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Independence of NSW integrity agencies threatened by state government’s role in funding arrangements, audit finds

The report notes that the current funding arrangements in general can compromise the integrity agencies’ ability to fulfil their duties.

A lack of transparency and independent advice regarding funding arrangements for the New South Wales corruption watchdog is threatening the agency’s independence, state auditor general Margaret Crawford has found.

Crawford’s latest audit report considers the financial arrangements and management practices of four integrity agencies — the Independent Commission Against Corruption, the NSW Electoral Commission, the NSW Ombudsman, and the Law Enforcement Conduct Commission.

NSW Treasury and the Department of Premier and Cabinet currently play a key decision-making and management role in the funding process of integrity agencies. The report notes that the current funding arrangements in general, including the involvement of the executive government, can compromise the integrity agencies’ ability to fulfil their duties.

“The audit found that the current approach to determining and administering annual funding for the integrity agencies presents threats to their independent status,” the report says.

“[The current approach] is less appropriate for integrity agencies because it does not provide additional protection against the risk that funding decisions could be influenced by previous or planned investigations by the integrity agencies.

“This risk has the potential to limit the ability of the integrity agencies to fulfil their legislative mandate.”

Aspects of the financial management mechanisms used to administer funding could also “create tensions with their independent status”, the audit found.

For example, a point of contention has been the ability of the Treasury and DPC to administer efficiency dividends, budget savings and reform measures which prevent the integrity agencies from accessing the full funding approved by parliament, Crawford notes.

“There are two competing interpretations of appropriation legislation that lead to different conclusions about whether there is a clear legal basis for doing this,” the report says.

“NSW Treasury and DPC focus on the fact that the Appropriation Act provides funding for the integrity agencies to a premier, rather than the agency, and does not state that a premier must provide the full amount of funding approved to the agency. This interpretation leads to the view that a premier can restrict access to appropriation funding that was approved by parliament.

“An alternative interpretation of the Appropriation Act would consider factors specific to the integrity agencies that differentiate them from other agencies subject to these measures. These factors include that the integrity agencies are independent of ministerial control, accountable to parliament for performing specific legislated functions, and some may conduct investigations that involve a premier, or DPC or NSW Treasury.

“If this alternative interpretation is used, then the reduction of the integrity agencies’ access to appropriation funding approved by Parliament could diminish the independent status of the integrity agencies and limit their ability to fulfil their legislative mandate.”

DPC has…

Shannon Jenkins

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