TLDR: Core funding needs to be set outside of politics at a level that reflects operational requirements and is not subject to Government-imposed efficiency dividends or other cost-saving measures
- Current model threatens ICAC independence
- Projected budget will require forced redundancies of 31 staff (1/4 of all staff) in 2020-21
- More staff would need to be forced into redundancies in 2021/22, 2022/23, 2023/24, 2024/25 and 2025/26
“Lack of appropriate funding undermines the Commission’s independence. The capacity of the Commission to sustain its core operations is challenged by the lack of adequate ongoing parliamentary appropriation funding and reliance on grant funding from the Department of Premier and Cabinet (DPC) to make up deficiencies in appropriation funding.”
“In 2019-20, the Commission is due to receive appropriation and grant funding of up to $27,399 million to fund its operations for the year. This is barely sufficient to fund the Commission’s work for the year. The forward estimates for 2020-21, however, provide for funding of only $24,814 million. Already, the Commission has been advised that this funding will be reduced by $673,000 in additional savings for that year alone thereby reducing appropriation funding for 2020-21 to $24,141 million. Absent further funding this means that the Commission is due to receive $3,258 million less in 2020-21 than it received in 2019-20. Increased levels of expenditure in 2020-21 including increases arising through inflation, rental and mandated staff salary increases means that in 2020-21 the Commission will need additional funding of about $4.7 million on top of the $24,141 million in appropriation funding just to maintain its 2019-20 level of operations”
To make the requisite savings of about $4.7 million for the year 2020-21, the Commission would need to reduce its full-time equivalent (FTE) staff by up to 31 positions from the currently funded number of 120. That is about one quarter of the Commission’s staff.
To meet ongoing savings measures embedded in the forward estimates, Commission FTE positions would need to be further reduced in each following financial year up to the year 2025-26.
- Efficiency dividend mean that by 2022-23 the agency will need to find $2,175,000 in savings
- Caseload continues to increase (17% increase in direct complaints in 2018-19) and an additional 1500 police is likely to increase police complaints proportionately- meaning an around 9% increase in caseload
- Quality of oversight and number of investigations will continue to fall if current funding arrangements are maintained
In 2017-2018 LECC started with a recurrent budget of $25.4m and an establishment of 121 staff. The same year the Commission was advised by Treasury of an “efficiency dividend” of 3% which it was required to meet for the succeeding four years. In 2019 the Commission was advised that those savings are expected to be closer to 6% from 2019-20 and are ongoing and permanent.
The following table illustrates the savings the Commission is required to make from the existing 2019-2020 recurrent budget of $23.75m over the next four years:
Total efficiency dividend
The total number of complaints made directly to the Commission increased by 17% in the 2018-2019 financial year, resulting in an increase in the workload of the Complaints Assessment team.
In November 2018 the Government announced additional funding to increase NSWPF numbers by 1500 sworn officers, reportedly the largest increase in police numbers for approximately 30 years. This is an increase of 9%, which will inevitably flow on to the number of complaints against police which will need to be assessed and overseen by the Commission. The Commission assesses all “notifiable” complaints against police2 and takes over a small proportion that are suggestive of serious police misconduct or maladministration (approximately 2%).
Continual inroads on the budget available to pay staff means that the quality of the oversight the Commission is able to carry out on the police investigations, and the number of investigations the Commission can itself undertake is constantly under threat.
- Budgetary process should protect independence from Government, and ensure proper performance of statutory mandates
- Current process lacks transparency and true independence for Government creating a real reputational risk for oversight bodies
- Budget process is biased towards new announcements, meaning core functions like oversight may be overlooked
- Recommend budget setting for oversight bodies is not set by Treasury/Cabinet but a Parliamentary Committee based on information from the Government and the statutory remit of the body
“9 In our view, a shared uniqueness of the independent oversight bodies as a class lies in their essential role maintaining and enhancing a foundational bedrock of integrity, which is necessary to assure continuing public confidence and trust in all of the other agencies, activities and services of Government.50 We will be submitting that it is this uniqueness that warrants their funding being set by a process different to that applying to those other agencies, activities and services”
“1.5 The budget process should recognise and protect independence (and the appearance of independence) Independence (from Executive Government) – and the unequivocal public appearance of such independence – is essential to the effective functioning of the Ombudsman and the other oversight bodies.
“1.6 The budget process should assure appropriate funding to enable the proper performance of statutory mandates
Indeed, it is our submission that there are a number of weaknesses in the current budget process (identified below) that contribute to a structural bias toward a below-optimal quantum of funding for the independent oversight agencies. Primary among these is the fact that the budgets for these bodies are set, largely ‘behind closed doors’, by a Government which has its own priorities which are effectively in competition for a finite pool of funding. Underfunding means that a body is unable to perform its mandate in accordance with the legislative terms, Parliamentary intent and community expectations. Underfunding also risks contributing to the very problems that these bodies exist to address – namely a lack of public trust and confidence in the integrity, capability and fairness of public institutions.
“A budget process which makes an independent oversight agency dependent on Executive agencies and Ministers to set its funding inherently qualifies that independence.”
“The current budget process lacks transparency for the oversight body itself, for Parliament, and for the public generally. If an oversight body puts forward a funding proposal and it is not approved, it will not necessarily be clear even to that body why the proposal was rejected, by whom and on what basis. For example, if a funding bid that is made during the annual budget preparation process does not make it into the Government’s final budget, this could conceivably be because it failed to pass any number of hurdles – it may have been opposed by DPC;73 opposed by Treasury; rejected by the Treasurer or another Minister or rejected at the final hurdle by the relevant Cabinet Committee.”
Related to the point above, if a funding proposal is rejected (at whatever level within the Executive), there is no built-in mechanism by which the relevant body may seek any review of that decision, or otherwise insist that it proceed to the next level of decision-maker – whether that be the Treasurer, Cabinet Committee or Parliament.
Budget time provides an opportunity for Government to announce new initiatives that generate media and public interest, and to seek increased popular support. Inevitably, the same political mileage cannot be obtained from a Budget measure that ‘merely’ sustains or increases the funding provided for an existing function, irrespective of how important and in need of funding that function may be.
- The budget setting process should be overseen by a Parliamentary Committee rather than by Treasury/Cabinet
- Treasury/the Government must be given the opportunity to provide advice on funding, and all advice should be made public
- The budgets for Parliament and the independent oversight bodies should be set in advance of the Government budget setting process
- The budgets for Parliament and the independent oversight bodies should each be assessed separately
- In setting the budgets for the Parliament and the independent oversight bodies, advice from Treasury and the Government on the overall fiscal position of the State may be relevant
- Government should retain the ability to approve additional grant funding for oversight bodies, for example where their work contributes to the Premier’s Priorities and other Government-set outcomes
- Budgets for independent oversight bodies need to be set having regard to the particular statutory mandates and business models of each body, which will differ
- Funding should be considered and adjusted whenever functions or jurisdictions change
- Quarterly reviews may be needed to allow for the repurposing of unused contingency funding and/or providing supplementary funding requests
- The budget setting process should be embedded in legislation
- The independent oversight bodies should continue to be held accountable for their financial management and performance, in particular to their Parliamentary oversight committee
- The independent oversight bodies should no longer be publicly represented as forming part of the “DPC cluster”
- Only 3 of 14 funding submissions were considered and one approved – for additional public funding for political participants, nothing for core business
- 57% of staff temporary because of funding instability, including Senior Executive
- Have repeatedly raised these concerns through budget process but no changes
Only three of the 14 new funding submissions were fully approved ‘as submitted’ for inclusion in the NSW Electoral Commission’s 2019-20 appropriation. Of those three, only one substantive bid was approved, that being for additional public funding for political participants. That funding added nothing to the overall operating budget for the NSW Electoral Commission as it can only be used to meet claims by eligible political participants.
By value, less than one third of the NSW Electoral Commission’s new budget submissions were approved. The three submissions approved were not identified by the NSW Electoral Commission as being of the highest priority when making its bids as part of the budget process
The central problem of over-reliance on event-based funding is that NSW Electoral Commission has a core staffing complement of 133 employees, but approximately 45 per cent are temporary appointments. This reliance on short-term employment or contractor arrangements inevitably impacts on the cost and quality of services and the NSW Electoral Commission’s operational capability.
The NSW Electoral Commission perceives the main risks arising from not being funded for a more sustainable structure are as follows:
- Organisational fragility – approximately 57 per cent of staff are contractors or temporary, including the Senior Executive.
- Key person risk – over-reliance on key subject matter experts.
- Over reliance on temporary and expensive contract staff to deliver core services.
- Limited capacity for succession planning and knowledge transfer/capability building.
- High turnover – 22 per cent compared with Public Sector average of 10 per cent.
- Workplace Health & Safety risks – excessive hours, overtime, fatigue and well-being.
- Risks to the successful delivery of projects aimed at delivering core election services and improvements to election systems.
The NSW Electoral Commission has, unsuccessfully to date, sought to address these challenges through the Government’s annual budget process.
While the NSW Electoral Commission achieved a significant budget increase in 2018-19 of $22.3m (includes capital) to deliver the SGE in March 2019, not all items included in our Budget submission were funded. Unfunded items include: • Programme Management & Risk Mitigation – $5.51m • Media, Communications & Digital (website etc.) – $1.18m • Election Staff Recruitment & Support – $562k • Security at Election centres – $975K • Australia Post Postage Cost Increase – $880K
Difficulty in obtaining funds for back-office projects and asset renewal Under current arrangements, it is difficult to obtain funds through the annual budget process for many critical corporate support projects, for example, the replacement of core systems for records management. Requests for such “back office” systems must compete for funds against other high profile projects/programmes. As such, funding for many of these projects has to be met internally by not doing other things or they are never progressed. The pattern of not funding essential “back office” systems upgrades merely delays a problem and is not reflective of good financial and asset management.