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Administrative Review Council - Admin Review |
THE CONTRACTING OUT OF GOVERNMENT SERVICES - FINAL REPORT: A SALUTATION
Robin Creyke[*]
I was delighted to be asked to speak on the occasion of the launch of the Administrative Review Council's Report The Contracting Out of Government Services[1]- not least because I had had a small - and I emphasise small - part to play in its gestation.[2]
That experience was sufficient to give me a healthy respect for the task that lay ahead of the Council. The Council was established to monitor the development of Australian administrative law.[3] The contracting out reference entailed work in areas not usually covered in Council reports or opinions. Not only did the Council have to assess the strengths and weaknesses of major areas of private law,[4] but it also had to take account, in a more direct sense than usual, of the current economic and policy objectives of government and, in particular, the devolution of government services.[5]
In congratulating the Council on its final Report let me say that I believe that the Council has managed to synthesise the disparate and unfamiliar sources into a workable document. The Report should ensure that private sector contractors adhere to those principles that the public has come to expect from government. In other words, as the President of the Council, Professor Marcia Neave, has said, the recommendations, if accepted, will mean that those high standards which we expect of the public sector - both as citizens and as taxpayers - will continue to be exhibited by the new private sector agents of government.
It has been common to hear administrative lawyers say that contracting out marks the end of the administrative law industry. Such doomsaying is premature and this Report indicates why. This Report will, I believe, make a significant mark on the debate - and it deserves to do so because it is a strategic document - in the best sense of those words.
When faced with the question - how is administrative law to respond to the program for contracting out government services, that is, how are these new, private sector providers of government services to be made accountable, the Council had at least three options:
• to rely on those remedies already existing in the marketplace - contract, consumer complaints mechanisms, or damages actions;
• to impose on contractors all the panoply of the existing administrative law remedies - access to merits review by tribunals, to the Commonwealth's privacy protection regime, to information disclosure under the Freedom of Information Act 1982 ('FOI Act'), to grievance handling by the Ombudsman, and to the public law remedies offered by the Courts; or
• to draw on aspects of both private and public sector remedies to construct a new accountability regime, always bearing in mind that certain minimum standards must be attained.
The first of the Council's strategic decisions was to choose the third option. In doing so, the Council has acknowledged four things:
• the increasing overlap between the public and the private sectors;
• that there are valuable aspects of the remedial machinery which exists in both regimes;
• that private sector contractors are more likely to accept accountability measures with which they feel familiar; and
• that the Council's focus should principally be on those who stand to lose most from changes to the modes of service-provision - ordinary citizens, not wealthy individuals or corporations.
That is not to say that others of the options are not useful in particular contexts. For example, governments generally have accepted that the welfare arm of government must remain a primary government responsibility. Hence, the second option - to impose the panoply of administrative law measures on private contractors as full agents of government - has already been adopted for the contracting out of decisions in income support matters by deeming those decisions to be made by public sector officers.[6] That is, therefore, not a major issue in this paper. The Report, for the most part, deals with services other than those in the employment and welfare sectors.
The second strategic decision was to emphasise the use of machinery from the 'lower end of town'. In other words, the Report recommends that citizens complaining about actions or decisions by private sector agents performing government functions should have access to the cheaper, quicker and most accessible of the remedies available in both the public and private sectors. Courts are to be used only as a last resort. That represents a considerable change from traditional public sector thinking about accountability measures. It is no accident that Chapter 6, which deals with review of decisions by courts and tribunals, occurs three-quarters of the way through the Report.
The focus of the Report is on complaint-handling. The Report recognises that what is at stake for consumers in contracting out is shoddy or non-existent service - the garbage which isn't collected; the meters which aren't mended; the fences which fall down; the land which subsides. The individual who is affected wants something done to rectify the situation and/or compensation.
In line with its dual public/private sector choice-of-remedies model, the Report recommends that citizens should avail themselves of the services of both government and industry specific ombudsmen. These private sector ombudsman have expertise and some, like the Telecom Ombudsman, are able to award compensation for damage.[7]
Alternatively, the Report suggests that a complainant could rely on the contractor's own complaint handling procedure - assuming one is in place - or on complaints-machinery within the agency which has contracted out the service. Complaint-handling measures of the kind promoted by Standards Australia are no stranger to the private sector. They have been embraced as industry best practice and are benchmarked accordingly. Behind this recommendation is an appreciation that accepting the obligation to make provision for complaints should not be onerous for contractors wishing to do business with and on behalf of government.
The third strategic decision was to offer expansion of the existing official Ombudsman's role as a fall-back remedy. Although willing to advocate use of appropriate private sector mechanisms, the Council has, wisely, been cautious. Many firms, just like many government agencies, do not yet have in place service charters, much less machinery for responding to consumer complaints. In those circumstances to recommend, as the Report has done, that for the present the public sector body, the Commonwealth Ombudsman, should be retained as the principal complaint management body, is unquestionably appropriate.
The Commonwealth and Defence Force Ombudsman is probably the best known and best accepted of the administrative law agencies. Evidence of the popularity of the model is that there are equivalent government positions in every State and Territory.[8] Ombudsmen are proactive, have the experience and expertise to handle large volumes of complaints, and are best able to assist complainants who have little or no funds to pursue other avenues. The Ombudsman can also recommend damages since the Office monitors the scheme for payment by agencies for minor damage up to $10,000.[9]
Where the private sector has less to offer than the public is in access to information. Competitiveness does not encourage information sharing and the culture of secrecy is alive and well in the marketplace. By contrast a right to access information held by government is now well established in this country. Freedom of information legislation applies in the Commonwealth and in every State and Territory except the Northern Territory.[10]
What does this mean in the context of contracting out? In seeking to complain about services not provided by a contractor, the citizen will be handicapped by an inability to obtain information about what the contractor has promised to provide or to have access to records which evidence poor service.
The Government has - in part - already conceded this deficiency. During its last term it had announced that amendments to the Privacy Act 1988 would permit access to personal information on citizens held by contractors.[11] It had even accepted that a citizen could use the FOI Act to obtain information about a privately offered service provided the contract with the government agency permitted.[12] Tying that right to the contract is, however, a deficiency in the proposal since it depends on the parties choosing to include the term in the contract. Despite the warning in 1992 by Mr Alan Rose, (immediate past) President of the Australian Law Reform Commission, that public lawyers had better brush up on their contract law,[13] six years later, that lesson is still being learnt.
For these reasons, the Report has gone further than the Government's proposed legislative changes. It has recommended that the FOI Act should apply to any information held by the contractor which is directly related to the contract, whether or not it is referred to in the contract. If that recommendation is implemented, it will mark a major breakthrough towards making contractors truly accountable.
At the same time, there are deficiencies even in the Council's proposal. The FOI Act presently permits sensitive commercial information to be exempt from disclosure.[14] These provisions are designed to prevent commercial competitors obtaining information about their trade rivals. The 'commercial in confidence' exemptions can be used to evade the access provisions. That means as one commentator has put it that:
contractors' obligations in relation to service quality standards, handling of complaints, employment and training of staff and many other matters of public interest may be removed from public scrutiny. Secondly, the internal operations of the contractor are not subject to FOI, unless government and public access to information by the contracting agency is specified in the contract. This diminishes ... Ministerial and public access to information ...[15]
The exemption also has the potential to close off large areas of services from public scrutiny and accountability.
The Senate Finance and Public Administration Reference Committee in its Second Report into contracting out had a solution.[16] The Committee recommendations would require the contractor to establish that the material is commercially sensitive. In other words, the onus of proof would be taken off the citizen.[17] A sizeable minority of the Council also advocated modifying the FOI Act to prevent these problems arising. It is unfortunate that these suggestions were not heeded.
The second problem relates to the keeping of records. There is no point in having access to information in the hands of the contractor, if that information does not exist. Contractors need to be encouraged to keep good records. That process will require their training and support, factors which have enhanced public sector performance because administrators have been exposed to them over many years. Formal processes and possibly institutions need to be established to achieve this outcome for private sector agents. A similar approach has been essayed in relation to the implementation of voluntary privacy guidelines by the Privacy Commissioner. The Report recommends that a Freedom of Information Commissioner should take on this task for private sector bodies in the records-maintenance area. If no monitoring body is appointed, the value of applying the access provisions of the FOI Act would be lost.
The Report has identified key areas in which best practice can be found in both public and private sector complaint-handling mechanisms. However, a perhaps unintended consequence of its production has been to expose the outdatedness of key elements of the administrative law package.
If the recommendations about expanding the Ombudsman's role to encompass private sector agents are accepted, the Ombudsman's legislation will need to be changed to embrace this new task. The Report also highlights the inability of complainants to use the existing laws permitting access to the Federal Court under the Administrative Decisions (Judicial Review) Act 1977 ('AD(JR) Act'), or to the Administrative Appeals Tribunal. The rules which presently govern access to these bodies reflect the former, much clearer distinction between the public and private sectors. The advent of contracting out cuts across those divisions. Already we have seen in Hughes Aircraft Systems International v Airservices Australia[18] that the Federal Court is 'chafing at the bit' over the restrictions in the tendering field. If it has not already been manifest, I predict that the same attitude will prevail in relation to contracting out. In my view, a profitable new reference for the Council would be to rethink the jurisdictional limitations presently embedded in the AD(JR) Act and the Administrative Appeals Tribunal Act 1975. Indeed, the ideal reference would also cover suggested changes to the Constitution section 75.
Many of the recommendations in this Report are tentative in tone. I believe that is appropriate. What is being recommended is the consummation of a marriage of public and private sector remedies. That relationship - as in the early stage of all marriages - is untested. Behind this union is a belief that the culture of service can match the culture of accountability. That belief needs to be tested, and there will be many, this writer included, who will monitor the developments over the next few years with considerable interest. At this stage, however, the marriage has the Council's blessing and good wishes. It also has mine. Let us hope that in time, it will receive the final legal blessing - the imprimatur of the Government's certificate of approval in its implementation of the recommendations in this Report.
[*]Reader in Law, Australian National University
Endnotes
1 Report No 42 (1998)
[2] The author was a consultant to the Council for a short period in early 1996 prior to the publication of the first issues paper, The Contracting Out of Government Services Issues Paper (February, 1997). The Council also published a second issues paper: The Contracting Out of Government Services: Access to Information Discussion Paper (December, 1997).
[3] Administrative Appeals Tribunal Act 1975 s 51.
[4] The Contracting Out of Government Services Issues Paper (February, 1997), chapter 3 (contract; tort; consumer complaints remedies).
[5] For example, Budget Speech and Statements 1 and 2 of Budget Paper No 1 1996-97 (1996); Industry Commission Competitive Tendering and Contracting by Public Sector Agencies Report No 48 (1996).
[6] Formerly see the Employment Services Act 1994 . See now the Social Security Act 1991 Pt 2.12.
[7] Telecommunications Industry Ombudsman Information: Introducing the Telecommunications Industry Ombudsman Scheme (December, 1997) at 12.
[8] ACT: Ombudsman Act 1989; NSW: Ombudsman Act 1974; NT: Ombudsman (Northern Territory) Act 1977; Qld: Parliamentary Commissioner Act 1974; SA: Ombudsman Act 1972; Tas: Ombudsman Act 1972; Vic: Ombudsman Act 1973; WA: Parliamentary Commissioner Act 1971.
[9] Financial Management and Accountability Act 1997; Financial Management and Accountability Regulations 1997 reg 9. See, in general, Department of Finance and Administration Circular No 1998/01 Ref: 97/3364 Commonwealth Policy for Handling Monetary Claims; The Scheme for Compensation for Detriment Caused by Defective Administration (November, 1997); Waiver of Recovery of Debts Due to the Commonwealth (November, 1997); and Act of Grace Payments (November, 1997).
[10] ACT: Freedom of Information Act 1989; NSW: Freedom of Information Act 1989; Qld: Freedom of Information Act 1982; SA: Freedom of Information Act 1991; Tas: Freedom of Information Act 1991; Vic: Freedom of Information Act 1982; WA: Freedom of Information Act 1992.
[11] (1998) 50 Admin Review 62.
[12] Ibid.
[13] The comment was made in response to a question to the Panel of speakers, including Mr Rose, then Secretary, Commonwealth Attorney-General’s Department, at the National Administrative Law Forum Administrative Law: Does the Public Benefit?, held in Canberra in April 1992. Mr Rose warned that increasingly citizens would need to rely on private, rather than public, law to protect their rights in an era of privatisation and corporatisation.
[14] Freedom of Information Act 1982, ss 41, 43, 45.
[15] P Ranald Contracting Commonwealth: Service Citizens or Customers? Public Accountability, Service Quality and Equity Issues in the Contracting & Competitive Tendering of Government Services Paper No 47 (1997, University of New South Wales, Public Sector Research Centre) at 18.
[16] Senate Finance and Public Administration Reference Committee Second Report into Contracting Out of Government Services (May, 1998).
[17] Id at 52.
[18] [1997] FCA 558; (1997) 146 ALR 1.
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