle blowers testifying about their employers, but that doesn’t mean people in the Latrobe Valley know about such laws, or understand them.

“The Inquiries Act says that it’s a criminal offence for an employer to fire or threaten to fire someone who gives evidence,” Wilkinson confirmed. “But from an access-to-justice perspective, people need to be educated about that part of the law, they need to understand what it means, and they need to be supported to rely on it. There’s no duty for their employer to inform them … If people don’t even know the protection is there for a start, then it’s ineffective.”

Unless the workers that were involved in the Hazelwood mine fire understand the whistleblower protection available to them well before the inquiry’s public hearings begin, crucial pieces of information will never find their way into the new inquiry report — as may well have been the case with the 2014 Hazelwood Mine Fire Inquiry.

And unless there are mechanisms in place for workers to submit testimony anonymously, vital information contained in confidential submissions will never see the light of day, or be subject to media scrutiny.

If  Teague, chair of the newly reopened inquiry, is unable to find out what really happened inside Hazelwood Mine, how will D’Ambrosio ever be able to claim that her government did, in fact, “get to the bottom of what happened on that terrible day”?

Victoria

Oct 16, 2014

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Occasionally, a report will encapsulate everything that’s wrong with government. Almost never does that report come from government itself.

Victoria’s Auditor-General John Doyle got slap-happy yesterday. In a tranche of reporting tabled in Parliament, he released papers on heatwave management (“a lack of clear and effective leadership”), emergency response systems (“consistently failing”), IT security (“weak”) and mental health support in the justice system (“neither uniform nor sufficiently co-ordinated”). Doyle, an admirably fearless public servant, even had the gall to attack the Napthine government’s accounting practices over a write-down of 10 state schools — an intervention Spring Street veterans call remarkable.

Some of that — at least the stuff on heatwaves and ambulance response — was covered in the press yesterday and this morning. But you wouldn’t read about the most damning findings. The ones that cut to the bone on government accountability and dysfunction. Much more than any parliamentary “porn ring”.

As Crikey‘s sister title The Mandarin reported yesterday, Doyle’s report into how the bureaucracy manages and measures its performance was particularly scathing. Government is failing, spectacularly, to account for and communicate what it’s up to.

Examining three top departments — Premier and Cabinet, Health, and Transport — Doyle said they are “not effectively applying the performance measurement and reporting system” and are falling “well short of providing the information needed to understand departments’ effectiveness and efficiency in delivering outputs and intended outcomes for the community”.

Since 2011, the Victorian bureaucracy has been required to report not only its output but the impact that has on the community. Three years later, reporting still falls “well short of the government’s minimum requirements” and “the rate of progress does not suggest that agencies are close to addressing this”.

There’s specific evidence of systemic indolence. Another of Doyle’s reports, into technology systems, found security controls are inadequate and disaster recovery planning requires “urgent attention”. Of the previous recommendations grimly warning of security flaws, less than half have been taken up — and only those that were “low-risk” rather than higher risk. That is, picking off the low-hanging fruit and ignoring anything that might have been harder to solve.

In its failure to effectively measure performance, Doyle said the bureaucratic “weaknesses, repeatedly raised over the past 13 years through VAGO [the Victorian Auditor-General’s Office] audits and other reviews, remain unresolved”. Today, in yet another attack, he noted “serious concerns” with the Audit Act and that, four years after an inquiry recommending change, nothing has happened.

The charge is clear: even when it’s specifically instructed to improve systems, the bureaucracy either moves at glacial speed or does nothing at all. In some cases, more than a decade of inaction.

Government can get away with it because nobody is paying attention. You can’t blame anyone for tuning out when the reporting from government is so “impenetrable” (Doyle’s words) and fails to provide “the information needed to understand departments’ effectiveness and efficiency in delivering outputs and intended outcomes for the community”. Journalists can’t hope to get through all the reports anyway …

As Doyle lectured: “Being transparent and accountable are not optional extras under our system of government and are undermined if departments do not accurately and clearly communicate their performance. Parliament and Victorians deserve no less.”

Perhaps. But you’ll be waiting a long time to get it.

*More on the Auditor-General reports — and the best public policy debate — at The Mandarin

Companies

Oct 10, 2014

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For a supposedly well-organised and determined group of protesters, those opposing Melbourne’s East West Link missed a golden opportunity at yesterday’s Transurban AGM.

The world’s biggest listed toll road company, and key indirect participant in the controversial $6.8 billion East West Link project, only faced questions from two shareholders: namely Australian Shareholders’ Association monitor John Curry and me.

Proceedings were all wrapped up in just 75 minutes, and shareholders supported all resolutions, with more than 98% in favour.

There was still some interesting territory covered with Transurban chairman Lindsay Maxsted admitting the complex Macquarie-created triple-stapled structure had not been dismantled because it would trigger too big of a tax bill.

However, he did express surprise Transurban is being cited by Fairfax in the corporate tax avoidance debate, and reminded shareholders that the company wound up its offshore Bermuda structure a couple of years ago, partly for reputational reasons.

Transurban shareholders have a lot to be happy with after the sweet City Link concession extension and capacity expansion that the company signed last week with Victoria’s Napthine government as part of the East West Link project.

For what was originally an unprofitable $1.15 billion fixed-price construction contract taken on by Transurban’s City Link sub-contractors Transfield and Baulderstone Hornibrook in 1996, the toll road giant has enjoyed remarkable profits out of Melbourne motorists. And the winning formula has been that old chestnut of “bid low” to get the original deal and then negotiate ongoing contract variations.

The original City Link project was significantly under-scoped, so there have been a range of expensive bolt-ons and widenings. Motorists and taxpayers would have been so much better off with a government-funded “do it once and do it well” approach as occurred with the four-lane Eastern Freeway in the 1970s.

For instance, the 1996 contract signed with the Kennett government involved Transurban paying the government $2.9 billion in effective profit share payments in the out-years of the minimum 25 year concession. These payments would have been boosting the Victorian budget about now.

However, then-Victorian treasurer John Brumby foolishly negotiated all of that away in 2006, in return for a miserable $609 million in earlier payments as was outlined in this ASX announcement.

“City Link remains an absolute gold mine, which chairman Maxsted correctly claimed yesterday would cost $8 billion to $10 billion to replace in today’s dollars.”

Whilst some investors believe Transurban over-paid with its $7 billion acquisition of Queensland Motorways in July, its share price took off after the terms of the latest concession extension negotiated with current Victorian Treasurer Michael O’Brien were revealed on April 28.

Despite the dilutive impact of raising $2.74 billion at $6.75 in May, the stock soared to a high of $8.20 in early September as its market capitalisation burst through $15 billion for the first time.

While Maxsted correctly claimed yesterday that City Link has boosted Melbourne’s famed livability, you have to ask: at what price?

Truth be known, City Link has been one of the worst deals any government anywhere has ever negotiated on behalf of its motorists, who will have paid more than $15 billion in tolls by the time the road is handed back to taxpayers in the 2030s.

For proof of this, look no further than the Transurban share price. A company that  floated at an effective $1 a share in 1996 is now closer to $8 and is forecast to pay out 39c to shareholders in 2014-15.

Victorian Labor and Liberal have both been culpable in contributing to what has been a 10-bagger for those lucky Transurban shareholders who bought into the float and still hold those shares 18 years later.

This includes the original chairman Laurie Cox, the retired Macquarie director who attended yesterday’s AGM and would now be sitting on shares worth almost $10 million if he had retained the 1.142 million stapled securities he held on the day he retired in 2007.

While it would have been useful to debate at the AGM, Transurban today released its September quarter traffic and revenue data.

It shows that City Link remains an absolute gold mine, which chairman Maxsted correctly claimed yesterday would cost $8 billion to $10 billion to replace in today’s dollars. City Link’s September quarter toll revenue was up 6.5% to a record $143.2 million, suggesting that Melbourne motorists are headed for a 2014-15 toll bill of close to $600 million. This staggering figure is more than double any other Australian toll road project.

However, today’s September quarter data is also the first time in Transurban’s history that City Link has become a minority of its tolling revenue on all measures across what is now 12 different projects in four cities. Last financial year, City Link contributed $535 million out of $906 million of toll revenue on a statutory basis, and in the September quarter just passed it was $143 million out of $364.7 million, or just 39.3%.

That said, City Link remains the second most valuable toll road concession in the world after Toronto’s Highway 407, which was valued at US$9 billion in 2010, when a stake was last traded.

Once the latest $850 million Transurban-funded expansion is completed in 2019, and all that East West Link traffic is fed into its network, City Link could yet become No. 1.

Victoria

Sep 29, 2014

5 comments

If Labor is elected in Victoria in November, it has said it will cancel contracts the Napthine government enters into for construction of the East West Link tunnel. Can it do this legally?

Anybody can break a contract. This usually provides the other party with a legally enforceable remedy, which in most cases is compensatory damages. This applies to government, but government may get special treatment.

The law has recognised that there is a basic tension between the binding nature of contracts and the need for elected governments to be able to govern in pursuit of their policies, and transport policy is no different in this respect from any other policy field. If a government is hampered in governing — for example, in implementing a new policy or responding to a crisis — the law may recognise that the government can break the contract without the usual consequence of having to pay damages. No party can contract out of the law, and in this case the foundation of the law is the constitution of Victoria.

Under the constitution, Parliament is supreme, meaning Parliament can pass legislation that simply shuts down an existing contract. When it comes to the matter of compensation, the situation is a little more complicated. A contract creates a right, which the law regards as “property”. If that right is taken away, this could constitute an acquisition of property and, unless just terms (for monetary compensation) are provided under the legislation, in some jurisdictions the legislation can be challenged. If the challenge is successful, the legislation is declared invalid.

In Australia, in three jurisdictions such legislation can be challenged in this way. Under the Commonwealth constitution and in the two Commonwealth acts that established the Northern Territory and the Australian Capital Territory, there is a section that prohibits the acquisition of property other than on just terms.

However, state constitutions, such as the Victorian constitution, do not include a “just terms” section. Importantly for the present debate, Victorian Parliament is not inhibited in passing legislation that could constitute an acquisition of property other than on just terms. In short, legislation by the Parliament of Victoria can shut down a government contract without paying any compensation. A government may still wish to compensate a contractor for the expenses the contractor has incurred after signing the contract, but it is not required by law to do so.

The High Court has confirmed that a state parliament can legally pass such legislation. In Durham Holdings Pty Ltd v New South Wales (2001) 205 CLR 399 the New South Wales Parliament passed an act to acquire coal assets. The act did provide for compensation but the company considered that it was inadequate. The High Court held that the legislation was valid. A state parliament has full power to make laws for the “peace, order and good government” of the state and is not required to compensate if legislation is passed that adversely affects a citizen or a company.

The Age has reported the consortium chosen to build the East West Link is negotiating to include a “fee” of $500 million if Labor legislates to terminate the contract. If this “fee” is included, the legislation shutting down the contract could shut the “fee” down, too. It would just be part of the contract.

In any case, the alleged figure should sound a warning. Assuming the contracts are cancelled before any substantial work has been done, the substantial make-up of the “fee” must be pure profit. Is the state of Victoria really about to sign contracts of this nature?