The flood recovery inspectorate – practical politics or weakness?

Yesterday Opposition Leader Tony Abbott said that the Coalition would do everything ‘humanly’ possible to bring down the Labor government. Today it’s off to a flying start, and its first target is the creation of a proposed ‘reconstruction inspectorate’ announced by Gillard.

The inspectorate is tasked with overseeing all federally-funded rebuilding projects, to make sure the money is spent wisely. Along with this new oversight body, Gillard said that the states would have to provide independently audited financial statements to support any claim on government funds to rebuild infrastructure.

She appointed former Liberal Premier and federal Finance Minister John Fahey to head up the inspectorate, which will have the power to examine contracts, inspect projects, investigate complaints and help develop tendering process and management systems. It would not duplicate the powers of the newly-created Queensland Recovery Authority, but rather provide a new level of checks and balances.

Fahey is joined by experienced managers from well-respected firms: Martin Albrecht from the mining and construction corporation Thiess and Matt Sheerin from financial firm Deloitte. Gillard also announced that Brad Orgill, who conducted the Building the Education Revolution inquiry, would join the Queensland Reconstruction Authority Board.

Abbott initially slammed the idea of an inspectorate. It was an unnecessary new level of bureaucracy, and proof that the government was addicted to spending. The government and Treasury should be able to handle this task.

But let’s take a look at this proposed inspectorate. This body is not designed to take the place of organisations that actually call for tenders, prepare the financial statements and carry out the rebuilding work. Their purpose is advisory and precautionary. In essence, Gillard created a think tank who, based on years of experience in finance and construction, has the power to prevent the kind of debacle that can result from poor oversight of a major project. The insulation scheme is a case in point.

And it’s headed up by a former Liberal MP. Why a Liberal? There are a few possibilities here, about equally plausible.

First, Fahey is eminently qualified. Over his political career he served at both state and federal levels, with considerable experience in handling major projects and large expenditures.

Second, he’s not a serving MP. He can be said to be politically disinterested.

Third, he’s a former Liberal Minister. He has no reason to co-operate in any potential cover-up of questionable or wasteful spending that might occur. In fact, he’s as close to above reproach as any politician is likely to get. Many would remember how, in 1994, he tackled a would-be assassin who tried to target Prince Charles.

Fourth, as a Liberal, his appointment can be said to show bipartisanship.

Finally, appointing Fahey – and the inspectorate itself, more generally – to oversee expenditure on such a sensitive project sends a message to Australians that the government understands that it needs to take care with public money. Indeed, Gillard herself hinted at this as the primary reason for creating the body.

Practically, there is no downside to the inspectorate, no matter where you place yourself in the political spectrum. If you think the government cannot be trusted with money, then the inspectorate is a way to pull them into line. If you think that, despite the best of intentions, things go wrong occasionally, then it’s an insurance policy. If you think that everything will proceed without a major hitch, then it’s a good advisory body to have around, and a talent pool on which to draw in making big decisions.

It may be that, overnight, the Coalition realised this.

This morning the Coalition dropped the attack on the idea of the inspectorate. Instead, the new message – faithfully repeated in Parliament House doorstops – was that Labor had simply acknowledged that the only person capable of managing money was a Liberal. Shadow Treasurer Joe Hockey was particularly pleased with the opportunity to expound on this. His grin got wider and wider as he drove home the point – repeatedly – that Labor has proved everything the Coalition has been saying about them. When media attempted to ask him about the – as yet non-existent – proposed Coalition spending cuts, he informed them that what they ‘should’ be reading and writing about was how Labor had effectively endorsed the Coalition as better economic managers.

The suggestion is ludicrous. The Coalition would have us believe that the government has knowingly dealt itself a death blow, by yielding the field on an issue that has been a point of attack for the Opposition, and an area of concern for the public. That Gillard would undermine fatally the government’s long-held stance that it can, and has, managed the economy well in very difficult times. That she would deliver a public slap in the face to Treasurer Wayne Swan and Finance Minister Penny Wong.

The idea has potential traction with the public, however. Based on the failure of the insulation program alone, many people are already inclined to view the Labor government as unable to manage money. That perception is helped along by the Coalition’s constant mis-reporting of the Orgill Inquiry into the BER program as an utter disaster. The reality is that less than 3% of schools had valid cause for complaint regarding value for money or quality of workmanship; nonetheless the message has stuck that the BER – like the insulation scheme – failed.

Given this predisposition, people might well believe that creation of the recovery inspectorate does represent confirmation of their fears.

But here’s an interesting point: remember the Australian Wheat Board scandal, when it was uncovered that agricultural companies were paying kickbacks to circumvent UN sanctions on the Saddam Hussein regime in Iraq during the Oil-for-Food program? And how the government’s Cole inquiry was unable to find any evidence that the Howard government knew, condoned or tacitly authorised said kickbacks? Professor Stephen Bartos at the University of Canberra presented a paper showing that lack of a ‘strong sceptical and dispassionate regulator’ was a key failure that allowed the illegal activities to take place – indeed, to flourish.

Far from proving a lack of economic management ability, independent oversight is a sensible, practical way of ensuring value for money. It has the bonus of being a political shield, but the primary benefit is protection of public funds and the needs of the flood disaster victims.

It remains to be seen whether Labor can effectively counter this new Coalition strategy. In doing so, they’ll have to tread very carefully. It’s always risky when governments acknowledge past mistakes and take steps to ensure they do not repeat them. Gillard’s initial announcement held a good mix of humility, sincerity and determination – but Abbott and the Coalition seem now determined to portray that as an admission of weakness and incompetence.

Sadly, it will probably come down to whose rhetoric is louder, repeated more often and makes for better sound bites. And the Coalition isn’t about to let up. If there’s one thing they know how to do well, it’s control the news cycle.

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4 Responses to The flood recovery inspectorate – practical politics or weakness?

  1. […] This post was mentioned on Twitter by Marian Dalton, Captain Slog. Captain Slog said: RT @crazyjane13: The Conscience Vote: The flood recovery inspectorate – practical politics or weakness? http://wp.me/pZfPj-7o #ausense … […]

  2. In terms of value for expenditure of public funds (which is the focus of the Coalition’s criticisms on the flood recovery), the insulation scheme was a failure. Money went to dodgy firms, more had to be spent on inspections, compensation, replacement, etc.

    The fact that regulation occurred, for the first time in some states, is something rarely mentioned, and worth reminding people. For the purposes of this blog, though, I wanted to focus on the monetary side.

    • Rockstar Philosopher says:

      Possum over at Crikey did a great post about the insulation scheme with figures proving how it saved lives (the level of installs went up by a factor of something like 100, the number of deaths by a factor of 4). That this message never got out shows how ineffectual the ALP are at selling themselves.

  3. Rhiannon Saxon says:

    That was good but I am not entirely sure why you repeated that the insulation scheme was a failure – house-fires per installation DROPPED as the industry became more regulated for the first time. Yes four deaths were HORRENDOUS but not actually out of proportion for industrial deaths in Australia – in fact it has been said (by someone I can’t remember or source so perhaps, ‘in hearsay in was said’ would be a better expression) that that is a very LOW number of deaths for the ceiling insulation industry.

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