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

by | Jun 28, 2020 | Opinion | 2 comments

This is the final installment 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.

Stopping information flow through failing Freedom of Information system and banning a newspaper

In January last year The Guardian reported the Northern Territory Government was refusing one in four Freedom of Information requests, a rate seven times higher than Victoria’s and eight times Western Australia’s.

The paper analysed state and territory FOI data which showed the NT was by far the most likely jurisdiction to block requests for government documents. It showed in the previous financial year, the NT government granted just 292 of the 900 FOI requests it finalised, and partially granted another 298.

IT quoted CDU legal academic and former NT Labor MLA Ken Parish who said the Territory’s FOI legislation was no more restrictive than other jurisdictions and said the refusal rate might be partly a cultural problem within the NT public service.

He said the large public service relative to other jurisdictions was “top-heavy”, with “almost half the workforce being made up of managerial or administrative staff”.

He said the public service was dominated by managers who were “very much politicised because of the senior executive service and a large and still-growing set of ministerial advisers”.

Perhaps tellingly, the officer of the Chief Minister did not respond to The Guardian’s questions about the Territory FOI data.

A collision between Budget misuse and democratic responsibilities essay

The importance of FOI documents was well highlighted earlier in this essay with a FOI request by the ABC showing the Chief Minister’s then chief of staff Alf Lenoardi helped Darwin Turf Club chair Brett Dixon draft a letter to lobby the Chief Minister and Cabinet to pay $12 million for a new grandstand. As well reported, the Gunner Government did fund that grandstand.

That is just one example of the powerful and sometimes startling information that has come from FOI requests by journalists in the Northern Territory.

The Gunner Government has also gone into the business of banning the free press.

In the middle of the deadly coronavirus pandemic, the Gunner Government banned the NT Independent from attending press conferences and from seeking information from government departments to report to the public.

In an email on April 14, a few weeks after the paper launched, Chief Minister Michael Gunner’s director of communications, Maria Billias, banned Independent staff shortly after they asked questions at a press conference held by Deputy Chief Minister Nicole Manison.

She said the Government did not recognise the paper as an independent and reputable news media outlet because it was owned by Owen Pike who runs an unrelated Gumment Facebook page she described as a “concerted online hate page against several members of government”. 

Earlier this month the Chief Minister moved a press conference at the last minute after learning the NT Independent’s journalists would attempt to ask him questions.

The press conference was to announce the Government’s tourism voucher scheme, but was delayed while Chief Minister Michael Gunner and Tourism Minister Lauren Moss circled the area in government cars before heading back to Parliament House to hold the press conference there.

Editor Christopher Walsh and the NT Independent’s digital editor David Wood attempted to enter Parliament House for the press conference but were informed by security that they were not permitted to attend the Chief Minister’s event.

This sparked a news story on the ABC Northern Territory 7pm bulletin that night and also drew the attention of the ABC’s media watchdog program Media Watch which labelled the Government’s move “crazy”.

“It is crazy stuff, and they really do need to sort this out,” program host Paul Barry said.

The Fourth Estate is a pillar of democracy and is vital in engendering a democratic culture that extends beyond the political system. It supplies important information that helps people break down the promises and actions of governments and oppositions and they are also the watchdogs for uncovering errors and wrongdoings by the powerful.

It undermines that system when the Government chooses who it will have report on it. And a healthy Government that is actually interested in accountability and transparency should welcome the scrutiny, and further encourage a diversity of the media as they would with other sectors of the economy.

The Gunner Government and project development – A business plan? What’s that?

The Gunner Government has been prepared to support major project developments without the need for a professional business case that provides accountability and transparency for taxpayers.

Unplanned developments have the potential to have major negative ongoing implications for the Territory Budget and community.

A striking example of this lack of openness and accountability has occurred with the Charles Darwin University Darwin CBD development.

A recent excellent letter to the editor of the NT News captured the major problems that can be expected as a result of a lack of competence, expertise, transparency and accountability in the decision making of the Gunner Government. This letter is quoted in full below:

Why the CDU –Darwin CBD Development will fail

Let’s run the ruler over the CDU city campus deal. The stakes could not be higher. With $150 million of borrowed money, the two proponents, the CDU vice-chancellor and the NT Chief Minister, have put all our chips on red.

Everything must go perfectly right or our university will never recover.

  1. The underlying performance of the user – the current trajectory of CDU operations is spiralling out of control. It has reduced courses, reduced student numbers, made staff redundant and recently called on staff to volunteer to work fewer hours. Staff morale cannot be measured. It does not exist.

2. Financial track record of proponents – CDU has recently recorded one of the largest losses in history (this is before COVID!). The NT Government meanwhile has declared a financial crisis and has yet to do anything meaningful to address it.

3.The general market – Australian universities are facing the largest crisis in history. Their financial reliance on foreign students has been fully exposed and a call for a massive bailout is nigh.

4. The target market – Interest in supporting and nurturing our own best and brightest has been dismissed and the entire focus is on attracting second tier overseas students from the sub-continent. Whilst it is politely pushed under the carpet, the language barriers in the current cohort are a reason for extreme concern.

5. The real need for extra space – CDU has swathes of space at its current campuses. This will be exacerbated when they move a range of faculties into the city.

6. The design – The eight story glass wall without shading has been beautifully tilted so that it catches every last ray of the western sun. The unusual noise you are hearing is the sound of the local architects’ and environmental advocates’ jaws dragging along the ground.

7. Public support – Is there a single person beside the two proponents and the Property Council who believes this is a sensible spend of taxpayer money? Please raise your hand if you exist?

8. Local Content – Any notion that this will boost local business is laughable. The project manager, main architect, interior designer and landscape architect are all FIFOs. A great early record for our peak educational institution.

9.The location – Situated far away from the waterfront, state square and the three key commercial buildings, it yet again decentralises our poorly laid out CBD.

10. The forecast for success – the modelling of success of the campus forecasts 11,700 new students … you’re joking! When the real number fails to eventuate who picks up the pieces?

The score? 0/10. Until the CDU fixes its core business, its use as a saviour for the deep-seated CDB problems is pure mischief.’

In addition to these excellent points, the Gunner Government in concert with CDU, has shown insufficient concern as to the significant and problematic implications of such a development on CDU campuses located in other important regional centres of the Territory. These include the centres of Alice Springs, Katherine and Tennant Creek.

Regardless of the clear opposition to this project on the basis that there are far more productive and less risky projects that deserve public support, the Gunner Government is determined not to listen to advice and to plod on regardless. That is plod on regardless of what the community thinks or wants.

Principles of good governance require that Government is responsive to community input and suggestions and actively encourages such input. It also notes that good governments are good at communicating with the community.

The Gunner Government receives a fail for their ability to understand and adhere to these important principles of good governance – encouraging and being responsive to community input and good at communicating with the community.

The State Square redevelopment – A business plan? You’ve got to be joking

As pointed out by NT Independent editor Christopher Walsh, the Gunner Government has been unable to explain why it spent tens of millions of taxpayer dollars on the State Square redevelopment before a proper business plan was in place.

As a further, troubling indication of the Gunner Government’s lack of understanding of the primary importance and methods of financial decision making the Infrastructure Minister, Eva Lawler suggested the reasons for the project were “broader than just dollars,” “this is about the greatness …yeah,” it was reported.  

However, Government expenditure, particularly of this magnitude needs to be justified by a properly constructed cost benefit analysis.

Such analysis should be an important part of the business plan. This cost– benefit analysis by its very nature, takes into account both financial and non-financial factors in evaluating whether the project should proceed against competing project uses for what should be scarce Government funding.

That no such cost-benefit analysis was undertaken suggests the Government makes such decisions by ‘gut feel’ or for example, to satisfy the demands of special interest groups.

Such decision making is an unacceptable means of dealing with large amounts of public funding within modern democratic governments and successful economies.

Rather, it leads to the sort of complete Budget mess, the Territory is now experiencing. Such a naïve, unsophisticated and unprofessional approach to the expenditure of public funds acts as a major disincentive to private investors seeking to commence business operations in the Territory.

It leads to a serious lack of confidence in the professionalism and competence of Government in the Territory and serves to substantially increase business risk.

Before developing a business case for its “critical” State Square project, the Government paid $1.5 million to demolish the Chan Building, built a $20 million underground carpark, paid for a $500,000 “masterplan”, and awarded tenders to contractors for a variety of associated works since 2018.

Unplanned and unbudgeted expenditure and a Budget seemingly out of control has been the hallmark of the Gunner Government.

However taxpayers’ expect Government to be as careful with their money and follow similar disciplined financial processes to that expected within commercial businesses.

Commercial businesses would rapidly go bankrupt if they operated in the same mode as the Gunner Government.

Many have been worried that it is only a question of time before this Government suffers a similar fate to a South American dictatorship and effectively goes bankrupt, requiring a complete take-over by the Commonwealth.

An alternative approach to governance and Budget waste

While there would be few that would take issue for the need for new infrastructure development projects within the NT, particularly following the pandemic, the main question is whether the best projects have been chosen so that the Territory can get the best result from the expenditure.

Without proper community consultation or planning processes in place the Government appears to be working on a ‘hit or miss’ basis rather than a logical, thoughtful, disciplined, professional process involving the disciplined economic evaluation of alternative options.

This becomes essential as available financial resources become even scarcer, an event bound to occur to the NT.

For example, in a previous piece I have pointed to the well appreciated fact that Australia’s labour costs make it very difficult to compete in the traditional industries of manufacturing. As a result, we have continued to try and depend on our service sectors like tourism and the industries of agriculture and mining.

Many now believe that while the more traditional foundation industries are important there also needs to be a Government focus on kick-starting advanced manufacturing.

These industries are essentially knowledge based and concerned with the innovation of high-end technology products in almost all established and evolving industries.

Such sectors can locate almost anywhere because they are computer driven. What they need is high quality technical and computer based skills. There is a huge export potential in such knowledge driven industries. Exports are growing rapidly.

More opinion by Dr Fuller

Advanced manufacturers share a number of important characteristics.

They are globally oriented. They produce new, innovative products with high levels of design. These products are technologically complex, reliable, affordable and available. They are also newer, better and more exciting.

Advanced Manufacturing products are designed and built to solve a variety of problems and therefore, have multiple uses. They are underpinned by a high component of intellectual property control and sophisticated, state of the art computer based skills and systems.

Such products include new computer software technologies and applications (e.g. for Defence), high precision cutting and welding and building technologies, advanced robotics and intelligent computer based production systems, automation of processes, control systems to monitor manufacturing processes and products and systems for environmental management.

Many of these sectors could be located in the Northern Territory if institutions such as Government and the university provided the required support and leadership.

In addition, the Territory is confronted by a number of major problems of social and economic inequality.

While the Aboriginal population makes up around 30 per cent of the population, many live in third world conditions of poverty and are sadly destitute, with no hope for a better future, particularly in remote communities.

Would it be too much to expect that a Labor government in the Territory, that is supposed to stand for equality and equity regardless of racial background, did more to overcome such obvious and long-standing economic, social and human disadvantage?

Would not this be a fairer and more beneficial spend of the taxpayer dollar than wasting such resources on an expensive, high risk infrastructure project such as the CDU Darwin CBD development that is most likely to fail?

While the current Prime Minister may not understand the importance of this, the previous Prime Minister, Tony Abbott certainly would have.

Such alternative options should be closely considered and properly evaluated by Government.

A complete lack of understanding of  Government finance – The emperor unveiled

OnMarch 11, 2020 Michael Gunner visited Alice Springs.

He was asked by the Alice Springs News editor Erwin Chlanda: “What is the collateral for your Government’s borrowing?”

It was reported that Gunner replied: “This is a commercial arrangement and I can’t discuss this.”

This is a staggering and startling response from the leader of an Australian government.

This carefully placed question by Mr Chlanda unveiled in spectacular fashion how the Chief Minister appears to have a complete lack of understanding of Government finances and how a key component of this finance, Government debt, actually works.

Suddenly, the Emperor had no clothes.

Thus, borrowings in the case of private commercial entities such as businesses or private households do require collateral to support their holdings of debt. Most who have a mortgage on their private dwelling would appreciate such arrangements. In such a case, the collateral is the dwelling and the deposit required from the borrower. Similar forms of collateral are required in the case of borrowing by a private or large commercial business.

However, in the case of a state, territory or national Government in Australia, no such collateral is required by lenders of finance. In these cases lenders are aware that state and territory governments have very extensive assets in the form of property, capital equipment and infrastructure.

They are also very aware that governments such as the Territory Government have revenue raising capacity through taxation as well as the financial support of the Commonwealth – up to a certain point.  

However, what lenders are very concerned about is the financial state of the Budget and in particular how much spending is exceeding revenue and how much debt the Territory has.

Irresponsible Budget management as we have seen in the Territory may have the effect of delaying interest payments if complex negotiations are required with the Commonwealth to “bail out” the Territory so that it can continue to pay its interest obligations to lenders. An inability to do this is a prime reason for sending a commercial operation bankrupt.

What lenders to the Territory watch very closely is not a collection of collateral but how well the Budget is being managed. As discussed earlier in this essay, this is regularly evaluated by ratings agencies.

These agencies analyse the Budget health of states and territories and provide them with a rating which is also made public. Lenders watch such rating evaluations closely.

Any fall in this rating results in a re-evaluation of the risk lenders place on lending to the Territory. A decrease in ratings will result in a rise in interest rates on Territory borrowings. This does not mean the Territory can’t pay its debt necessarily, but it does mean that there are more attractive alternatives available for lenders than the Territory Government. Because of this, the Territory will be forced to pay an increased amount for its ‘less desirable’ borrowings.

So, this is not a matter of “commercial in confidence” at all, as stated by the Chief Minister.

The arrangements are widely known, in the public arena and appreciated by those with a minimum understanding of financial issues and have been for a very long time.

With this in mind, it is therefore important that the premier ratings agency Moody’s Investor Services in May 2019 was reported to have “voiced scepticism” at the NT Treasury’s optimism over the Budget. It stated that for the Government to achieve its savings measures it would take a “lot of ducks to line up”.

It is again concerning that the NT Treasurer was reported to have shrugged off Moody’s appraisal and stated that the NT economy was “starting to turn”.

There appears not only to have been a lack of respect and follow through given to the effort and professionalism provided by Langalount in his excellent report showing the NT Government how to proceed to get out of the Budget ‘mess’ on a step by step basis.

There also appears to be a lack of understanding by both the Chief Minister and the Treasurer of the importance of ratings agencies such as Moody and their warnings for the Territory economy.

To have such an apparent lack of financial understanding by those leading the NT Government at this time of financial stress, is ‘very scary’, for most Territorians to say the least.

What chance does the Territory have of building a confident, competent economy under such leadership?

The answer? Very little.

High levels of accountability and transparency, especially related to the expenditure of public funds, is essential to political, economic and community development.

An apparent inability to understand the important linkages between adequate levels of financial accountability in a properly functioning democratic Government – and political, economic and community development – has been one of the main criticisms of commentators regarding the performance of the Gunner Government, since coming to power.

It is of substantial concern that such failures have continued to occur since the election of the Gunner government some four years ago.

Disturbingly, there is little evidence of a Government capable of learning.

Sadly for the Territory, good government and in particular, sound financial management, appears to have proved far too complex and difficult for the Gunner Government. 

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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