December 5 2000Party leaders just fiddled with reform while their troubles were stacking up
Stacking the numbers
Kim Beazley’s order for a national audit of ALP members to prevent rorts was a tortuous decision, Laura Tingle writes.Geoff Walsh is the former Hawke and Keating government adviser cajoled late last year into running the Labor Party’s national office when Gary Gray walked away from the job, disgusted at the constant undermining of him by the party’s NSW Right faction and his former friend John Della Bosca.Early last month, Walsh, as national secretary, had to report to the party’s national executive the “cabinet” of the party’s administration on a reform proposal that had been the straw that broke the camel’s back for Gray.This was the establishment of a national database of the party’s membership which would let the national organisation keep an eye on what was happening in the branches and monitor the branch “stacks” of members which are at the heart, not only of the party’s excoriation in Queensland, but its decline over the last decade into corruption and internal warfare across the country.

Walsh told the national executive: “A national database could be used to assist in combating branch stacking. Regular monitoring and reports to the national executive could be made about recruitment patterns across the nation and provide a repository of all membership information.

“However, the national executive would need to take a view of its role in monitoring or even preventing branch stacking.”

Walsh would have known as he was writing his report that the national database had no chance of getting up at the meeting: the factions which control the various State organisations around the country particularly in NSW were simply not going to let the national office of the party get its hands on their membership lists, let alone take any “role” on branch stacking.

As one senior source said: “NSW’s main fear is that the national office, if it had a national membership list, might arrange for the national leader to write directly to individual members for donations skimming off some of their money.

“Worse still, a pro-active national leader with a reform agenda for both policy and party rules might use such information to actually achieve some change.”
In the circumstances, Walsh did not push the issue: “Such an enhanced role for the national executive in membership matters may be premature, given that the August 2000 ALP national conference adopted a new national rule requiring State and Territory branches to implement reforms to prevent branch stacking,” he wrote.

And as of yesterday he remained of the personal view that the database would not have significantly altered current events.

But the fact that as recently as last month the database proposal was so casually put off until some unspecified date has particular resonance now with Sunday’s announcement that Kim Beazley had ordered a “national audit” of the party’s membership base as a way of addressing branch stacking.

It was only when suggestions emerged that a second Beazley frontbencher was taking water over the growing Criminal Justice Commission maelstrom in Queensland that the national party and national leader decided it should have a look to see just who were its members.

Even a special national executive meeting held in Sydney last Friday night hours after Wayne Swan had been forced to stand down pending a police inquiry into alleged bribes he had paid to the Democrats did not feel compelled to escalate any action against branch stacking.

It didn’t even have a lengthy debate about what was happening in Queensland, concentrating its time instead on a preselection fight in the NSW seat of Richmond between the party fiefdoms controlled by Martin Ferguson and George Campbell.

The national executive’s swift disposal of the database proposal is, however, only the latest of a string of deliberate decisions and cases of calculated negligence by the party’s powerful over the last 14 months which have left the party politically
vulnerable to John Howard and ALP members with every right to feel angry.

In September last year, the Supreme Court of South Australia made a groundbreaking decision largely because the parties now receive taxpayer funding that the internal workings of political parties are subject to the scrutiny of the courts. They would be “justiciable”.

The advice about the implications of this decision for the Labor Party from three QCs was clear and concise.

Kevin Bell, QC, Richard Kenzie, QC, and John McCarthy, QC, told the national executive on September 24: “If the National Executive accepts that the ALP rules are justiciable then a fundamental review of party rules, national, State and Territory, will be necessary.”

The “fundamental review” has still not occurred, though Walsh argues national rule changes that have gone through require it by June. There has been no move to establish validation provisions or defective membership applications.

Instead, the party and Kim Beazley have hidden behind the changes that have been made to the party’s rules voted in at August’s national conference.

These changes have themselves had a sorry history.

In the wake of the South Australian court ruling, the former NSW attorney-general Jeff Shaw and Federal shadow attorney-general, Robert McClelland, prepared a seven-page draft of new rules on party membership, recruitment and reform of internal appeals processes designed to protect the party from further court actions.

Among their proposals were exhaustive checks on identity, including a check against electoral records, so-called “tripwire” provisions stopping many members joining the same branch on the same day, but in particular, exhaustive details of impeccable internal review processes designed to keep the party out of the courts.

Shaw and McClelland, for example, specified that no party officer, member of the State executive, management committee or paid employee of the party could be a member of a review tribunal.

A working party was established to consider the draft, but it never did: the day before the committee was due to meet for the first time in June, Walsh circulated a draft that cut the proposal to seven dot points covering less than a page “in order to provide a focus for our discussions”.

Walsh was subsequently involved in the rebuilding of the rules to a more respectable bulk, which would “re-include” requirements for members to sign their own applications, and branches to have tripwire procedures in place (but cut out all references to the word “faction”Smilie: ;).

There is a requirement that all States must establish a tribunal to resolve disputes concerning memberships, but only “where necessary”, and the detailed design of the earlier proposal has gone.

The rule changes contained a threat: all States and Territory branches had to amend “where necessary” their rules to reflect the national rules by June of next year.

The reality is few in the party have believed until now that this would take place, given the national leadership’s form so far.

And the State most synonymous with branch stacking is NSW.

Many in the party believe that it is only a matter of time before the stench from Queensland travels south.

October 9, 2000Mystery behind hiring of $16m adviser
A US law firm is being paid millions by the Federal Govern-ment for IT savings which haven’t eventuated, Laura Tingle reports.Michael Murphy by all accounts is a “very talented young man”.

According to his CV, in just five years after gaining his law degree at the University of Melbourne in 1986, he worked in “the technology, energy, automotive and finance sectors”, as well as “corporate and securities law and trade practices/anti-trust law”.

The question in Canberra is how young Michael Murphy, who became a New York-based partner of the US law firm Shaw Pittman Potts and Trowbridge in 1992, and several colleagues, came to be appointed as computer advisers to the Howard Government on fees that would make Australia’s leading barristers blush.

Even Tom Hughes, QC, might only dream of a four-year brief in mid-1996 at $US85,000 a month for 21/2 years, and after that at $US4,500 a day (about $8,300 in today’s Australian dollars).

As of May 31 this year, Michael and his colleagues have cost Australian taxpayers $15.82 million, and the cost is still rising.

But if the question is a good one, the official answer is even better.

Not even the Auditor-General with access to internal departmental records has been able to find any records of how the US law firm came to be hired. There is even uncertainty about what its staff actually does.

The huge bill for the US law firm is just one aspect of what may prove to be the biggest administrative scandal of the Howard Government.

Shaw Pittman was hired as adviser to what is known as the information technology outsourcing initiative the move that was supposed to save $1 billion over five or six years by placing the public sector’s IT systems in private hands.

Instead of departments individually buying and running systems, a contract is let to serve all the bureaucracy’s needs from equipment to service.

The initiative was torn into shreds in a damning Auditor-General’s report last month.

But there has been no “mea culpa” from the Howard Government. Instead, the responsible minister, the Minister of Finance, Mr Fahey, responded that the Government was “satisfied that good progress has been made” and failed to acknowledge the report’s trenchant criticism.

Yet the Government has been exposed as culpable both for the time pressures its push for budget savings placed on the computer initiative, and in relation to Shaw Pittman, for its failure to ensure adequate controls on the cost of the consultancy.

In anticipation of the $1 billion of supposed savings, the Government cut departmental budgets commensurately in the 1997 Budget.

But the “initiative” has not delivered expected savings.

According to the Audit Office, savings to date are closer to $70 million than $1 billion, and that’s before the $40 million bill for advisers like Shaw Pittman.

The new arrangements are costing some departments more than their old systems.

The role played by Mr Fahey and his office in the whole affair remains unclear. But if the quality of his oversight is exemplified by the Shaw Pittman saga, it does not reflect well on the former NSW premier.

The US firm’s appointment, according to Senate estimates evidence, was made in mid-1996 by the then chief information officer, Dr Andy Macdonald, after a call to the Government Solicitor in South Australia.

The State Liberal government of Dean Brown was engaged in its own highly contentious “outsourcing” of its computer systems at the time.

Sources close to Dr Macdonald who now works in Geneva have told the Herald he had always envisaged that an international firm would provide strategic advice for the mammoth project, and that a second adviser would provide tactical and drafting advice.

The Saskatchewan-born Dr Macdonald was familiar with Shaw Pittman from his work as chief information officer in the Canadian government.

But it was Shaw Pittman’s involvement in South Australia demonstrating its capacity to deploy people here that got it over the line.

The firm initially went to Canberra on a short-term basis as an “outsourcing consultant” to advise how departments’ computer systems should be “clustered” grouped and offered to the market.

But the consultancy was never put to tender, and what’s more, the Audit Office found there was no evidence a contract had even been signed with the firm for the first year.

Outsourcing experts who have spoken to the Herald say the May 1997 Budget move to cut departmental budgets helped ensure a complex task became almost impossible: “clusters” had to be developed and “sold” before systems had been standardised itself a timely process.

The non-standardised clusters would prove hard to service and difficult to structure for economies of scale.

In June, Shaw Pittman’s brief was expanded from “outsourcing consultant” to “strategic adviser”.

A contract was finally signed in July 1997 still at rates originally set for a short-term consultancy and after publicity about the the firm’s fees, a “competitive tender” was put out for the strategic advisory work.

But even then, the Auditor-General has politely suggested the tender was rigged: 17 firms expert in asset sales rather than computers were given just 10 business days to tender on the basis of “limited information provided”.

The bids were assessed by a panel chaired by the very bureaucracy that had originally hired Shaw Pittman, and the firm was rehired, even though their bid was $A2 million, or 44 per cent, more expensive than the next ranked bid.

Mr Fahey responded to written questions from the Herald about Shaw Pittman’s appointment by contending it had been appointed “under a competitive selection process”.

According to the Auditor-General’s report, this is not true.

It appears that even at this stage, the Macdonald plan for Shaw Pittman’s role was well off the tracks. The Audit Office says it was already providing “technical assistance”, including the development of tender documents.

Shortly after Shaw Pittman had arrived in Canberra, so did Ms Gillian Marks, a South Australian government lawyer on secondment.

Ms Marks was to prove significant in the IT project.

Sources say Ms Marks’s job was to work with Shaw Pittman when the decisions were being made about which departments’ computers could be “clustered”.

The US firm had expertise with clustering in the US but needed local input on how regulations and bureaucratic protocols might influence clustering. This was Ms Marks’s role, even though her experience was in State, not Federal, government.

This work was happening as a fierce power struggle raged within Cabinet and the bureaucracy over the project. Department heads believed the outsourcing plans would cut them out of a say in the day-to-day running of large parts of their departments.

There was also growing tension among those running the project.

Sources say concerns about the ever expanding role of Shaw Pittman, and about the close liaison on the project between Ms Marks and Mr Fahey’s then chief of staff, Mr Greg Barns, to others signified an uncomfortably close involvement in the project by the minister’s office.

The culmination of those tensions was to come with the departure of Dr Macdonald.

Greg Barns acknowledged to the Herald he was “pretty heavily involved” in the project at this stage, “trying to get it back on the rails” in the face of fierce resistance, but said he was not aware if this had led to a conflict between Dr Macdonald and Mr Fahey.

Mr Fahey would not comment when asked whether Dr Macdonald had expressed concerns at a meeting in August or September of 1997 about the close liaison on the project between Mr Barns and Ms Marks.

Ms Marks who now works with a large legal firm in Sydney has not returned the Herald’s calls.

In November 1997, Mr Fahey announced that Dr Macdonald was leaving his job just 21/2 years into his contract, “as most of the major initiatives that he has led are either completed or at the implementation stage”.

In fact, at that point only one request for tender out of a planned 12 had been released, and that tender had not yet closed.

Mr Fahey also announced outsourcing was to be moved from the Office of Government Information Technology (OGIT) to the Office of Asset Sales, which would be renamed the Office of Asset Sales and Information Technology Outsourcing (OASITO), citing “greater access to a pool of staff skilled in the management of large scale projects”.

But despite the skilled staff pool, and Dr Macdonald’s departure, the role of Shaw Pittman continued to grow like topsy.

The Audit Office says the firm was now providing “technical assistance” and acting as lead negotiator. The one thing it doesn’t provide, ironically, is legal advice.

Shaw Pittman appears to have become simply indispensable to the bureaucracy.

OASITO’s chief executive from late 1997, Mr Mike Hutchinson, told the Senate last year: “These are people who are almost invariably in the office at work when I arrive in the morning, which is generally before 8 o’clock. They are always there after I leave, which is usually after 7 in the evening, and they are customarily there for at least half of the weekend.”

Yet the Audit Office found that for “sustained periods of time, particularly in the first year of the initiative, the strategic adviser was engaged in tasking that was not commensurate with the nature of the engagement and associated fee structure”.

One of the Coalition’s promised savings on coming to office was a $12.5 million cut to the resources of the Office of Asset Sales to “reduce duplication” of effort between the office and advisers.

Shaw Pittman’s local staff represent about 20 per cent of the IT outsourcing team.

The depressing truth about Shaw Pittman’s lucrative Australian contract may be no more than a grotesque case of false economies of scale.

September 8, 2000Arrest militia killer, Jakarta urged
Mark Dodd and Laura Tingle
Australia has told Indonesia that the notorious militia leader Eurico Guterres is to blame for Tuesday’s murderous rampage in West Timor that killed up to six United Nations workers, including three foreigners, and must be brought to justice.The demand by the Foreign Minister, Mr Downer, to the Indonesian Ambassador is Australia’s toughest stand so far amid the increasing pressure on Jakarta to act against those responsible for the Timor violence.It came as the UN’s Millennium Summit intended as a celebration of its ideals of peace and harmony focused the world’s anger on Indonesia, with pleas for Jakarta to crack down on the pro-integration militias.The UN Secretary-General, Mr Kofi Annan, broke news of the massacre in his opening address, calling on the world leaders to observe a minute’s silence as the UN’s humanitarian staff in West Timor were being evacuated.

The last 69 UN workers, who had been sheltering in an Indonesian army camp in West Timor, arrived safely across the border yesterday amid reports that up to six international and local staff had died in the militia attack on the town of Atambua.

The convoy arrived at the Motaain border checkpoint under Indonesian military escort shortly after 4pm and included coffins bearing the bodies of three foreign workers with the United Nations High Commissioner for Refugees.

“All 69 are in good condition and in good spirits,” said a UNHCR spokesman, Mr Ian Hall.

Mr Hall said he could not confirm reports that six people had died in the Atambua attack but the Herald was told by a senior UN official that three international staff and three Timorese staff were killed.

An Indonesian team investigating the Atambua killings had reportedly arrested 15 suspects. One other person was suspected of having killed the militia leader Olivio Mendosa Moruk, whose death triggered the rampage.

In Canberra, Mr Downer said he had told the Indonesian Ambassador, Mr Arizal Effendi, yesterday morning that Guterres who was notably left off last week’s list of suspects in Jakarta’s investigation of last year’s violence in East Timor was “somebody they should deal with”.

“Eurico Guterres last year was very actively involved in leading the militias in East Timor,” Mr Downer told a press conference. “Eurico Guterres is now actively involved in leading the militias in West Timor.

“He’s clearly one of those involved in leading this assault on the United Nations High Commissioner for Refugees in Atambua. He is one of the people that the Indonesians need to target and bring to justice.

Mr Downer expressed hope that the arrival of two battalions of the Indonesian Army in West Timor yesterday was evidence that Jakarta was finally acting seriously to tackle the violence.

“This must lead to a turning point in the Indonesian Government and the Indonesian military’s approach to bringing the militias under control, disarming the militias and restoring law and order in West Timor and, from our perspective, stopping raids
across into East Timor.”

The Treasurer, Mr Costello, also pressed for action over the violence during his meeting with the Security Minister, Mr Susilo Bambang Yudhoyono, in Jakarta yesterday.

Mr Costello called the attack in Atambua deplorable and urged Mr Yudhoyono to improve security in West Timor.

“The Indonesian Government should do all that it can to bring pressure to bear on the militia to cease cross-border activity and to cease involvement in violence,” he said.

The Department of Foreign Affairs and Trade said eight Australians had been evacuated from West Timor on Wednesday night and up to 30 more were registered as travelling or living there. All are believed to be safe.


Carlos Caseras, a UN worker in Atambua, sent this email to a colleague early on Wednesday.

He was killed shortly afterwards.

I was in the office when the news came out that a wave of violence would soon pound Atambua. We sent most of the staff home, rushing to safety. I just heard someone on the radio saying that they are praying for us in the office. The militias are on the way… These guys act without thinking and can kill a human as easily (and painlessly) as I kill mosquitoes in my room.

You should see this office. Plywood on the windows, staff peering out through openings in the curtains hastily installed a few minutes ago. We are waiting for this enemy, we sit here like bait, unarmed, waiting for (the) wave to hit. I am glad to be leaving this island for three weeks. I just hope I will be able to leave tomorrow.

As I wait for the militias to do their business, I will draft the agenda for tomorrow’s meeting on Kupang. The purpose of the meeting: to discuss how we are to proceed with this operation.”

August 19,2000Net Loss
The McClure report overturns the perception of mutual obligation being a one-way street for the unemployed. Laura Tingle reports.THOMAS is a 17-year-old schizophrenic who can’t believe his luck. Not only has he had the support of his parents since his condition was diagnosed but a lot of other people and resources have been assigned to his case.There is a social worker from the mental health service, the local support group drop-in centre, his school counsellor and an adolescent mental health team member.All these people have agreed he should get the incentive of a social security payment to encourage and support him to stabilise his condition and complete his education, so he has gone to Centrelink to arrange the payment.

Then there was the specialist psychiatric employment assistance which developed an individual employment plan for Thomas, and the local cafe owner who gave him work experience two days a week.

All the while his personal consultant and the Centrelink disability officer were there to co-ordinate all the support including financial he needed to meet his agreed goal: a secure paid job in the hospitality industry within 18 months.

This is the way the social safety net should work. Unfortunately, neither Thomas nor the network of supporters outlined here actually exists.

Thomas remains a figment of the collective imagination of the Reference Group on Welfare Reform led by Patrick McClure that has just reported to the Howard Government on its recommendations for a major overhaul of the welfare system.

Thomas was a number of “case studies” the group outlined in its interim report in March to show how the system the group had outlined would work.

The case studies illustrate the ambition of the aims of the McClure report.

The positive response of all sides of politics to the report this week, in part, reflects the compassionate ambition of its ambit: it is about a lot more than extending mutual obligation to single parents and the disabled.

But the case studies also highlight the vulnerability of that ambition during the “five to 10 years” it is expected it would take to implement it.

For implementing the McClure report will not only involve the politically and administratively complex tasks that the Howard Cabinet must undertake immediately such as combining pensions for older people and rationalising payments for adults in the labour market and education.

It will involve a much broader range of financial and administrative negotiations the scope of which has not really been comprehended in Australia in the past.

As Thomas’s case study shows, the system that would help Australia’s diverse jobless “remain part of society” whether by study, education, voluntary or paid work would have to co-ordinate the efforts of Federal and state governments, the charitable sector and business.

In Thomas’s case, for example, the support would involve funding of his “participation payment” (benefit in the old parlance), payment of course fees and access to concessionary pharmaceuticals.

There would also be government funding of his support group, and State government would contribute through the mental health system.

Somebody would also be funding the specialist employment service and the McClure report leaves open that Thomas’s work at the cafe might be subsidised as well.

The Family and Community Services Minister, Senator Jocelyn Newman, made clear the task of starting to cost this mammoth new system has not yet begun.

But the funding side is probably the easy part of the equation: after all, many of these services already exist.

There has been little said about the ambitious infrastructure changes it would require to work properly, nor the fact that such a hands-on, interventionist piece of social engineering would appear to run totally counter to both the Coalition’s philosophical liberalism and its policy history since 1996.

When releasing his final report on Wednesday, McClure appealed to journalists to make sure they reported all five of the initial steps his committee recommended:

* Individualised service delivery.

* A simple and responsive income support structure.Incentives and financial assistance.

* Mutual obligations and social partnerships.

* Building community capacity.

To take just the first of these steps, the final McClure report makes it clear the Reference Group had no illusions about just how difficult its recommendations would be to implement.

In simple terms, the idea of the new system would be that there would be a “gateway” like the current Centrelink which would both direct and co-ordinate the various forms of assistance the jobless received from a range of other providers.

Just as job seekers are currently referred to Job Network agents for assistance in finding work, a range of different government and non-government bodies would be providing the actual assistance services provided in the new safety net.

The McClure report noted: “We accept that achieving our service delivery system is a major challenge. Nevertheless, we are convinced that a redesigned delivery system is a necessary foundation for reorienting the social support system to one that maximises people’s opportunities and capacities to attain social and economic participation goals.”

To do that, it says the central “gateway” would need to have an assessment process with the flexibility to meet the diverse range of individuals’ lives.

But McClure prescribes a mammoth job to the “gateway”, which would include:

* Determining entitlement to financial support (basic payments, add-ons and the new “participation” support payments).

* Assessing a person’s risk of long-term joblessness.

* Identifying what an appropriate “participation” requirement might be placed (effectively by taxpayers) on a person in return for financial support.

The “gateway” would also have to assess what assistance would need to be provided by other agencies, refer a client on to those agencies and monitor whether the assigned “participation” had been carried out.

This is but one part of the complex system that must be constructed if McClure’s vision is to be fulfilled.

The political risk, of course, is that only parts of the system will ever be implemented, leaving those in the system vulnerable to what must necessarily be highly arbitrary judgements made on poor information.

The anecdotal evidence of the Government’s experimentations in these forms of service delivery systems shows that this is a real risk. Specifically, the Opposition highlighted earlier this week that in the current Job Network system, many people are being “breached” that is, losing their benefits in dubious circumstances.

Labor’s community services spokesman, Wayne Swan, highlighted, for example, the case of an unemployed person who was “breached” for failing to turn up to a job interview because it had been arranged by Centrelink at the same time as a TAFE course that had also been organised by Centrelink.

Swan said that the Government was already using “breaching” as a way of cutting the social security bill, and that about 450,000 breaches would be imposed this financial year though 30 per cent of those would be overturned on appeal.

One of the problems that some senior figures in the Government privately acknowledge is that Centrelink the current “gateway” already has a “dirty” database.

That is, the data that Centrelink has on its clients is so unreliable it has become a point of some contention between the Government and the Job Network agencies it has contracted to provide employment services to the unemployed.

The Job Network agencies say that too frequently, the people who are “referred” to them as clients turn out to effectively not exist, or not reflect the person whom the agency thought it was being asked to help.

Senator Newman was more upbeat about the Centrelink database this week.

Asked by the Herald about the indications the database has not proved reliable and has been out of date, she said: “Actually, I haven’t heard that, but what I have heard about the IT system from the very beginning was that there were two systems the Centrelink one and the Job Network one, and they didn’t talk.

“It was very frustrating for some of the Job Network people. Over the first contract, work was done on that and it is somewhat better but I understand there are some frustrations.”

When the Herald travelled through regional Australia with Newman’s junior minister, Tony Abbott, recently, the “dirty” database was one of the main bones of contention he was expecting to deal with.

There have already been estimates of several hundred million dollars to clean the database up just to better service the existing Job Network.

While such a nuts-and-bolts issue might seem to be out of step with the grand vision of the McClure report, information technology will be the key to determining whether the system works for welfare recipients, and also whether it works for, and is accountable to, taxpayers.

Because multiple changes need to be taking place in the welfare system over an extended period if the McClure report is to be implemented, we may not know for decades whether the new system will work, or whether in fact it has actually been implemented.

August 17, 2000With a big job ahead of her, Newman is going nowhere yet
The Minister for Family and Community Services, Senator Newman, has scotched speculation of her imminent departure from politics, saying she will be driving through the process of welfare reform for some time to come.With the Howard Government due to consider the findings of the McClure Report in detail and on a “whole-of-government” basis, Senator Newman said yesterday that she had been asked by the Prime Minister to oversee the process, which she indicated could still be under way at the time of next year’s Budget.She also refused to confirm that Centrelink would be the “gateway” organisation to the new welfare system.There has been intense speculation of a Cabinet reshuffle based on an expectation that Senator Newman would leave her job once the welfare report was released.

Saying she was “bored” by suggestions of her departure, Senator Newman said of the welfare reform process: “I just find it a fascinating exercise. I’m very engaged in it. It’s not been easy to get to this stage with it. I’m just delighted that people are saying good things about [the report], and I hope that goodwill continues.

“This work is not finished. There is a long way to go yet. My horizons are totally bound, if you like, by the here and now of what I’m doing. It’s stimulating, it’s purposeful, it’s important. It’s a very significant job.

“Don’t ask me what I’m going to be doing next Pancake Day.

“I can’t imagine why people were so ready to say I was going to leave. I just found that extraordinary. Labor was all saying back in June `Goodbye Jossy, this will be your last Question Time’.

“This has been a major issue of the heart for me, as well as the intellect, and it’s not done”.

Mr Howard had asked her to oversee the process from here, she said, and “Cabinet has determined that that will be so”.

“I’ll be leading the work from now on. My department will be chairing the [interdepartmental committee considering the report’s recommendations].”

The framing of the Government’s initial response to the report should be completed in October, but certainly “before the end of the year”.

“I don’t want to be too specific. If it’s going to be done, it’s got to be done well,” she said.

But Senator Newman indicated the Government’s slow progress towards its reform goals would continue. Asked if she thought it was possible to achieve all of the McClure Report’s initial recommendations by October, she said: “That time frame is not mine. We will be giving an indication of our support for the short-term measures when the report comes out.”

But the level of funding for these measures would not be made clear until next year’s Budget, she said.

The McClure Report sets out a massive infrastructure of co-ordinated government and non-government agencies providing assistance to welfare recipients.

However, Senator Newman said yesterday: “I wouldn’t want you to get the feeling it’s all about providing case management to every individual, because that implies huge buckets of money.

“We see what [the committee] are saying as [getting], say, Centrelink as a gatekeeper … some gatekeeper that assesses individuals according to their need and according to the barriers they have, and streaming them off into the most appropriate area.

“For a lot of people they won’t need much more assistance.”

Asked if she was indicating Centrelink would not necessarily be the “gatekeeper” to the system, Senator Newman said that would “depend on the Government, because we weren’t ready to make any sort of announcement about these things at this stage”.

Despite the positive reception for the report yesterday, the jury is still out on its influence on the system, because neither the minister nor Mr McClure was willing to outline details of how parts of the system would work particularly sanctions against those not complying with mutual obligations.

Senator Newman spoke to the Democrats leader, Senator Lees, as they left Question Time: “I said well, trust me. Don’t be cynical about how it will be implemented.”

The minister said it was generally agreed that bringing together various pension payments into one payment with modifications or add-ons “will be a very difficult process”.

Asked for her own view about how easily the package could be dismantled, Senator Newman said: “I think I’d be as cautious of answering that as [Patrick McClure] was. He was pretty unwilling to suggest ways it could be dismantled.

“We’ve given an indication that we think the direction is right. Most government reports don’t end up with everybody endorsing every single recommendation, and this may be the same, but I can’t say now. I don’t know.”

July 22, 2000Workout
Laura Tingle joins Tony Abbott on the road as he tries to sell his Job Network scheme and its new direction.

LET’S call him Dean. Still carrying the physical awkwardness of his teenage years, young Dean has just shuffled into the Sarina Russo Job Access office south of Brisbane to discover whether his so far bleak job prospects can be improved.Instead he is discovered at the reception desk by the firm’s managing director, a human whirlwind called Sarina Russo, who is in the office with the Federal Employment Services Minister, Tony Abbott, for the office’s official launch.

“Oooh, here’s a client,” she says. “Hello. What’s your name? Would you like to meet the minister? Come over here and meet the minister and tell him how things have been working out for you.”

The still slightly dazzled Dean is then quizzed by the perpetually upbeat Russo for Abbott’s benefit about his experience at the job agency. (“How are you finding it? Are we helping you enough? Who is your consultant? Oh, Cameron, isn’t he just fantastic? Do you find you can really talk to him as a young person?”Smilie: ;)

Dean escapes after sounding as positive as he can in the face of such daunting enthusiasm.

The Herald is spending the day travelling with Abbott through Southern Queensland and far northern NSW as he attempts to persuade us that his beloved Job Network the collection of private and community-sector organisations that have replaced the old
CES in finding people jobs is delivering.

The trip coincides with a major speech Abbott delivered in Melbourne this week. His aim is to shift public perceptions about the Job Network. He wants people to stop seeing it as no more than a Howard Government attempt to deliver government services on the cheap.

Abbott wants the network to be seen as a system that is not only better for the unemployed, but is indeed closer to the so-called Third Way of government championed by the Blair Government than either Tony Blair or Australian Labor has yet achieved.

For the strident Abbott who has chosen to make a name for himself by attacking “job snobs” and arguing that the dole is “cruelty masquerading as compassion” this argument about Job Network is a new direction indeed.

Since its inception in May 1998, the Job Network has been dogged by controversy over the way contracts were initially let, how a second contract tender resulted in the virtual wiping out of the Government’s job agency, Employment National, and the way the contracts favoured regional Australia and religious groups.

There has also been little information available to date against which to judge the network’s performance, or the performance of its individual members.

The Government tends to quote highly debatable figures comparing Job Network’s performance with that of the old Commonwealth Employment Service.

Even when the Auditor-General’s office reviewed its performance recently, it was unable to make any comprehensive findings (despite claims to the contrary by Abbott) about whether the Job Network provided value for money, and whether it was doing its

More of that information is slowly starting to emerge. Abbott’s department, according to some of the companies in the Job Network, is gradually starting to provide more information about relative performance. Equally, network members are starting to co-operate more among themselves after a period where the intense competition provoked by an initial 18-month contract, followed by the second contract for $3 billion worth of business over three years, did little to encourage information sharing, or co-operation in helping their clients.

The network as it now exists has been in operation only since late February/early March but, travelling with Abbott, it becomes clear that while he still acknowledges its shape is a “work in progress”, there is a general sense of comfort about where the network is now headed.

The job agencies we visit on the day reflect its new dominant influences: Mission Employment in the semi-rural centre of Beaudesert, Sarina Russo offices in Beenleigh and in Lismore, NSW, and Wesley Uniting Employment in Grafton.

Mission and Wesley Uniting are two of the four big Christian-based organisations that dominated the $3 billion tender to deliver services announced in December.

Russo’s Queensland organisation is one of the biggest private-sector winners.

Abbott argued in his Melbourne speech this week that “the presence of different kinds of organisations has given the Job Network its special tone”.

“The private sector has helped to ensure efficiency and value for money. The charities have provided a strong sense of mission. And the former Skillshare sector has kept a `main street’ focus on services adapted to individual job-seekers and particular employers in distinct communities.”

The irony of all our visits, perhaps, is that the majority of people we meet during the day, and who are now running and staffing these offices, are former employees of either the CES or Employment National, or both.

This, of course, raises the question of why these organisations are supposed to be so fabulous in comparison with both the CES and EN when they are all run by the same people?

Abbott’s answer is that the monolithic system of the CES had entrapped people and they could no longer provide a responsive service.

What is true is that, using the model of case management pioneered under the Labor Government, Job Network offices have to concentrate only on getting people into jobs not the administrative side of welfare keeping their purpose clear.

It is also true that the very diversity of organisations participating means a similar diversity in approach to the task, which is refreshing.

For example, in Beaudesert, Mission Employment not only manages those seeking work through the Job Network but also has a contract to deliver the community support program aimed at really difficult cases usually people with drug and alcohol problems, ex-prisoners and abuse victims.

As we will also see later in the day in the Wesley Uniting Employment office in Grafton, there is more of a “pastoral care” feel to the Mission office than there is at its private sector competitors.

The Mission office, which has been slowly building up a local profile, uses a number of standard Mission Employment programs to help the core of the Job Network’s business; people receive “intensive assistance” in finding work after being unemployed for a considerable period of time.

Mission runs a “Worklink” program: three weeks of intensive course work aimed at preparing people for the less obvious side of work. This includes socialisation skills, for example, through work in a group setting which also allows staff to make informal assessments of numeracy and literacy skills.

Sarina Russo’s organisation has a clearly different approach which stems from the organisations history as a training organisation it runs the Russo Institute of Technology(RIT) in Brisbane.

Indeed there have been suggestions from competitors that the Job Network contract has provided a ready pool of funded students for the college.

But the Russo office in Beenleigh provides a different story.

Beenleigh is a tough employment market but Russo’s organisation, under former EN manager Jeff Green, has in four months placed about 40 per cent of the intensive assistance clients whom it had been given 12 months to help.

Cameron Moir, the “fantastic” consultant who was helping young Dean, tells me that when he sends prospective staff out for employee interviews, he may also send one of his harder cases who might not be quite right for the job.

Having established good relationships with employers, he says he can ask them to have a look at the fourth person and give them some feedback.

“They might pick up something we don’t about how the person presents for a job,” he says. “That might be something as simple as chewing gum in the interview.

“But it is often the case that the skills the job-seeker wants or thinks he might need might not be what the employer wants and this at least helps us focus on what we need to do.”

The industrial base of the area means Moir spends a lot of his time working with local organisations and now other Job Network members to get recognition for skills for training, such as trade certificates.

Moir says most of the government funding he gets to help people into work is spent instead on qualifications recognition and basic things such as work boots or money for fares.

Russo is also taking a different approach in her new Lismore office. She says she is offering many of the clients there the opportunity to travel and train on the Gold Coast and stay on to look for work. If the jobs aren’t in the local town, she says, you’ve got to help people find a route to where the work is.

Russo might appear at first an unlikely ally for Abbott: as he notes she was a republican delegate to the Constitutional Convention. A more obvious Abbott soulmate might be the Rev Gordon Moyes, from Sydney’s Wesley Mission, who is in Grafton for the Wesley Uniting launch. The two men fall upon each other like old friends and Moyes proselytises at the launch for the “remarkable period of time as far as employment is concerned” and of the importance of breaking the welfare dependency cycle.

He also enthuses about the group’s employment arm in the context of Wesley’s push into rural and regional Australia, a third generation of homelessness in major cities, teenage suicide rates, and the wider Wesley group expanding “fairly aggressively” with growth that is “quite impressive”.

“Wesley Mission wants to make a contribution to Grafton as significant and enhancing as the jacarandas,” he says.

Once again, Wesley’s Grafton office is largely staffed by former CES and Employment National staff. Its regional manager, Ros McInnes, is also ex-EN and CES. The Wesley office is on the old EN site.

As Abbott says, the “can-do” feel of the Job Network offices we visit is striking. But what Abbott still has to show is that it is ultimately achieving uniformly good results.

June 10, 2000Consuming passions
The hard men and women of the ACCC aren’t fazed by the prospect of monitoring the GST. In fact, writes Laura Tingle, the commission is positively relaxed about its new responsibilities.THE Australian Competition and Consumer Commission has had a busy time in the past two weeks, and not just because of the growing storm over the goods and services tax.In that time, it has had something to say about the price of Snowy Mountains power, the BLF, a homeworkers’ code of practice, frequent flyer schemes, Spanish olives, the Commonwealth Bank/Colonial merger, and biscuit maker George Weston Foods being fined $900,000 for price-fixing.Its interests over the past fortnight characterise the exceptionally wide brief the commission has these days, let alone the enormous new pressure it is under as the Government’s prices watchdog for the new tax system particularly the GST.

It all raises the question: how can any one organisation possibly handle such a workload, even before it goes on the wild ride of trying to tame the most comprehensive shake-up of prices of literally everything in the Australian economy?

At the commission’s headquarters in Canberra its chief executive, Hank Spier, is remarkably relaxed. Why on earth, for example, take on the issue of frequent-flyer points when it is about to be bombarded in earnest by the GST?

Spier is philosophical.

“Our work comes from the marketplace”, he says, “and a little from the hill [Parliament House]. With frequent flyers, we had been getting a lot of complaints, plus there were two or three people with bees in their bonnets about the issue in this office not because of personal experience, mind you.

“It was coming to us from the community and the media. A lot comes from industry itself other industries who have businesses to run.”

The ACCC argues it doesn’t have a choice of putting such inquiries off. The commission has a statutory obligation to respond promptly but is also driven by market imperatives to resolve issues quickly. In the case of the frequent flyers, it is now in the process of talking to airlines and card companies with loyalty links.

The only difference the GST has made to the commission’s life, Spier says, is the extent to which it has put the spotlight on the commission and potentially politicised its work.

The business community has always had a love/hate relationship with the ACCC: businesses, after all, are the biggest complainants of unfair practices or pricing arrangements, but they are also the sector that comes under the commission’s not-always-welcome scrutiny.

In the past, the ACCC’s role has tended to only infuriate a few individual businesses at a time.

Now the whole sector is up in arms about the commission’s approach to policing price changes around the GST, even though (of course) it was business that was prodding the hardest for the new tax.

The business community argues the commission has been giving conflicting advice, has been unnecessarily heavy-handed in making examples of businesses, and has damaged company reputations by making price exploitation allegations without immediately being prepared to take matters to court.

What is particularly significant, though, for the environment in which the ACCC works is the dissipation of bipartisanship about the prices watchdog.

The Opposition has clearly had the ACCC in its sights this year, the implicit charge being that the commission has been given, and accepted, a too-political task: not just to monitor prices but to take the heat for the Government on price rises.

What has made this task even harder is the ludicrous situation the Government has got itself into on prices and the GST arguing that prices cannot rise by more than 10 per cent and even suggesting it was illegal for this to happen.

It was officials from the ACCC who finally had to concede during a long grilling in front of a Senate estimates committee last month that there was no such legislative direction.

It was they who also had to squirm as they tried to explain how the commission would decide whether price rises were justifiable or not.

Asked by Labor’s Senator Stephen Conroy if business could increase prices to boost its margins, the ACCC’s deputy commissioner, Allan Asher, said that this would make a business “a prime candidate” for prosecution.

The only non-GST price increase he could envisage was one that “is unavoidable, that doesn’t increase profit margins, that isn’t about taking advantage of consumers or ripping off the system”.

All that sounds fine until you think of a group such as the retailers of clothing. They argue there will be no offsets cuts in taxes and costs for imported clothing which will, as a result, be going up at least 10 per cent.

How do they then, for example, recoup the cost of Australia’s recently plunging exchange rate? For his part, the ACCC’s chairman, Professor Allan Fels, was suggesting as recently as this week that businesses should just try to avoid raising prices for the moment as much as possible.

“The commission has encouraged businesses to separate tax system-related price changes from other price changes and to explain to customers how they have adjusted their prices on account of the system,” he wrote in Thursday’s Australian Financial Review.

“If businesses link other price rises to tax-related ones, there is a higher possibility of some public misunderstanding and a greater possibility of ACCC investigation.”

The Opposition has argued that the commission is underresourced for the enormous task of monitoring price changes with the GST.

Spier responds that the commission has taken on an additional 40 professional staff plus 60 call-centre staff to deal with the tax changes (representing a 25 per cent increase on last year), with call-centre numbers to increase further.

Already, the call centre is taking about 2,500 calls a day, many seeking information rather than making complaints.

For those consumers and businesses finding themselves either complaining, or being complained about, over the next two years, the process goes like this:

The ACCC’s call centre takes an inquiry or complaint. All are logged and referenced so trends in particular industries or companies show up as quickly as possible.

Where possible, the commission seeks evidence from callers such as receipts rather than simply taking unverified anonymous tip-offs.

Staff receive daily briefings on emerging issues and the ACCC’s computer system contains an extensive question-and-answer format for people simply inquiring about how companies should be applying prices.

The complaints are fed through to professional staff for analysis.

Letters go out to between 20 and 30 companies a day as a result of all this information, outlining the complaint and seeking an explanation from each company. “We are not threatening people,” an ACCC staffer says. “We like to hear the other side of the story.”

The company is given a couple of weeks to respond.

These replies are then assessed by officers, many of whom the commission says come from small business so have a good feel for practices in the sector. Information about cost or price trends may also be cross-checked with others in the industry to see if claims are reasonable.

There are now 350 matters that have got beyond this initial stage.

The normal response, the ACCC says, is, “OK, we’ll stop it [the price-fixing behaviour].”

The provisions of the act allow for the company to be required not just to fix its behaviour for the future but to correct any damage. If it appears the law has been breached, the matter is handed to the commission’s normal enforcement section. But if it is to be pursued in the courts, it is a decision for the seven-man commission.

The commission has the power to subpoena specific documents though it cannot go on fishing expeditions and conduct formal interviews which can be used in court.

So far only one case has gone to court: the commission instituted proceedings against the Video Ezy chain in the Federal Court on May 26 in what is its first GST price-exploitation case.

One of the complaints of the business community and this seems relevant to the Video Ezy case is that the commission can issue what has become known as a “shame notice” a notice of price exploitation long before court proceedings begin. The commission responds by saying the notice comes about only after extensive discussions with the company involved.

In Video Ezy’s case, the notice appeared on April 11 and the matter went to court on May 26 after what the commission says was two and a half months of investigation.

It has rejected suggestions that the move to hire out videos at $7 a pop a $1 increase blamed on the GST was the invention of junior staff and has subpoenaed internal company documents to back its case. The outcome will be keenly watched by the business community and the Opposition.

The ACCC says it will be relying on its “19 million informants” to ensure there is no price exploitation when the new tax system kicks in. What its critics will want to know is that there are no political prisoners.

Heavy competition

The Australian Competition and Consumer Commission administers the Trade Practices Act and the Prices Surveillance Act.

It is responsible for:

*Improving market competition.

*Fostering fair trading practices, particularly for small business.

*Promoting competitive pricing.

*Adjudicating on merger proposals where competition may be affected for example, in the financial, media and telecommunications sectors.

*Product safety.

*Price surveillance.

*Prohibition of price exploitation in relation to the new tax system.

*Ensuring fair access to essential services such as gas.

It has:

* 440 staff.

*A $43 million budget in 1998-99. An extra $15.5 million this year for monitoring tax reform price exploitation and an extra $10 million for legal services.

*Offices in all capital cities and in Townsville and Tamworth.

*Surveys of prices in 112 towns across Australia about once a month.

*Fifty-two cases now before the courts and 350 cases of possible price exploitation.

June 8, 2000Have we been sold out?
While some have made fortunes from the rush to sell public assets, a new book argues that the community has been left the poorer. Laura Tingle reports.AUSTRALIANS don’t do things by halves. If it’s new, we want it. Mobile phones, PCs, the Internet and let’s not forget shares. GIO, Qantas, the State Bank, Telstra. Australia’s mums and dads, and sons and daughters, have rushed them all.There’s been a huge plunge on former government-owned businesses in the past decade. Indeed, we rank behind only Britain in the billions of dollars we’ve spent snapping up public assets in the hope of private profit.But it’s got to the point where at least some sections of the community are questioning further sales (think the balance of Telstra or the NSW electricity generators).

So along comes Privatisation: Sell off or sell out? to tell us who has made the big bucks and who has lost out as governments rush to sell the family jewels, the family silver and, let’s not forget, a fair slice of the farm.

The book goes back to basics to address the big questions of whether we should privatise at all, and if so, what should remain in government hands. And there’s a delicious account of our great privatisation disasters.

Yet it is not an anti-privatisation book. The authors, Professor Bob Walker and his wife, Betty Con Walker, are quite happy for government to sell off airlines or banks or gaming where these former government enterprises can expect to find themselves in a competitive marketplace.

But they do see problems with selling public utilities, such as water and electricity, which are likely to remain monopolies or, at best, oligopolies that will face limited competition, or none at all.

The Walkers insist decisions about the role of government in enterprise have to be based not on ideology, but sound financial analysis of the costs and benefits, and must take into account non-financial issues as well.

Such rigour, they say, has been missing in the past. The authors have a range of people in their sights: politicians on both sides of politics, privatisation advocates in the private sector and the media, and public servants.

All have let us down, they say: “The community has been subjected to a series of simple, repeated messages: debt is bad, debt imposes costs on future generations; governments should reduce debt; privatisation will reduce debt; the public sector is too big; the public sector is inefficient; the private sector is more efficient than the public sector; privatisation will reduce the size of the public sector; privatisation will lead to increase in efficiency.”

The Walkers say the flow of this argument is seriously flawed. It relies on the idea that the private sector is inherently more efficient than public enterprise. It ignores the argument that while privatisation might reduce debts, it also reduces services or increases their cost.

They say the suggestion that an efficient private sector will automatically provide lower-priced services “ignores the risk that government may become hostage to the inefficiencies of single sellers of services if it is the sole or major purchaser of services; ignores the tendency of private providers to service only the easy and profitable customers; and ignores the creation of opportunities for bribery or kickbacks”.

These messages might now reach a more receptive audience than they did at the beginning of the decade.

The book is peopled with politicians and public servants making privatisation decisions on ideological grounds, in the financial dark, and at the mercy of the privatisation lobby.

It is a hair-raising story. There are the big losses to taxpayers and gains to shareholders as a result of underpriced floats, like the $14 billion difference between the current market price and the issue price of the first lot of Telstra shares. And that’s not counting the profits such organisations have made since they were sold off.

Privatisation estimates that for a selection of privatisations Telstra, Commonwealth Bank, Qantas, Commonwealth Serum Laboratories, Tabcorp (Victoria), TAB (NSW) and BankWest (Western Australia) the wealth transferred from taxpayers to shareholders has been about $48 billion. That’s the difference between what the government got and what those companies’ shares sell for today.

Much of this will be familiar to those who follow the financial pages. What makes the book so useful is the way it brings all this information together, and explains how changing accounting policies, along with bad advice and poor pricing decisions, created some of the disasters.

It also tracks how the public debate has been manipulated to support the ideology of privatisation. Specifically, there has been the “crisis in government finances” routinely discovered by incoming governments followed by the obligatory short-term inquiry into the government’s financial position.

The Greiner Government led the way with the Curran Commission of Audit in 1988. The Walkers cite illuminating remarks by Greiner’s head of Cabinet Office, Garry Sturgess, who in 1994 described the Curran Commission as “a marketing exercise”.

“In March 1988 there was no great feeling that NSW’s finances were in drastic shape, so why would you need a government shake-up? So we had to create a popular demand for that kind of reform.”

It led to similar reports around the country. But who would be surprised to find that such crises can come and go at the change of an accounting method?

The book notes, for example, the “net worth” of Victoria slumped from the Cain Government’s 1990 estimate of $39.9 billion to minus $5.4 billion, according to an Audit Commission report to the incoming Kennett Government. Three years later the same government reported a miraculous return to a positive net worth of $6 billion.

But the Walkers argue these dramatic changes were mainly the result of accounting changes, which saw assets fall from $93.7 billion to $64.4 billion before rising again to $74.2 billion. Borrowings between 1992 and 1995 had fallen by only $1.6 billion.

“It is of more than passing interest to note that when the Kennett Government produced financial statements … in 1995, it did not follow the Audit Commission’s approach to identifying liabilities, but reverted to the practices used in reports from
the previous government.”

Public assets and truth have not been the only casualties. There has been the loss of “corporate memory” in the Public Service and a brake on the trend towards more open and accountable government as increasing areas of activity are classified as “commercial in confidence”.

The privatisation trend along with outsourcing has meant reskilling bureaucrats as contract managers instead of program deliverers. Yet a Government survey reported in the book found that less than 10 per cent of finance staff in Commonwealth agencies hold professional accounting qualifications.

The Walkers argue that the lack of monitoring of service delivery within agencies means many “are ill-prepared to either write contracts for outsourcing … or to monitor the performance of contractors”.

Despite this, the authors believe a range of services are likely to be privatised, including telecommunications, water, electricity, transport and health.

The Walkers say this means we need measures to ensure taxpayers don’t lose out financially or in terms of services. They say proposals should include forecasts for up to 10 years of earnings likely to be lost on a sale, plus the cash flows from investing the proceeds.

Privatisation: Sell off or sell out? by Bob Walker and Betty Con Walker. ABC Books, $24.95.

May 9, 2000Votes up for grabs in a $17bn spree
THE 4,000 Kosovars who were greeted by brass bands and the Prime Minister last year would not be thought of by most people as an economic indicator.But as commentators shrug off four years of complacency about the federal budgetary position ahead of tonight’s Budget, and start to express collective alarm about the economic outlook, they should ponder what the Kosovar episode says about how the Howard Government runs Australia.It emerged last month that bringing 4,000 Kosovars to Australia last year has cost about $100 million. There has been no public explanation of how this figure mounted up, nor is the point here to be churlish about aid of some description going to the Kosovars. But it is to ask what sort of administration could set in train a form of aid that cost $100 million to help 4,000 people when to put this in context Australia will spend just $40 million in East Timor on humanitarian aid in the coming financial year, and could manage only an extra $1 million in aid to Papua New Guinea after the devastating tsunami in 1998?The answer is a Government which has presided over the appalling delivery of policies that may have been conceptually sound or worthwhile. John Howard’s Government has been persistently revealed as administratively sloppy and too prone to the panicked and therefore expensive political fix.

The result has been the squandering of much of the $19 billion in savings announced in the 1996 Budget for the following four years and the pain they caused to the unemployed, the aged and to education.

A Labor MP, David Cox, an economic dry who worked as a senior adviser to Labor finance ministers and treasurers, documented this deterioration in Parliament last month, claiming that of the $19 billion of cuts, the Coalition has now squandered all but $1.7 billion.

Savage cuts in existing policy have often been replaced by expensive policy that has not been properly thought through, or no policy at all.

Think of the billions spent on attempts to get people into private health insurance, or how Labor’s superannuation policy, aimed at creating a viable national retirement savings pool, was replaced by a savings rebate which was dropped almost before it was implemented.

Elsewhere, there was barely a gasp when the Government announced last month it would spend $500 million to reduce the cost of petrol in the bush, while an underlying weakness in the Government’s nursing home policy its move to self-regulation with no accounting for $3.5 billion of government funds was lost in the hysteria about kerosene baths.

Also, it emerged at Senate estimates hearings last week that the Government is spending $362 million advertising the GST, slightly more than half of what it advanced to the ABC this financial year.

And then there’s all the pork-barrelling: the $1 billion Federation Fund which handed out $70 million in grants during the last election campaign; the $1.25 billion Natural Heritage Trust, and the persistent pandering to the “rah-rahs” of non-urban

But there have also been less obvious but more insidious effects from the way the Government governs that affect our rights and chances of finding out how our tax dollars are spent. Changes the Government has imposed on the Public Service have not merely politicised it but changed its role. “I still don’t sense that they have a good working relationship with the Public Service, even after four years,” says one source. “There is still a sense of distrust on the Government’s part, and fear and loathing from the bureaucrats.”

But changes like the contracting out of government services have also undermined the value of Public Service advice. Public servants’ skills are now directed at administering contracts, rather than on how best to deliver policy.

Those close to public policy-making note that the vast institutional base of policy knowledge in the Public Service is rapidly evaporating.

“It’s a bit scary when public servants contact you asking for your advice on how they should implement policy, which happened to me recently,” one consultant says.

Contracting out of billions of dollars to other organisations to deliver government services has both stopped full scrutiny of how those services are delivered and helped break down the chain of responsibility and accountability for tax dollars.

There is no better example than the Job Network.

The Government often boasts that its labour market schemes are cheaper and more effective than Labor’s Working Nation schemes. But the public is given no regular data on the overall outcomes achieved by the network of private and not-for-profit organisations which now deliver government services for the $3 billion being spent under the current Job Network contract.

And commercial-in-confidence arrangements mean the individual performances of job providers are also not subject to scrutiny, even by Parliament.

The only “external” ratings of performance are provided by the department which gave out the contracts in the first place and by spurious and unsubstantiated assertions by government ministers.

This trend to lack of information and responsibility had begun with the corporatisation of government business enterprises in the 1980s.

Last week saw the Secretary of the Department of Finance and Administration, Dr Peter Boxall, humiliated under 81/2 hours of questioning about the demise of the Government’s job agency, Employment National.

Repeatedly, he and his officers had to admit they did not know the answer to questions, or take them on notice, or gather in huddles searching for answers.

The Prime Minister’s pledge when he came to office was to lift the standards of government and of government accountability to the Australian people and to the Parliament.

The opposite is in fact true.

The Coalition has benefited not just from benign economic times over the past four years but from Labor’s lack of credibility on economics, and its refusal to put the Government frontbench under pressure in the House of Representatives on the many substantive but complicated policy issues that should be addressed.

A cooling economy, a falling dollar, rising interest rates and a Budget surplus under pressure mean that, with tonight’s Budget, there will be considerable scrutiny of the Howard Government’s broad economic indicators.

But there should also be a lot more scrutiny not just of the Budget bottom line but the Government’s entire administrative style.

March 18 2000Getting back to work
After recovering from her own illness, Labor’s Cheryl Kernot is now looking to revive the health of the labour market, writes Laura Tingle.WHILE she convalesced in hospital last year, Cheryl Kernot had a chance to ponder first-hand the problems in nursing which she says are representative of wider problems in the Australian labour market, and the way government delivers services.On the one hand, there are not enough senior staff, on the other, the least skilled are paid so poorly they have to have two or three jobs to get by. Both groups are overworked and thinking about leaving draining the skills pool even at a time when unemployment overall is falling.It’s an outcome of what she calls “el cheapo” Australia, and Kernot as Labor’s employment spokesman, is now trying to develop policies to change it.

Back in 1997, before all the dramas consumed her, Kernot represented an opportunity for Labor to put a new face on its policies as it distanced itself from the Hawke-Keating years. The recent release of some early policy directions for Kernot’s portfolio gives her a new opportunity to take on that role.

The launch of Workforce 2010 as it was known was hijacked on the day by controversy over the GST.

But it raised interesting questions about where Labor policy will be by the next election.

Beazley, for example, said the economic forecasts Labor had commissioned showed the importance of education part of his Knowledge Nation agenda. But the forecasts actually made some more politically difficult predictions such as that the big growth in jobs would be in areas like nursing, teaching and child care.

This growth in traditionally public sector jobs raised the question of whether Labor would be re-embracing a bigger role for government.

In an interview with the Herald this week, Kernot’s emphasis was on Labor’s Federal role in trying to revive the status and standards of areas like teaching and nursing, “rather than throwing around big buckets of money”.

Her thinking about how to address unemployment involves acting faster and in conjunction with business to retrain people in declining industries, and setting new, higher standards of training to meet the demand of growth industries like information technology.

More broadly, she does believe that Australia has come to the end of its tolerance for cuts in government services and in “el cheapo” service delivery, and that by advocating that enough is enough, Labor can win support from voters. “I think the nursing home crisis is the most vivid, graphic illustration of the collision of Coalition philosophies: self-regulation, `the private sector can do most things better’, no need for tied funding because you’ll be forced to invest in capital works, an
d quality to get accredited or the market will sort you out …”

“Nursing homes have reduced the number of the most skilled staff and put greater pressure on those who remain and on the lesser skilled people.

“This is what I was struck by when I was in hospital. Not only are we not prepared to give them adequate remuneration, but I believe this Coalition philosophy has undermined the value of skills by saying `it’s OK for you to have more people at lower level skills as long as you’ve got one registered nurse’. ”

So what does a Labor government do to address these problems?

“You’ve got to go back and look at government responsibilities for framework and condition setting.”

Staff/student ratios and nurse/patient ratios should be strictly supervised, she says. The same problems exist in teaching. “It is just such a contradiction: we’ve got parents demanding quality education at a time when we are not saying to our best students teaching is a worthwhile profession.”

There are also the issues of pay, recruiting and hours, of course, but Kernot is insistent that the main problem is the shift that is happening in the “wider economic values of our society” which says things like teaching “don’t matter as much as speculative things, making money on the sharemarket, being computer literate.”

Once again, Kernot and Labor believe the role a Federal government can play in improving this is in implementing and supporting standards for these careers.

For example, Labor’s education spokesman Michael Lee has just foreshadowed that Labor would provide special payments to teachers to support their lifelong upgrading of skills.

But Kernot worries about the impact the GST may have on any Federal government’s capacity to set national standards on anything. “I just think the GST the way it’s delivering money to the States is going to make this harder getting co-operation for agreed national priorities.”

At the end of the day, won’t Labor have to put more money where its mouth is for things like nurses and teachers? “That will have to be one of those social contract things we discuss in this nation about what level of services you really want in a civilised nation. I don’t think it’s hard to win that argument.”

There seem to be two distinct sources for the Labor employment policy that is now emerging: the first flows from the research on the labour market of the future and Beazley’s Knowledge Nation agenda which was under way before Kernot gained the portfolio.

The second reflects Kernot’s recommendations in her April 1998 report to Beazley on how to help the older unemployed. Both streams are littered with voter-unfriendly jargon skills auditing, skills profiling and workforce forecasting council but some apparently sensible ideas.

The forecasting council is just a matter of reorganising the economists within the employment department to do more long-term forecasting and forecasting of employment trends in particular areas, she says.

Kernot is having productive talks with the business community about her idea of skills profiling.

“You need people to believe that getting in first like BHP did [in preparing workers in Newcastle for the closure of the steelworks] is a good idea that you get in first and say what are the skills that these individual workers have. Where are the new job prospects for them emerging in the next few years in this area? What do we need to do about the skills that they have? Is it minimal upgrading that’s required or are we looking at an entirely new area of skills?’

“The problem for industry the workplaces that know it is coming is how much can they trust to tell. So you’ve got a cultural thing about being upfront about the future. And we’ve said we are listening to their concern about not wanting to get involved in too much excessive paperwork.”

Overcoming this problem might mean the Commonwealth sending someone in, or funding them, to go into the workplace and do the skills profiles.

“You might be able to have a reliable community sector person filling in that role rather than a departmental person,” Kernot says.

But she believes both industry and unions are open to the idea of partnerships to prepare such workforces for change.

“I think the flavour of all our documents is partnerships not the John Howard social coalition which says it’s all your work. But it requires a different culture of co-operation. It means that in Question Time you don’t stand up and abuse unions every day.

“Governments have to have a greater leadership role in making training providers more responsive to those emerging needs right down to the individual workers. Industry is constantly telling us we’ve done OK at the really basic level but in information technology, for example, we’re OK at qualification levels 1 and 2 but not 3 and 4.”
The general problems for Labor would be implementing its policies on the top of the labour market structure put in place by the Coalition including Job Network.

“We’re stuck with that until 2003,” when the current contracts run out, Kernot says. “Job Network’s greatest defects are in accountability and transparency and in market failure in terms of meeting the needs of [the long-term unemployed].

“We’re stuck with it so how do we improve it? We’ve said we can’t go back to the old CES but we think there is still a strong driving role for government in the market through Employment National.

“Once again, our model is a strong driving role for government, setting national frameworks, monitoring and evaluating how public money is being spent, making sure specific purpose payments to the States remain because they are really under threat.”

What is not clear yet is whether Labor would revive some of its Working Nation-style programs that were designed to “reshuffle” the unemployment queue in favour of the long-term unemployed.

Kernot does not rule it out. “We do think that’s what differentiates Labor from the Coalition giving a higher priority to that. We certainly want to reshuffle the queue and give priority to them because of the longer term, broader consequences that flow from long-term unemployment.

“We look at the best of what we think worked and there is increasing research which says wage subsidies worked for the very long-term unemployed. Even The Economist magazine said Skillshare was the best labour market program in recent times in Australia.

“What concerns me about this entire portfolio is the haphazard nature of it. We rely on economic growth and markets to sort it out. That will only work for those that are most likely to get the job anyway.

“I’m really heartened by a shift that’s emerged in conversations I’ve had with the corporate sector where they acknowledge long-term unemployment is everybody’s responsibility.

“I just think we’ve come to the end of the current philosophical road. All the headlines about Telstra and profits and jobs the juxtaposition of that was just so stark that lots of people said, `Now look, it’s time to rethink this’.”

March 11, 2000Old money
Government penny-pinching helpedcreate a market in nursing-home beds which leaves the elderly vulnerable tothe profit motive, writes Laura Tingle.The Government’s regulatory regime has created a window of opportunity for unscrupulous operators to do everything they can to maximise profits, rather than upgrade homes.SHANE Moran is the Doug Moran son who runs the family nursing-home business that dominates the privately owned sector of the industry.In 1997, when he and his father acknowledged their role in developing the Coalition Government’s nursing-home policy, he observed, “What other business gets paid every third working day of the month in advance?”

The controversy over standards of care in nursing homes inevitably poses the question of how much value, and care, taxpayers are getting for the $3.5 billion they pump into residential support for the elderly in nursing homes and hostels, or how much
may simply be lining the pockets of nursing-home operators.

Underlying the recent horror stories is the suspicion that aged care is compromised by operations run on the cheap, cutting corners and service quality.

As Moran’s 1997 comments made clear, residential aged care, covering nursing homes and hostels, is an industry that provides a regular income stream from the government to the private investors who operate about 56 per cent of the beds in NSW.

That cash supports investment in an increasingly scarce, and therefore valuable, government-regulated commodity.

That would suggest a goldmine funded by government. But the story, and the link with the quality of care, is more complicated than that: complicated by the changing role of government in the sector.

The anecdotal evidence suggests growing rewards may be available since the Howard Government introduced the regulatory and funding regime shortly after coming to office.

The Moran family, for example, has seen its estimated wealth in the BRW rich list grow from $100 million in 1993 to $280 million last year. The Moran Group, the dominant company in the private for-profit sector of the industry, with about 25 per cent of beds in Australia, has boasted it can run its operations debt-free and is expanding offshore.

But the Moran Group has not fallen foul of any of the Government’s standards requirements. Industry observers argue it has profited instead from its increasing economies of scale and tough, if shrewd, management.

Then there is the trade in beds. For an industry that cries poor, there has been a growing premium in recent years on the price of a nursing-home bed. The number of beds is strictly controlled by the Federal Government because each bed attracts a subsidy worth about $30,000 a year. Industry observers put the price of an approved bed at about $35,000.

It is not quite the $260,000 to $280,000 of a Sydney taxi licence, but, says Francis Sullivan of the Catholic Health Care Association, a few years ago beds were transferred between operators at no cost. The Department of Health says nursing-home beds could be bought for $27,000 in 1997, meaning their value rose 30 per cent in three years. And unlike the taxi industry, the holders of nursing-home licences are less likely to be mugged.

On the other hand, few new players seem to have been eyeing the sector. While the US-based Omega Group recently took to the stage as an investor (but not as an operator), other Australian organisations with an interest in health care have either wound back their involvement in nursing homes, like FAI, or have had a look and not proceeded, like the Mayne Nickless subsidiary Health Care of Australia.

Last year’s allocation of new bed numbers also went to the existing players, with Moran again picking up one of the two largest allocations of high-care places, which attract the big subsidies. The other big winner was K.B. and A.J. McKenzie, which won places in Queensland, Melbourne and Tweed Heads.

Many in the industry will argue that the sector has not enough capital or income to deliver good services. But the Productivity Commission found last year that many private and charity services produced operating surpluses and that the big prices paid for bed licences did not “sit comfortably with the view that the industry faced a funding crisis”.

Sullivan, representing one of the largest non-profit groups, says that while the government funding base may produce surpluses, the Government last year failed to adopt the Productivity Commission’s recommendations that would ensure the industry’s viability. The Aged Care Minister, Bronwyn Bishop, initially said the commission had endorsed the Government’s funding approach (although the commission called it “inadequate and inappropriate”Smilie: ;). But she was silent on recommendations for indexing subsidies and a “benchmark level of care”.

The cynical shorthand is that Bishop and the Government avoided committing the Government to a realistic level of indexation of subsidies because of the ongoing cost to the Budget and the problems it would create for indexation levels in other services like hospitals. By avoiding the suggested benchmark, the Government has kept pressure off the industry to lift its standards, and saved itself money.

Meanwhile, the Government’s regulatory regime, which requires certain standards of care to be met by the beginning of next year, has created a window of opportunity for unscrupulous operators to do everything they can to maximise their profits, rather than upgrade their homes, before selling out at the last moment for higher bed prices. This particularly applies to small homes owned by one or two investors. Victoria, the source of many of the horror stories, has the greatest number of small nursing homes; 72 per cent of the State’s nursing homes have fewer than 40 beds, compared with 29 per cent in NSW.

The self-regulating accreditation system means homes have to demonstrate good-quality care, a safe building and a commitment to protecting residents’ rights by next January or lose funding.

The problems stem from the sector’s genesis as a co-operative system designed, after years of pressure from home operators, to cut red tape. “Conducting `surprise’ visits is not within the spirit of the new collaborative arrangements,” the Department of Health told the Opposition last year.

But the latest controversy has shone a spotlight on the loosening of requirements for qualified staff and homes’ accountability for public funds. Under the previous regime, the Commonwealth required 24-hour, on-site care by a qualified nurse in homes with eight or more high-care residents.

Since August 1998, the homes can determine staffing arrangements based on their assessments of residents’ needs.

The Productivity Commission noted the for-profit sector used more staff in direct service provision, and had a higher proportion of contract staff and a lower proportion of full-time staff. As writers of letters to the Herald this week have said, “more staff in direct service provision” often hides a situation in which registered nurses spend most of their shifts doing paperwork and leave patient care to less qualified staff.

One issue that has been successfully skimmed over in the current controversy is that Government penny-pinching, as much as that of the nursing homes, must share the blame for creating a sellers’ market for nursing-home beds.

The Government argues it has dramatically increased spending on aged and community care compared with Labor (up 43 per cent since 1995-96) and has boosted aged-care places after years of Labor neglect. But many of the extra aged-care places it claims to have created have been cheap low-care places, or even cheaper community-care packages, rather than costly high-care, nursing-home beds. And the Government’s initial policy measures were motivated by expected savings of $500 million as it made nursing-home residents pay for the capital investment in homes it no longer funded, and cut nursing-home and hostel subsidies by introducing income-testing.

The Productivity Commission says the Government is not meeting its own targets for residential-care places and that the average waiting period for a nursing-home bed jumped from 18 days to 31 days between 1996-97 and 1997-98. In 1998 the Auditor-General reported that to meet the Government’s target an extra 10,100 places would be needed. In NSW that unmet demand has translated into hundreds of thousands of public-hospital bed days being taken by people who should be in nursing homes.

The NSW Health Minister, Craig Knowles, says an average of more than 860 beds were occupied by nursing-home-type patients in 1998-99, including 17 per cent of total bed days in rural NSW; the cost last year to the State system was $83 million.

As the emotion of recent weeks starts to fade from the debate, expect more scrutiny and pressure on what contribution the Prime Minister (who faces the years of his twilight period, too, since turning 60 last July) makes to elderly care.




$4,380 a year up front if not a full pensioner for maximum of five years (assets tested)

Daily fee of $22 for pensioners to $65 for self funded retirees (income tested). Pensioners fee equals 85 per cent of the pension

(Patients and their families also have the option of paying unlimited amounts for care in unsubsidised homes)


$19 – $110 a day basic care subsidy (depending on frailty)

$12 a day in lieu of $4,380 up front fee if patient is a full pensioner


Over 56 per cent of nursing home residents are pensioners paid for by Federal Government.

The combined bill for nursing home and hostel residential care in 1999-2000 is $3.5 billion

The NSW nursing home industry is dominated by private (for profit) homes. In fact it has the highest proportion in the country of for profit homes at 56 per cent

February 5, 2000Church and State: making a job of it
The major employment agencies have much wider roles than simply guiding the unemployed into jobs. The charitable agencies have become a big influence on the workings of society, writes Laura Tingle.A week before the Howard Government announced who had won contracts to provide $3 billion worth of job services to the unemployed last December, one of Australia’s biggest charities anticipated the result by setting out for staff its plans for a major restructure.In a document outlining its plans, Mission Australia expected to use its contracts in the Government’s Job Network as a vehicle for expansion of its services into new areas, and set out an aggressive plan to protect its slice of the job services market to ensure its “longer term market survival” against competitors.The plan along with figures from one of the other charities which is a player in the Job Network, Wesley Mission highlights just what a big business charity, and the government contracts that charities are now signing to take over government services, have become.

In turn, the amounts of money involved put a new spotlight on the role charities that have won big contracts with the Commonwealth take in the workings of the Howard Government, and in supporting its policies, particularly the GST.

As a result of the second Job Network tender announced on December 3, Mission Australia’s employment services arm, Mission Employment, is to become the second-largest job agency in Australia behind the Salvation Army, winning more than $240 million in contracts over three years.

This amount is equivalent to its entire current annual budget of $80 million.

(It has also won a dominant share of the contracts to manage the Government’s Work for the Dole program, responsible for 17.5 per cent of the market, worth $21.68 million, and dwarfing all other contractors.)

To deal with this expansion, the charity announced to its staff a restructuring of the organisation, aimed at better dealing with “the development of relevant services to unemployed clients and in the expansion into new and more complex employment services product areas”.

“We see longer-term market survival in relation to our competitors requiring Mission Employment operations to operate temping and other commercial services in conjunction with our Employment Services operations,” the plan stated.

“Mission Employment is seen as a key vehicle in developing Community Services regional coverage and development, particularly in regions where Mission Australia presently has no Community Service operations.”

The aggression of Mission Employment’s business plan may surprise those who view contracting services such as job placement in terms of “pastoral care” of the long-term unemployed.

But the role of the Job Network contracts in restructuring the entire financial arrangements of the big church charities should not be underestimated.

According to a summary of the operating results for another of the big Job Network winners, Wesley Mission, for the period ended April 30, 1999, employment services contributed $1.9 million profit to the organisation’s operating results, offsetting some of the losses in many others to reduce the organisation’s net deficit to $798,426.

(A Wesley spokesman quotes alternative figures for the year to June 1999 saying that around $9 million of revenue came from employment services, compared with $18 million from aged care).

And this was under the much more limited number of contracts held by Wesley under the first tender for Job Network contracts.

But it is the role of the big winners from the Job Network tender the Salvation Army, Mission Australia, and Wesley Uniting Employment in formulating Government policies and in public debate on Government policies that comes under new scrutiny with
such large contracts.

Last December, the week after the tender results were announced, the Prime Minister, Mr Howard, came under sustained attack in Parliament over the position of GST on charities.

Speaking out against the Government were: the Australian Council on Disability; Uniting Community Services Australia; the Council for Homeless Persons Australia; the NSW Council of Social Service; Catholic Health Australia; St Vincent de Paul; Adelaide Central Mission; Melbourne City Mission; Anglicare Australia; the Cancer Council; SIDS; Catholic Social Services; Royal Surf Life Savers Qld; the RSPCA; Lutheran Community Care; and Volunteering Australia.

But the Salvation Army and Wesley Mission came to Mr Howard’s public defence and Mission Australia said nothing at the time.

Mission Australia’s chief executive officer, Mr Patrick McClure, is a member of the Government’s tax advisory board, the Charities Tax Consultative Committee, the Prime Minister’s Business and Community Partnership and the Youth Pathways Action Plan Taskforce. He has also been appointed chair of the Government’s Welfare Review Committee.

Mr McClure argues that his role on the tax advisory board means Mission Australia has an important role to play as a conduit between the Government and the community sector explaining policies on the one hand and acting as a funnel for queries and complaints on the other which makes public comments on the issue inappropriate.

“There are many forms that advocacy can take,” he says. “One role is through the media. In other ways it can be just as effective lobbying politicians, or talking to bureaucrats in the [Tax Office].”

He flatly denies suggestions circulating in Canberra that he sought the public support of other charities last year for the Government’s policy on GST and charities as “absolutely untrue”.

“I’ve never been requested by the Government to come out in support of it,” Mr McClure said.

A Salvation Army spokesman told ABC radio on December 8 that the Army “is now comfortable with the GST”.

A spokesman this week defended its statements on the GST, saying the Salvation Army had a “policy of supporting governments of all political persuasions, both State and Federal, in introducing genuine reform which will reduce inflation, reduce unemployment and reduce interest rates and, in so doing, bring genuine relief to low- and middle-income earners who are struggling to make ends meet”.

“In recent years, we have distanced ourselves from the statements of the current leadership of ACOSS, who we regard as not truly representative of the membership,” the spokesman said.

“Our relationship with government, especially our participation in the highly successful job placement programs, doesn’t in any way influence our decisions or public comments on such issues as the GST.

“But the Salvation Army has signed off on the GST nationally as we believe there has been adequate compensation provided with these new taxes which the Australian Government has been given a mandate to implement.”

Wesley’s Mr Richard Menteith, who had previously been critical of the GST during Senate Community Affairs hearings on the GST and charities, told The 7.30 Report on December 7 :

“Wesley Central Mission has always seen the GST as a significant improvement on the other tax paradigms and regimes that we’ve had in previous years.”

A spokesman for Wesley Mission said that “the Mission has always worked with whoever is in government but also with the Opposition because we know that what goes around comes around”.

“There’s been a lot of change in overall government policy and social structure, and it’s beholden on charities to do things differently, as much as it is on governments.

“We have a moral obligation to be the voice of underdog but at the same time have to be creative and innovative in how we can best respond in a practical sense to the mood of the moment.”

January 1, 2000Worries over Vietnam pull-out
1969 Cabinet papers
The Gorton Cabinet’s in-principle decision to withdraw ground forces from Vietnam in 1969 was made reluctantly, against military advice, and in an environment where it could not get substantive information from its American allies about their own withdrawal plans.Its decision was made against recommendations of the Chiefs of Staff Committee, which did “not at the present time, recommend any reduction of existing Australian forces in Vietnam”, and warned that Australia, along with its regional neighbours, faced a threat to its security if Vietnam fell under Communist control.The 1969 Cabinet documents, released by Australian Archives today, reveal the Cabinet agonising over its lack of information from the Americans, and how to politely ask President Nixon about his plans so that Australia could determine the pace and nature of its own withdrawal.The documents clarify what at the time was a very limited explanation by the Prime Minister, Mr Gorton, of why the Government had reversed its previous policy that any withdrawal would be on a “one out, all out” basis.

Notes from the Cabinet meeting on December 9, 1969, also reveal very different approaches from some senior ministers.

The Prime Minister, for example, suggests that Australia “say to the United States that there will come a time when we must reduce our forces not asking what their plans or timetable are, but asserting that at some level of reduction on their part
we must make our reductions”.

But the National Party leader, John McEwen, takes a more pragmatic approach: “The United States went in militarily to achieve its own national objectives … the military intervention, theirs and ours, has not succeeded not defeat, but equally not success.

“For the Americans on the home front there is defeat, and so they are turning their minds to some withdrawal formula no doubt one that will leave them with a shred of respectability.”

McEwen says Australia “went in with the Americans for objectives partly related to Vietnam but primarily to win the Americans. Now we face a political situation at home not to be compared with Nixon’s but to be faced nevertheless.

“We must handle it in such a manner that we do not throw away the goodwill we have built up with the United States.”

The December 9 decision to withdraw was made soon after the Government had been returned at the October 25 election. During his campaign launch on October 8, Gorton had said: “Should there be developments which result in plans for continuing reduction of United States forces over a period then we would expect to be phased into that program and would see that we are.

“But we will not unilaterally withdraw. To do so would be to abandon an objective, to betray our allies and, I believe to imperil our future security.”

But just over a month later, Cabinet could not find out how its troops would be “phased into” the American withdrawal plans and was unsure whether Australia should be, and should be seen to be, acting unilaterally.

The Cabinet’s Defence Committee laments the lack of information on US thinking about withdrawal and notes that, without it, the Australian Government would be “forced to take a unilateral decision in respect of reduction of our forces, both as to timing and numbers”.

The committee says it does not want to be seen to be “shabby” towards the Americans.

Nixon had already made two public announcements in June and September of US plans to withdraw troops but the Australians were frustrated by a lack of detailed information about how the withdrawal would take place.

Cabinet decided to write to Nixon “with the object of getting United States acknowledgement of the need for provision to be made for Australian withdrawals”.

In a draft of the letter sent by Gorton to Nixon, the Prime Minister notes that there have been “briefings and consultations” but since the President’s withdrawal announcement “we feel the need for rather more information than we have at present”.

Cabinet decided that Nixon’s plans made it “inevitable … that Australia should look to the course it would itself follow as regards its own forces in Vietnam”.


PAGE 24 After 30 years, the Cabinet leak inside the Gorton Government is revealed. Plus the secret plan to ban street demonstrations, the concern about a Soviet weather station in the Antarctic, and how Cabinet rejected attempts to have non-Europeans receive the same citizenship rights as Europeans.

PAGE 25 The Minister for Aboriginal Affairs told Cabinet the Government had succeeded in restricting the spread of unemployment benefits among Aborigines “by keeping them ignorant of their rights”. Plus why Australia paid for a US base at Woomera of little use to us, and Ainsley Gotto, the PM’s right hand woman.

January 1, 2000Government policy: keep Aborigines in the dark
Gorton government secrets
A series of measures obscured access to unemployment benefits. Laura Tingle reports.
THE Federal Government slowed the spread of unemployment benefits to Aborigines “by keeping them ignorant of their rights”, “legal fictions” and “the use of administrative discretions which cannot be defended against informed criticism”, the 1969 Cabinet papers reveal.The candid admissions about how Aborigines were often deprived of their rights came from one of their most passionate advocates, the then minister in charge of Aboriginal affairs, W. C. (Bill) Wentworth. He put forward a series of submissions in 1969 on Aboriginal affairs which were not dealt with because of the looming Federal election.As a result, the records of some of these submissions survive only in the records of the Cabinet Office, as opposed to the Cabinet files, also kept by the Australian Archives and released today under the 30-year rule.Only two years after the Commonwealth gained powers to act in Aboriginal affairs, policy in this area was still limited and primitive. Wentworth’s aim was to establish employment programs for Aboriginal people, but he argued that these should be in the form of jobs and spoke strenuously against Aboriginal people being given unemployment benefits in arguments that have echoes today in the Howard Government’s policies.Wentworth argued that it was “impossible to discriminate against Aboriginals on racial grounds in the granting of applications for unemployment benefits”.

“Nevertheless, it should be recognised that the spread of unemployment benefit amongst Aboriginals who are accustomed to living under primitive conditions would be disastrous for them and would frustrate plans for their economic advancement.

“Existing rates of unemployment benefit which provide the barest sustenance for a man or a family in the normal community could represent luxury for an Aboriginal living on a settlement or round the fringes of a northern town.

“Such an Aboriginal pays no rent, has no fuel bills, incurs no expense for fares or incidentals, is accustomed to the minimum of clothing and can supplement his food by hunting.

“Once Aboriginals get the idea that unemployment benefit is freely available, motivation for work will be destroyed, and the `mentality of the hand-out’ will become established among them in its most vicious form.

“Hitherto, we have succeeded in restricting the spread of unemployment benefit among such Aboriginals by keeping them ignorant of their rights and by the use of administrative discretions which cannot be defended against informed criticism.

“Undoubtedly Aboriginals will eventually become `wake ups’ to the real position.

“We cannot in good conscience continue to deny them unemployment benefits because `they have no work history and are not therefore considered as employable’, when in point of fact our policy is now to give them opportunities which have been denied to
them in the past . . . It is, in addition, highly undesirable to stimulate the movement of Aboriginals from settlements and isolated areas into the towns, where they too often become `fringe-dwellers’, frequently men alcoholics and the women prostitutes.”

Wentworth said the situation of Aborigines in northern Australia “has been aggravated by the introduction of equal wages for Aboriginals. Many who have been previously employed are likely to find themselves out of work”.

“In recent months there have been attempts both by left-wing elements and by `do-gooders’ to organise northern Aboriginals to claim unemployment benefits. These attempts have been stalled by administrative delays and by legal fictions which cannot, in my view, be indefinitely maintained.”

The minister’s proposal, which was to be echoed eventually in the first Australian “work for the dole” scheme, was to provide Aboriginal people with jobs rather than the dole.

“Where no work is available through normal channels the only acceptable solution seems to be to `work test’ Aboriginals who apply for unemployment benefit by offering them ad hoc jobs . . . and over a longer term organising them into work teams on some co-operative basis, supplementing their resources by handicrafts, hunting and subsistence farming.

“The initial offer of such ad hoc work need not be very expensive, as once it becomes known that there is no free `unemployment benefit hand-out’ a substantial increase in the numbers of applications becomes far less probable.”

The then minister for the interior, the Country Party’s Peter Nixon, opposed Wentworth’s proposals, saying they were “in conflict with the basic policy of Cabinet”.

Wentworth also told Cabinet he would be raising with the States “reports of many alleged discriminations against and maltreatment of Aboriginals which, if true, reflect serious encroachment on their human rights as Australian citizens”.

Wentworth planned to express the Government’s concern “and to indicate that the Commonwealth is committed to achieve for Aboriginal Australians full enjoyment of the rights of citizenship”.


January 1, 2000How Billy McMahon gave away the Cabinet secrets
Gorton Government Secrets
A Canberra lobbyist recounts how a Federal treasurer gave away confidential information, from a phone box. Laura Tingle reports.
IT IS a sunny Sunday afternoon in Sydney. Standing in a phone box in the prosperous eastern suburbs is the Federal Treasurer of Australia, holding a Cabinet submission which he is reading over the phone to a journalist in Canberra.Richard Farmer, one of the journalists who took some of the many phone calls from the phone box between 1967 and 1971, says William McMahon’s calls were a regular weekly event.But in 1969, the leaks were so consistent that they became the subject of no fewer than four Cabinet discussions, a police raid and, eventually, a trial of a public servant.McMahon was calling Maxwell Newton – for whom Farmer worked at the time – who ran a series of newsletters about events in Canberra which became famous both for their extraordinary reporting of Cabinet and government leaks and for their role in the feud between McMahon and the Country Party Leader and Deputy Prime Minister, Jack McEwen.It has long been widely accepted that McMahon was the source of many of Newton’s leaks. This assumption was behind McEwen’s extraordinary blackballing of McMahon in January 1968 when he publicly stated that he would never support McMahon’s accession to the prime ministership after Harold Holt had disappeared in the surf in December 1967.

But this is the first time the extent of the Treasurer’s breaches of Cabinet solidarity and confidentiality has been confirmed. “Most of the information we got was from Billy McMahon,” Farmer, now a Canberra lobbyist and chairman of an Internet betting company, says.

“Billy used to ring every Sunday afternoon. To make the call he’d go to a public phone box around the corner from his house in case his phone was bugged. But he was so stupid as to never think that ours was.

“It’s a great picture, isn’t it? The Treasurer of the country, standing in the phone box, leaking government secrets.

“As a precaution he’d never say who it was, though of course his voice was completely recognisable. The agreement was we never mentioned his name.”

By 1969, McMahon was turning his attention to undermining Prime Minister John Gorton, as well as McEwen, Farmer says. The leaks were of such quality that, Farmer says, Newton and his team started to take actions to cover McMahon’s tracks, including offering in semi-public venues to buy information from public servants.

In April 1969, Newton’s magazine Incentive had accurately published a Cabinet decision on assistance to Singapore, and in May, Newton’s Management Newsletter had published a confidential cable from the Australian Embassy in Paris.

Cabinet decided to send in the police to investigate the leaks and sought advice from the Attorney-General about whether an amendment to the Crimes Act was needed to make it an offence not just to publish government documents, but even to receive them.

It also noted that a “member” of the “Maxwell Newton organisation” had told public service trainees that it was “willing to buy information”.

The “member” had been invited by the Public Service Board to address a seminar for graduates of the Departments of External Affairs and Trade and Industry and was “alleged to have told the seminar that his organisation was willing to buy information”. The member of Newton’s organisation was Richard Farmer.

“When you had a situation where everything was being done to damage the leader of the Country Party and this information was normally being supplied by the Treasurer, everything else said and done was for the purpose of not wanting to tell people the
truth,” he says. “So it was better to suggest we were buying it.”

The combination with Newton’s campaign against dairy protection – in a book called The Great Dairy Hoax – and his attacks on McEwen’s proposal for soft financing for industry “drove McEwen mad so he wanted to believe we were buying and suborning people”.

Farmer observes that – with most of the Cabinet assuming the leaks were coming from McMahon – the Cabinet meetings where the security breaches were discussed must have been somewhat tense affairs.

“There was some difficulty for McEwen raising in Cabinet that he had such a treacherous colleague. Newton and I were the surrogates and we couldn’t tell the truth. So he seized on us as a way of trying to send a message to McMahon.”

The Cabinet discussions were to lead to a police raid which eventually saw a public servant go to trial for leaking Cabinet documents, though the case was not proved.

Farmer says that public servants had started to leak information to Newton, on the assumption that others were doing the same thing, but “[the leaks] were minor compared with McMahon’s”.

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