The Gunner Government: A collision between Budget misuse and democratic responsibilities – Part IV

by | Jun 27, 2020 | Opinion | 0 comments

This is part three of a five part presentation of an essay by Dr Don Fuller looking at the characteristics of good government including the principles of transparency and accountability and how the five core attributes of good government make for the foundation of strong economic and community development. Dr Fuller then uses these characteristics to evaluate the Gunner Government, which swept to power in 2016 and famously tabled a document to Parliament entitled, Restoring Integrity to Government– Trust and Integrity Reform Discussion Paper.

Despite Langalount Gunner Government expenditure problems continue

Despite the clear call by external experts to reduce Government expenditure, the NT Infrastructure Development Fund (IDF) approved a $10.5 million taxpayer funded payment to Darwin water bottler NT Beverages despite the company ‘being deeply in debt and on the brink of financial collapse’.

At the same time the NT Government had threatened the company with debt recovery action for unpaid stamp duty.

Two weeks later the IDF approved the company receiving 10.5 million in taxpayer funding.

This clearly demonstrates a clear lack of consistent, integrated financial decision making within the Gunner NT Government.

In this case the creditors’ report into NT Beverages operations found the company had spent $9.2 million of the taxpayer funding in just four months. It remains unclear on what the money was used for.

The Administrator’s report also found NT Beverages owed more than $130,000 to the Australian Taxation Office, including penalties for not paying their employees’ superannuation contributions.

The NT Government’s member on the IDF board,  Northern Territory’s head public servant Jodie Ryan is reported to have declined to answer the ABC’s questions, including why she approved the $10 million of public funds less than two weeks after the NT Government threatened debt recovery action for $221,000 in unpaid stamp duty in February 2018.

Ms Ryan was reported as also not answering questions over her personal role in overseeing the funding as a board member or why taxpayers later loaned the company an additional $100,000 to pay wages.

As pointed out by Vowles, McConnell and Collins, without clear and uniform standards and guidelines, Government administration is in danger of squandering public funding in an undisciplined and uncontrolled manner and becoming dysfunctional and chaotic.

However, unfortunately for the people of the Territory, the Gunner Government was in no mind to listen and take wise advice. Rather, they seemed content to ‘shoot the messengers’ and ‘pile on (somewhere- anywhere?) regardless’.

The impact of the 2019-20 NT Budget

The NT Treasurer released the 2019-20 Budget in early May 2019. This indicated that the Territory’s daily interest bill would soon exceed $1 million a day and that forecast debt would climb to $6.2 billion during the period.

It followed the release of former WA under-treasurer John Langalount’s Plan for Budget Repair in April, which set out a range of savings measures designed to help the Territory claw back a surplus by 2027-2028.

But Moody’s Investor Services report author John Manning was sceptical as to whether the Territory Government had the ability to implement the plan and said it would “require a lot of ducks to line up.”

Importantly, even though spelt out by Langalount to the NT Government on how to proceed to bring Government finances under control, Moody’s Investor Service stated, “The Territory’s plans to cap, and ultimately reduce, this rising debt burden is unclear.”

It appears that the NT Treasurer had been unable to translate the Langalount report into an effective strategy for implementation, even though this had been set out in clear and logical steps.

Earlier this month the agency said the Territory’s rating of Aa3 (stable) would most likely continue, but only because of the Commonwealth potentially bailing it out should financial problems worsen, and in spite of its inability to implement meaningful fiscal reforms.

“The Territory’s stand-alone credit profile … reflects a structural fiscal imbalance that will require a rising debt burden in order to fund recurrent and capital expenditure,” the report noted.

It added the “reputation risk” to the Commonwealth of not bailing out the NT would be too great, if the NT “were to experience acute liquidity stress”.

Credit downgrades are important as they signal higher interest costs per day for the on-going payment of escalating Territory Government debt.

The A collision between Budget misuse and democratic responsibilities essay

Langalount had provided very clear warnings in his report to the NT Government to avoid overspending, particularly outside the Budget cycle. He had also importantly pointed to the need for the Government to change their culture and to understand and act on the importance of disciplined Budget management, in order to reduce the escalating level of debt.

Despite this, it was being reported in October 2019 that the debt-laden Gunner Government spent almost $170 million on unbudgeted policy changes — including $12 million for the now very controversial grandstand at the Fannie Bay Racecourse — in the two months after its May Budget was handed down.

In the Annual Financial Report tabled by Treasurer Nicole Manison the report showed increases in revenue because of higher than expected GST receipts and higher taxation and royalty receipts than previously forecast.

However, this improvement was countered by spending on unbudgeted policy changes, including $64.5 million in capital grants, such as upgrades to sporting facilities, and community infrastructure.

Major problems of accountability and transparency for Gunner regarding the Fannie Bay Racecourse grandstand

By early 2020 the Chief Minister was being confronted by serious questions regarding probity, accountability and transparency involving the construction of the. This was exacerbated by the fact that the racecourse was deep inside the Chief Minister’s own electorate of Fannie Bay.

Documents obtained by the ABC showed the Chief Minister’s former chief of staff Alf Leonardi helped draft a letter so that the Darwin Turf Club could receive funding from the Government for the construction of the new grandstand. This letter was then used by the vlub to support a $12 million dollar funding request for the grandstand from public funds.

The Chief Minister claimed that this conduct was ‘completely inappropriate’. 

This is seen by many as a potential major breach of Government probity, accountability and transparency.

The Chief Minister has provided documents to the NT Independent Commissioner Against Corruption for evaluation and assessment because of such concerns.

It is important in this context that the relevant documents came to light only after a Freedom of Information request by the ABC. Such documents were not released in an open and accountable manner without the need for a formal request under FOI.

The grant has been controversial since it was first announced in July last year, when critics questioned the merits of funding a corporate grandstand at a time when the Territory was facing unprecedented levels of debt. How could the Chief Minister not understand the priority of reducing this debt and containing expenditure following the excellent advice provided by Langalount, they asked?

Concerns about the probity, accountability and transparency of the Government funding arrangement intensified when it also emerged that the winning tenderer to build the grandstand was Jaytex Construction — a company part-owned by the Turf Club’s chairman Brett Dixon, it was reported.

While the Chief Minister has stated that the way in which this process was handled was ‘completely inappropriate’ according to reports by the ABC, it appears to be both important and relevant that the Chief Minister himself responded to a letter from Mr Dixon, telling him he supported the assertion that the project would create a world-class facility.

‘I look forward to a timely outcome from that process,’ Mr Gunner is reported to have written.

It is therefore difficult for many to believe that the Chief Minister was not involved in the processes and financial decision to provide funding for the construction of a grandstand within his electorate.

In April the NT Independent reported an internal planning document obtained by the paper showed the grandstand project was “unlikely” to increase visitors to the Northern Territory.

The report, which was dated June 2019, contradicts public comments made by government officials and the club’s CEO Brad Morgan, who told a local radio station the day before that while the structure won’t be enjoyed by spectators this year due to COVID-19 restrictions, “the response from overseas and interstate was phenomenal”.

“The proposed grandstand will provide improved and additional function space and facilities for race day attendees, and is unlikely to significantly increase race-day attendance,” the report stated.

More opinion by Dr Fuller

The highly respected independent MLA Gerry Wood was reported as telling the ABC that he was concerned the independence of the Government’s decision-making process had been compromised.

He urged the Chief Minister to ask the Auditor-General to review the process.

“From what I hear now, I think there is a lot more there that needs to be looked at,” he said.

“From whether the due process was done and whether the turf club got favourable treatment by using staff within the Government — in this case the chief of staff — to write a letter which was really weighted with the hope that the ministers would say, ‘Oh yeah, $12 million, we give it the tick’.

Such concerns and increasing lack of confidence and distrust of Government highlight the damage that can occur when the essential underpinnings of democratic Government appear to many to have been ruptured, by inappropriate Government actions – particularly involving the Chief Minister.

In this case the Chief Minister appears to operating at anything but arms length from a commercial transaction that he can be seen to be personally benefitting from. It appears that there is potential in such processes for a clear conflict of interest.

Territorians need truth on economy and Government finances

In May 2020 it was reported that the Gunner Government had refused to provide Territorians with a clear picture of the books prior to the election and that this ‘goes against their promise’.

While the Gunner Government caved into the pressure, it had first refused to provide budget information before the August election.

The Budget had been delayed until at least November. However, the Government refused to release a pre-election outlook.

This meant that it would be the first time in NT’s history that voters would go to election without knowledge about the state of the books. The Gunner Government had argued this was not possible due to the impact of the coronavirus.

However Tasmania, a relatively small jurisdiction like the NT, managed to release a detailed fiscal outlook during May, 2020. While it acknowledged the volatile conditions it was still able to provide Tasmanians with a view on the challenges confronting them.

Recently, the Gunner government agreed following substantial pressure, to provide Territorians with a ‘rough guide’ of the Budget situation – whatever this may mean.

Langalount found that NT Budgets had been treated more like “rough guides”, rather than serious financial plans.

Territorians have now been informed by their Chief Minister to expect another ‘rough guide’ for a fiscal outlook.

The democratic principles of accountability and transparency are to be again dragged bucking and kicking  to the starting gates – with the jockey riding on instructions that ‘rough enough will be good enough.’

Part V of the essay will look at the continued failures of Freedom of Information under the Gunner Government and then the banning of the free press, plus the lack of business cases for the largest projects going on in the NT, the Charles Darwin University Darwin city campus and the State Square Redevelopment. Then Dr Fuller proposes an alternative approach to governance and to Budget waste.

Professor Don Fuller

Dr Don Fuller holds a first class Honours degree and PhD in economics from the University of Adelaide. He has worked as senior public servant in the Territory. This included as a senior economic advisor to Northern Territory chief ministers. He was also Professor of Governance and Head of the Schools of Law and Business at Charles Darwin University. He grew up in Darwin and attended Darwin High School. 

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