The million-dollar AAT trap left by the Liberals.
Was it a bailout? How did the NSW government owned superannuation fund convince the federal Liberal party to sign a $58M building lease contract nearly 3 years early?
It is typical for contracts signed during a government’s term in office to extend beyond the next election date.
It is not common for contracts to be signed where the start date is after the next election. Minor administrative contracts are an obvious exception. However, the exception of the administrative contract applies to contracts commencing soon after the election.
Prime Minister Menzies first established the principle of not locking an incoming government into non-administrative commitments. Menzies did this by instructing his Ministers not to make new commitments (Grants or Contracts) during the caretaker period. A copy of his letter is below left. (Credit PMO & NAA)
I have previously written about the Liberal and National Party awarding $600,000 per hour in grants during the 2022 caretaker period. One of the most outrageous was Angus Taylor approving a $30M grant three days before the 2022 election. Below is a copy of the announcement made by Angus Taylor, along with the Media release made by the grant recipient.
The Liberal and National Parties have ignored these norms and signed many contracts that start months and years into the future. The chart below shows the number of contracts commencing each month from January 2023 onwards.
The extraordinary contract
One of the most egregious contract commitments is the $58M lease for the AAT at 83 Clarence Street, Sydney. The contract does not commence until December 2025, almost three years after the election.
There is no apparent cost benefit in the new contract. The current contract costs $21.5K per day, while the future contract is $32K per day.
For years, Labor’s Attorney General has been clear that he would stop unqualified crony appointments and implement a merit-based appointment system. However, with a massive backlog of cases and unqualified appointments, it was no surprise to anyone, including the Liberals, when Mark Dreyfus declared he would abolish the AAT and start again.
Mark Dreyfus summarised the issues with the following quote:
“Australians rely on the tribunal to conduct an independent review of decisions by Commonwealth ministers and public servants. These decisions that can have life-altering impacts on people's lives, such as whether an older Australian receives an age pension, whether a veteran receives a service pension, whether a participant of the NDIS receives funding for essential support or whether a refugee obtains a visa.”
“The Morrison Government doesn't care about those Australians. To the Morrison Government, the Administrative Appeals Tribunal is there to serve the interests of the Liberal Party and its mates, not the interests of Australians”
Removing the deadwood would free up office space, and rebalancing the location of staff to existing sites, including those in other states, would enable considerable financial savings.
The Liberals have prevented these savings from being realised by locking in substantial costs for office space. Sydney has the most expensive office space in the country, and the AAT already has offices in cheaper locations. So the potential for cost savings would’ve been in the millions.
What are the rules?
Do the rules allow for this level of inefficient spending? The short answer is no. The Commonwealth has many rules, guidelines, policies & laws that govern public expenditure.
Property costs have a dedicated set of rules to ensure government spending is efficient and represents value for money. However, the rules governing property expenditure provide no apparent justifiable reason to sign this extraordinary contract.
Furthermore, the contract appears to contradict the requirements of the Public Governance, Performance and Accountability Act 2013. It is hard to see how a contract signed so far in advance could demonstrate the proper use a’ proper use and management.
Was this a response to issues arising from the Early Release of Super?
Was this a pre-emptive bailout stemming from the Early Release Superannuation policy?
Unlike most superannuation funds with massive positive net contributions, State Super operates as a closed benefit fund. Chief Executive John Livanas explains the consequence of this by saying he must,
“come to grips with how to manage a closed fund, in negative cash flow, with a membership nearing retirement and a long tail of defined benefit pension liabilities.”
Over three million people withdrew money under the COVID “Early Release Scheme”. Did this extensive depletion of assets in the closed State Superannuation fund create a future liquidity shortfall?
A further hint the financial stability of State Superannuation was below expectation could be included in Standard & Poor’s credit rating review. S&P specifically noted the government would bail out the organisation should it fail.
It would be astonishing if this were the reason for the creation of this extraordinary contract, but there is no apparent or logical reason to explain it.
Consequences or investigation
The list of obscene failures of public administration by the Morrison government is without precedent. A questionable $58M contract pales into insignificance when compared to Robodebt, Canstruct, Palladium, NBN, $40B JobKeeper waste, Color Coded spreadsheets, “Secret Ministries”, or many other scandals.
It is hard to imagine there is enough staff to investigate more than a small fraction of maladministration by the Morrison government. Before the corruption of Mainstream Media by the right-wing fascists’, issues like this would’ve been prosecuted in the court of public opinion.
Let us hope people do not forget the many examples of maladministration when the next election rolls around.
Thanks for reading my work - AusPolMate
Ten and a bit grand per day should help their "negative cash flow" situation fairly handsomely, you'd imagine :((