Bills

Infrastructure SA Bill

Committee Stage

Debate resumed.

The Hon. R.I. LUCAS: For reasons I have outlined before and will repeat again, the government opposes this particular amendment. As I have referred to—and I think the Hon. Mr Parnell also summarised the government's position—the government believes that the Public Sector (Honesty and Accountability) Act is the act that applies to board members. As I instanced earlier, it is the act that is relied upon to govern conflicts of interest, declarations of pecuniary interest and those sorts of very important issues for a whole range of existing boards that actually make decisions and do not just advise the government about decisions it might make.

I return to the Funds SA board, the SA Water board, the ReturnToWorkSA board and any number of government business enterprises and government-related boards where board members are actually making decisions. In the Funds SA case, investment decisions are made that account to billions of dollars; we are not talking about minor amounts of money. In relation to SA Water, decisions are taken in relation to hundreds of millions of dollars on a common basis.

Those particular board members are governed appropriately by the Public Sector (Honesty and Accountability) Act. On appointment, they are required, so I am advised, to disclose their pecuniary interest to the relevant minister in writing in accordance with the regulations. That is the process that has applied, for however long the public sector honesty and accountability provisions have existed—it has been a long time—to board members of Funds SA, SA Water and all those other boards. It will also apply, so I am advised, to Infrastructure SA.

It is the government's position, and we believe it to be not an unreasonable position, that if this is the process for managing potential conflicts of interest for boards that actually make decisions for hundreds of millions of dollars or billions of dollars, why is that level of accountability not also sufficient for Infrastructure SA board members, who do not make decisions but just make recommendations to the government of the day for the decisions that, ultimately, the government of the day has to take?

Again, I can only repeat that this is the sort of disclosure regime that, as the member indicates, as elected officials we in parliament and local council members readily acknowledge. Parliaments have outlined those particular requirements for elected officials, and we have set ourselves apart for reasons that have been argued in the past as to why we should be set apart. We equally argued as a parliament, and accepted the position of the former Labor government on many occasions, that what was sufficient in relation to board members was to be governed by the Public Sector (Honesty and Accountability) Act.

In relation to that process, which is outlined there in terms of conflicts of interest, the particular board member has to disclose those pecuniary interests. If there is any further pecuniary interest of a kind which is specified in the regulations, he or she has to disclose those interests in writing to the minister, and if there is any potential conflict, the minister has powers in relation to requiring resolution of those particular conflicts.

I am referred to section 8, also of the Public Sector (Honesty and Accountability) Act, which states the duty of corporate agency members with respect to conflict of interest. Without going through all of that again, it is quite prescriptive in relation to what the duty of a corporate agency member is who may have a direct or indirect personal or pecuniary interest in a matter decided or under consideration by the agency or the governing body of the agency. There are quite prescriptive provisions.

I stand corrected. Section 17 is the one that relates to the agency board members, not section 8.

The Hon. C.M. Scriven: We will not hold it against you.

The Hon. R.I. LUCAS: That is alright. Section 17, to which I was referring earlier, is the appropriate one, which is about the duty of senior officials with respect to conflict of interest. The earlier explanation that I was giving in relation to the prescriptive requirements of section 17 of the Public Sector (Honesty and Accountability) Act are the ones that would relate to the potential board members of Infrastructure SA.

For all those reasons, the government again opposes this. We think it is an additional onerous requirement on potential board members. We think it would discourage board members, and therefore we do not support it.

The CHAIR: The Hon. Mr Parnell was just slightly faster to his feet. We will come to you, the Hon. Ms Scriven.

The Hon. M.C. PARNELL: Thank you, and I thank the Hon. Clare Scriven, but I wanted to pursue this exact avenue. I expect the Treasurer saw me previously obtain my copy of the Public Sector (Honesty and Accountability) Act from the back of the chamber. It is not an act that I have had a lot to do with, but it seems to me that there are three areas that potentially could cover the members of Infrastructure SA. The minister started referring to section 8 of that act, the duty of corporate—

The Hon. R.I. LUCAS: I started at 17, then I moved to 8.

The Hon. M.C. PARNELL: Anyway, the three sections are: section 8, which deals with the duty of corporate agency members in respect of conflict of interest; section 12, which is the duty of advisory body members in respect of conflict of interest; and section 17, which is the duty of senior officials in respect of conflict of interest.

The difference between those, it seems to me, is that I do not think the advisory body section applies. That only relates to unincorporated bodies and this will be an incorporated body, so scrub section 12. We are now back to whether it is between sections 8 or 17. The difference between them, and this could be important, is that if we were talking about corporate agency members, then the requirements of them are basically to disclose in writing conflict of interest, to not take part in discussions, to not vote in relation to anything, and to be absent from the meeting room. To paraphrase, they are the four main obligations if we are talking about corporate agency members.

If we are talking about senior officials, then that is a different category. It seems to me that the obligation on the senior official is to disclose his or her pecuniary interests to the minister. That is a bit different, because if it were a corporate agency member it was direct or indirect personal or pecuniary interests. If we are only talking about senior officials, we are only talking about pecuniary interests.

That, as I can see it, is basically it. I cannot see that section 17 requires them to not participate in meetings, to not vote in meetings and to leave the room. It may well be that there is something in the regulations, which I do not have in front of me, that actually applies a different standard. If we want to ask a simple question of the minister: is the requirement to not take part in discussions, to not vote and to leave the room applicable to senior officials the same way that it would apply to a corporate agency member under section 8?

The Hon. R.I. LUCAS: I will come back to that in a tick, but can I just make it clear that the final, considered piece of advice I have received is that it is clause 17 that we are talking about. I refer the honourable member and members to clause 17 of this bill, 'Honesty and accountability', which reads:

The appointed members of the board are senior officials for the purposes of the Public Sector (Honesty and Accountability) Act 1995.

It makes it quite clear in this particular bill to which particular provision, of the many provisions in the Public Sector (Honesty and Accountability) Act that one might select from, one should be referring to. Clause 17 in this bill says these people are going to be senior officials for the purposes of the act. Therefore, we do not have to worry about sections 8 and 12 of the Public Sector (Honesty and Accountability) Act. We are talking about clause 17.

One other interesting distinction between section 8 and clause 17—section 8 is irrelevant anyway, because it is there—in terms of comparing the two is that when one looks at section 8 in the act, it says that a corporate agency member who has a direct or indirect personal or pecuniary interest in a matter does certain things. It would only be in the case where you had a judgement, where you had a direct or indirect interest in a particular matter, that you are then required to do certain things. The requirements under the senior officials in clause 17 are that as soon as you are appointed, you have to go through this process of declaring your pecuniary interests.

All of that is quite clear. From where the Greens and the Hon. Mr Parnell would normally come, I would have thought he would be more inclined to say, 'You should be declaring upfront what your pecuniary interests are.' I think that is probably closer to the position—although not as far as the Hon. Ms Scriven would like to go—where at least, upfront, you are declaring all of your pecuniary interests in some way. The corporate agency provision seems to refer—again, I hate to say I am not a lawyer—to when you think you have a conflict of interest. You then have to go through this process of how you handle it.

Turning to the next issue, we now know we are just talking about section 17 of the Public Sector (Honesty and Accountability) Act. In that, I referred earlier to:

A senior official must—

(a) on appointment as a senior official, disclose his or her pecuniary interests to the relevant Minister in writing in accordance with the regulations…

The obvious question I have, and I am sure other members would have, is what do the bally regulations actually say? Finally, I now have—with thanks to my adviser's mobile phone and googling, and all those sorts of wonderful things that we do these days—a copy of the regulations. In relation to what has to be disclosed—bearing in mind, as soon as you are appointed, you have to disclose—what are the pecuniary interests you have to disclose? These are quite prescriptive:

Pecuniary interest

1. A contract of service, office, trade, vocation, business or profession in respect of which the person receives or is entitled to receive any remuneration, fee or other pecuniary sum (not being payable under the Act).

2. An office held by the person (whether as a director or otherwise) in a company or other body (whether or not incorporated) in respect of which the person received or is entitled to receive any remuneration, fee or other pecuniary sum.

When you do that, you have to reveal:

The name and address of the company or other body and the amount of the remuneration fee or other pecuniary sum.

In relation to the earlier one, 'contract of service', the information that is required is:

A description of the contract, office, trade, vocation, business or profession and the amount and source of the remuneration, fee or other pecuniary sum.

It would seem to indicate you have to not only indicate what your interest is, but in some way a measure of the extent of the pecuniary interest. Further on, under pecuniary interest, what you have to disclose is:

3. A company, partnership, association or other body in which the person is an investor.

In that case you have to reveal:

The name and address or description of the company, partnership, association or other body.

4. Land in which the person has a beneficial interest (other than by way of security for a debt).

You just have to provide the address or description of the land in that case.

5. A trust (other than a testamentary trust) of which the person is a beneficiary or trustee.

In that case, you have to provide:

A description of the trust and the name and address of each trustee.

6. Any other pecuniary interest of the person of a kind determined by the Minister.

So, the minister evidently can determine any other pecuniary interest in relation to that.

For the purposes of this regulation—

(a) a reference to a beneficial interest in land includes a reference to a right to reacquire land; and

(b) a person who is an object of a discretionary trust is to be taken to be a beneficiary of that trust; and

(c) a person is an investor in a body if—

(i) the person has deposited money with, or lent money to, the body that has not been repaid and the amount not repaid equals or exceeds $10 000; or

(ii) the person holds, or has a beneficial interest in, shares in, or debentures of, the body or a policy of life insurance issued by the body.

I am indebted to my adviser's mobile phone and Google. I think that is a relevant question, which I certainly had as the minister handling the bill, and I would have thought other members would have; that is, this requirement would appear to be up-front you have to declare your pecuniary interest. It is in accordance with the regulations which have been set down, and they are quite prescriptive and quite onerous. Then there is this process which I have outlined, and which the Hon. Mr Parnell would have before him, in terms of how you would manage particular problems that might arise in relation to conflicts of interest.

The Hon. M.C. PARNELL: I thank the minister for his answer. I think where that leads us is the minister has said that the appointees to Infrastructure SA have to declare certain things in advance. They go through section 17, they go through the regulations, and the minister has listed some of the things that they have to declare up-front. The Hon. Clare Scriven has an amendment which has a slightly different list to be inserted as a schedule which, again, is a list of things that have to be declared.

One of the questions is: how different are the two lists? Are there things on the Hon. Clare Scriven's list that are essential and must be included, or are the things in the Public Sector (Honesty and Accountability) Regulations sufficient? We will see what other members have to say about that. My comfort with the bill as drafted is improved by now knowing that there is this advanced disclosure of pecuniary interests, which are the main ones we are interested in. In terms of 'What does it mean if someone does have a pecuniary interest?' section 17 goes on to say that if there is a pecuniary interest, and then goes on to say 'or other personal interest', so the idea of a personal interest is picked up as well.

If that conflicts, or may conflict with, his or her duties, the main obligation is, firstly, to disclose that in writing to the minister and, secondly, to not take action or further action in relation to the matter, except as authorised in writing by the minister. The obligation on the person with a conflict of interest—whether it is disclosed or not (the interest will be disclosed, if it is a pecuniary interest)—if there is a real or apparent conflict, is to not take action or further action in relation to the matter. My guess would be that that probably means, if the board of Infrastructure SA is considering a matter where a board member has a direct conflict of interest, that they will leave the room and are not going to participate in the discussion.

That is what I would have thought was the logical consequence of this provision. Before determining this matter finally, I would be interested to hear from the Hon. Clare Scriven whether there are things in her schedule that she thinks are vital areas of disclosure that go above and beyond the disclosure required by section 17 of the Public Sector (Honesty and Accountability) Act.

The Hon. C.M. SCRIVEN: I thank the Hon. Mr Parnell for his contribution. I will also state that I am not a lawyer, but my understanding of some of the key differences between the honesty and accountability act requirements and the disclosure of interest schedule that we have here is that the schedule, as proposed in my amendment, would include interests of close family members. I am happy to be corrected, but my understanding is that that is not included the act to which the honourable minister refers.

The schedule would include the declaration of gifts, which I think is of considerable importance in terms of ensuring that there is public confidence in the members of the board. It would also include membership of a professional organisation, including, for example, an industry advocacy organisation. Whilst that may not be a direct pecuniary interest, it is certainly of relevance in terms of the operations of the board and its membership.

I think it comes down to a key question. Those matters that I have just mentioned are particularly relevant, and the bill would be improved by having those things included in terms of a disclosure of interest, but there is a further question, namely, do we actually care about the confidence of the South Australian public in this body? There have been attempts by the honourable Treasurer to say that this is just like any other board or any other body and therefore we do not need to have anything different. However, it is relevant that Funds SA, for example, is not looking at capital investments, as I understand it. The capital investments that Infrastructure SA will recommend will be very considerable.

Again, there has been an argument that this is only an advisory body that will just be making recommendations. I think it would be ridiculous for any of us to suggest that those recommendations are not going to hold a great deal of weight. If they do not hold a great deal of weight, why are we bothering with creating such a body in the first place? For all of those reasons, I think it is really important that the South Australian public has confidence that the people appointed to this board do not have conflicts of interest.

We can talk to them about the Funds SA board. Most people have probably never heard of the Funds SA board, so it would not really have much relevance to them; however, when a 20-year strategy for infrastructure planning for the state is released, I think most South Australians will have a great deal of interest in it.

Therefore, I think that the transparency, the accountability and the ability to have confidence in the total neutrality of this board are absolutely paramount. This will be a unique body, and it will have a higher level of public interest than perhaps the other bodies that have been referred to in terms of comparison. The schedule: (1) enables a broader disclosure of interests, and (2) is proactive. I note the honourable Treasurer's comments that the public accountability act does require proactive disclosure, but that is not to the same extent as the schedule proposed in my amendment.

The Hon. R.I. LUCAS: I refer the Hon. Ms Scriven to subsection (4) of section 17 which states:

Without limiting the effect of this section, a senior official will be taken to have an interest in a matter for the purposes of this section if an associate of the senior official has an interest in the matter.

I will bow to the lawyers in the room as to whether associate includes family member or not—I am not sure. I guess my layperson's interpretation, a non-lawyer's interpretation would be that it would, but I just refer the honourable member to that particular provision.

The other point that I would make in relation to the two schedules is that should the honourable member's amendment be successful, there would actually be two disclosure regimes that would operate: the government's disclosure regime and the honourable member's disclosure regime, as I understand it. So, the board members are going to have to go through those two processes.

The one thing I would say about the disclosure regime for members of parliament—and I suspect it is the same for local councils—is that whilst we have to disclose an interest, we never, ever disclose the extent of the value of that interest. If the Hon. Ms Scriven has shares in Santos, she does not have to declare that she has $2 million worth of shares in Santos, or whatever it is, or, indeed, $20 worth of shares in Santos. It is just that you have a level of interest. My reading of those regulations that I referred to earlier is they would appear to indicate, in terms of the values of the pecuniary interests, that they have to be disclosed in some way. I am not necessarily talking about the shares but in terms of a range of other remunerated interests or pecuniary interests that they have.

Therefore, I certainly think that in that particular respect the disclosure of pecuniary interests that is required under the Public Sector (Honesty and Accountability) Act, at least on the surface—and again, the caveat is that I am not a lawyer—would appear to be that it goes a step further than what is required of us. It has been an interesting debate over the years about the disclosure of interest of members of parliament. If the Hon. Mr Parnell has one Santos share and the Hon. Ms Scriven has 100,000 Santos shares, why should the disclosure of interest be exactly the same? The Hon. Ms Scriven might be more influenced by a decision in relation to Santos than the Hon. Mr Parnell might be because one share might not mean as much as 100,000 shares to the Hon. Ms Scriven.

However, that is the regime that this parliament has accepted for many years and I assume it is the same for local councils. I have not looked at it. It is actually different in that respect in relation to the Public Sector (Honesty and Accountability) Act, but that is not a public disclosure. That is something that has to be disclosed in relation to the particular board, and the minister has access to that in circumstances where there is a potential conflict of interest that needs to be resolved as well. So, there are two different mechanisms, and what the honourable member is seeking to do is to add a separate disclosure regime, which is a public disclosure regime, and, again, as I said earlier, it is completely unrelated to what occurs in other boards.

I disagree vehemently with the honourable member's view, which is that no-one or very few people would care about Funds SA. Trust me, you should speak to the tens of thousands of superannuants within the Public Service. I think they would be interested to know the honourable member's dismissive views about the importance of Funds SA or, indeed, the retired superannuants—the tens of thousands out there. They would be interested in the view that the Hon. Ms Scriven has, that this is not really as important as Infrastructure SA, which only advises.

It is the same thing with SA Water. SA Water's decisions impact on almost every South Australian. Again, the dismissive view that Infrastructure SA has more impact on South Australians out there than SA Water or Funds SA, or indeed ReturnToWorkSA, is a view that I strongly disagree with. I think they are all important boards but the difference is that Infrastructure SA makes recommendations; these other boards, in many cases, take decisions which impact on either all South Australians or tens of thousands of South Australians in relation to their superannuation earnings.

The Hon. C.M. SCRIVEN: I would like to place on the record that the Treasurer has misrepresented my comments in regard to those other boards. I will check the Hansard, but my recollection is that I referred to the awareness of those boards rather than their importance. That is a cheap political point that is not helpful to the debate.

The Treasurer suggested that this is adding an additional level of scrutiny, and I do not think that is a problem. Given the context we are in of the banking royal commission and the information that has come out of that, the level of trust people have in such institutions is probably historically at the lowest point it has ever been, certainly in my lifetime. So I do not think an additional level of disclosure of interests for a body that will make recommendations that have huge ramifications for the state is unreasonable.

We are constantly hearing the rhetoric around transparency and accountability, yet so far in this debate we are constantly trying to avoid a high level of scrutiny of the membership of the board. I cannot agree with the Treasurer's views.

The Hon. M.C. PARNELL: In the interests of advancing this debate—which has been a good and healthy one I think, and we are possibly now down to arguing over fairly fine detail—the position the Greens have landed on, having had further explanation and more information, is that the regime under the Public Sector (Honesty and Accountability) Act provides for proactive disclosure of pecuniary interests. There is a separate requirement for disclosure of actual or potential conflicts of interest, whether they arise from a pecuniary or a personal interest. As the Treasurer pointed out, that extends to associates of the senior officials as well.

We have got most of what the Hon. Clare Scriven sought to achieve through her amendments. I do not like the idea of having double or parallel systems of reporting and accountability, so the Greens' view is that we will accept the provisions of the existing law in the Public Sector (Honesty and Accountability) Act and will be opposing this amendment and the schedule related to it.

The Hon. J.A. DARLEY: For the record I will be opposing this amendment.

The Hon. F. PANGALLO: We will be opposing it.

New clause negatived.

Progress reported; committee to sit again.

Sitting suspended from 12:58 to 14:15.