Keeping Sticky Fingers out of the Public Purse

Commentary, Frontier Centre, Public Sector

Public theft of the dramatic size and nature that characterizes Canada’s Adscam would today be regarded as inconceivable in New Zealand.

For a Kiwi like myself, who was closely involved with reforms in governance over the last generation, Judge Gomery’s inquiry makes for astonishing reading. After an era of world-wide public sector reform focused on themes of accountability, transparency and the separation of management and governance responsibilities, the thought that Canada’s past governments appear to have shirked their responsibility for legislating to prevent scandals of this nature is appalling. Surely they must be held as guilty as the perpetrators.

One asks, “How could some monkeys have got their fingers in the till like this?” But the story is even more fantastic than the allegations that some individuals personally pocketed $100 million and steered some of it back to their political masters. The 2002 report from the Auditor-General that offered the first peek at Adscam turns out to be the tip of the iceberg. Politicians are central to a grander larceny. At least $793 million more had been flagged with serious questions before Adscam.

We take great comfort in the knowledge that the chances of similar incidents occurring here are somewhat remote. Canada’s agony gives us ample justification for the rigorous mechanisms and processes developed here and in other democratic nations to protect against corruption of this nature.

Common law provides a robust means of specifying and enforcing service delivery, but the establishment, monitoring and enforcement of common law obligations is costly and resource intensive, and requires skill and persistence. Inadequate attention to these factors reduces the effectiveness of the common law as a means of ensuring transparency and accountability. The reforms we undertook expanded on the discipline of public law to encompass a wide range of accountability mechanisms and remedies.

Activist governments that commandeer large parts of a nation’s economic production face substantial risks. The New Zealand reforms have therefore been vital in tightening processes in the public sector and hopefully eliminating the opportunity for bribery and other moral hazards. Our legislation clearly defines management and governance responsibilities, and creates a very tall firewall between politicians and the pools of funds so susceptible to diversion.

It is not sufficient, as witnesses to the Gomery maintain, to speculate that dedicated public servants in Ottawa must have known what was going down. Many did object, only to be countermanded by more connected people higher up the feeding chain. The accountability of government managers vis-à-vis their political masters must be clearly defined and all decisions taken transparently. There is little opportunity for politicians in New Zealand to curry favour for their mates in the awarding of contracts. Put simply, politicians here have the responsibility for budgets, but they are completely separated from the managers who give effect to approved plans and budgets.

The legislated responsibilities of a public sector chief executive in New Zealand include employing staff on behalf of the agency, and the agency is obliged to ensure that its governance structures and processes are effective, open and transparent. A central government department chief executive is responsible to cabinet ministers for the financial management and performance of all departments.

The chief executive is responsible also for implementing the decisions of an agency’s governors and ensuring effective and efficient management of its activities. This function complements other laws that involve the Controller and Auditor-General, who is an Officer of Parliament, no less, and which strengthens their roles as instruments of public accountability. Management is held to account in the awarding of contracts and processes are transparent through those agencies and the Chief Ombudsman.

If not completely immune from criminal behaviour, New Zealand’s governments have at least made it much clearer than yours that institutional remedies are available.

Separating politicians from management should be the number one campaign issue in the next Canadian election. Adscam didn’t have to happen, but the fact that it did shows your country needs more than good intentions. To quote the American philosopher, Ralph Waldo Emerson, when faced with a sanctimonious dinner guest, “The louder he talked of his honour, the faster we counted our spoons.”

Politicians need better laws to save them from temptation.

Bob Vine is the Executive Director of Interlog (New Zealand) Limited, a consulting group specializing in local government reform and Internet services for local government.