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An evaluation of the NSW ICAC

Abstract
Among increasing calls for a federal anti-corruption agency, a review of the New South Wales
Independent Commission Against Corruption (NSW ICAC) is of particular relevance. The NSW ICAC
is arguably one of the most successful state government, anti-corruption agencies and it could
provide a useful template for the Commonwealth’s formulation of a federal integrity agency. This
report evaluates the effectiveness of ICAC in promoting integrity within the public sector, by
considering its performance in terms of coherence, capacity, and consequences (Smith 2005). While
ICAC has been credited with some improvements in the handling of integrity matters within the public
service, and attitudes to integrity more broadly, its ongoing capacity and independence are threatened
by existing financial and political processes. It is therefore recommended that an independent funding
model is established for ICAC with increased transparency and accountability, and with contingencies
which allow for fluctuations in corruption matters.
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Contents
Introduction ............................................................................................................................................ 3
The NSW ICAC .................................................................................................................................. 3
Evaluating integrity agencies ............................................................................................................. 3
Methodology .......................................................................................................................................... 4
Results and discussion .......................................................................................................................... 4
Coherence .......................................................................................................................................... 4
Capacity ............................................................................................................................................. 5
Consequences ................................................................................................................................... 5
Independence .................................................................................................................................... 6
Conclusion ............................................................................................................................................. 6
References ............................................................................................................................................ 7
Appendices ............................................................................................................................................ 8
Appendix 1 – Independent Commission Against Corruption Act 1988 .............................................. 8
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Introduction
The last few years in Australian politics has seen a proliferation of government scandals set alongside
an “erosion of public confidence in institutions” which has prompted calls for the creation of a Federal
anti-corruption agency (Hobbs & Williams 2017). Proposals put forth by the current Government have
been met with significant opposition amid concerns that the proposed agency lacks ‘real teeth’
(Remeikis 2019). This report turns its attention to the New South Wales Independent Commission
Against Corruption (ICAC). The NSW ICAC is arguably one of the most successful state level anti-
corruption agencies and could provide a useful template for the Commonwealth government.
This report aims to evaluate the effectiveness of ICAC against its primary goal as set down in the
ICAC Act 1998, which is “to promote the integrity and accountability of public administration.” A
framework of coherence, capacity and consequences, as adapted from Smith (2005), will form the
basis for the evaluation.
The NSW ICAC
ICAC was created in 1988 as “an independent agency that is accountable to Parliament.” (Audit
Office 2020, p. 15). ICAC’s main goal is “to promote the integrity and accountability of public
administration” through dual functions focused on investigation of and education surrounding
corruption. An investigation of ICACs constitutional powers is beyond the scope of this report,
however there is general agreement within the literature that ICAC’s extensive investigative powers
are necessary for performing its functions providing these powers are “tempered by human rights
considerations” (Cowdery 2017, p. 2).
Despite the current context, there is a lack of contemporary evaluations of the effectiveness of ICAC
in peer reviewed literature. Additionally, of the reports that do exist, few have considered both
qualitative and quantitative sources of data in their assessments. This report aims to address this gap.
Evaluating integrity agencies
There is currently no standardised way to measure the effectiveness of integrity systems. Most
evaluations tend to focus on whether agreed actions have been implemented and if the system is
providing “basic value for money” (Uhr 2005, p. 71). These are important considerations for a public
agency which sits within a larger political system with competing budget priorities and has a
responsibility to ensure that public funds are used appropriately (Smith 2005). However, quantitative
measures often fail to take into account the appropriateness or quality of activities performed, nor do
they consider “the broader constitutional setting” in which the integrity agency operates (Uhr 2005).
Smith (2005), alternatively, employs a framework focused on coherence, capacity and consequences.
This approach acknowledges the value of quantitative measures, like conviction rates and complaint
volumes, while also paying attention to “the manner in which the agencies operate” (De Sousa 2009,
p. 4). Qualitative approaches also focus on substantive outcomes and ultimately attempt to assess
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whether the integrity system has succeeded in “enhancing ethical standards, corruption resistance
[and] public trust in institutions” (Uhr 2005, p. 71). Neither quantitative nor qualitative methods are
without their disadvantages. However, by utilising both, it is possible to capture a more accurate
picture of the overall effectiveness of an integrity agency.
Methodology
The purpose of this report is to evaluate the role and effectiveness of ICAC in promoting integrity, by
considering Smith’s (2005) principles of:
• Coherence – a unified integrity system exemplified by cooperation between agencies and
systems of mutual accountability.
• Capacity – adequate resourcing, including sufficient staff and funding, which enables an
integrity agency to fulfill its obligations.
• Consequences – “the enhancement of integrity and, most importantly, of community
confidence in public administration” (Greiner 1988 in Cowdery 2017, p. 23).
Both qualitative and quantitative data has been utilised from several secondary sources and grey
literature including Annual Reports published by ICAC, the Audit Office of NSW (‘the Audit Office’)
and the Committee on the ICAC (‘the Committee’).
Results and discussion
Coherence
Within the NSW integrity system there is a reasonable level of coherence between agencies,
including ICAC. Smith (2005) notes that formal referrals, cooperation on investigations and staff
movements between agencies are all relatively common, at least among major agencies. Additionally,
ICAC has created a national anti-corruption intelligence network made up of state integrity
commissions to share ‘strategic’ information identifying integrity trends and risks (Parliament 2020).
Smith (2005) notes, however, that there are legal, budgetary, and political barriers to achieving
greater coherence between agencies. The NSW Privacy Act, in particular, poses a legal barrier to
information sharing between agencies (Smith 2005, p. 58). While budgetary bodies are often reluctant
to fund inter-agency efforts (Smith 2005). The level of coherence that exists among NSW integrity
agencies may, in fact, be sufficient as it is important for agencies to retain some element
independence (Sampford, Smith & Brown 2005).
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Capacity
Both the Audit Office and the Chief Commissioner have raised concerns regarding the ongoing
suitability of ICAC’s resourcing. There are three main issues which point to ICAC having insufficient
resources to fulfill its obligations, including:
• for four of the past five years, ICAC’s expenditure has been higher than its revenue despite
consistent demand for both investigative and preventative actions (ICAC 2020).
• ICAC has repeatedly made requests to the Cabinet for additional funding to hire extra staff
which have been denied (Audit Office 2020).
• the Chief Commissioner has noted that budget cuts forecasted for late 2021 are substantial
enough to “have a drastic impact on all of the work of the Commission” (ICAC Committee
2020).
Conversely, a respondent in Smith’s (2005, p. 59) study notes that while additional resources are
always helpful, even with significantly greater funding it is unlikely that agencies will “get it all done.”
Indeed, one of the criticisms the Audit Office raised with ICAC is that it does not adequately
demonstrate that it delivers its functions “in the most efficient way possible” (Audit Office 2020, p. 23).
Nevertheless, as Cowdery (2017, p. 31) notes, funding cuts are “an easy way for government to
impair the effectiveness” of integrity agencies and should be taken into consideration.
Consequences
It is difficult to measure the precise impact that an individual integrity agency has on the integrity of
public office, however general opinion seems to be that integrity has improved since ICAC was
created in 1988 (Bersten & Hogg 1990; Smith 2005). A survey conducted by Smith (2005, p. 60)
found that most senior public servants believed that integrity issues were generally handled well by
government agencies and that this is, at least partly, attributable to the “expectation of third part
scrutiny by the ICAC”.
Whether this is a result of ICAC’s investigative powers, or its educational initiatives however is open
to debate. ICAC’s figures for corruption exposure activities in 2019-20 show that less than one
percent of the 2,416 matters received by ICAC resulted in investigations or public inquiries (ICAC
2020). This perhaps points to the fact that integrity agencies have a normative role to play as much as
a coercive one. One respondent in Smith (2005, p. 59) notes that integrity agencies “encourage the
public sector to take responsibility for their integrity issues”. In fact, there is general agreement that
the motivation for integrity reform must come from within an organisation in order to be successful
(Cowdery 2017; Smith 2005).
Another key measure of the success of an integrity agency is the “enhancement … of community
confidence in public administration” (Greiner 1988 in Cowdery 2017, p. 23). Trust in governments can
fluctuate significantly depending on a range of social and political factors, thus it can be hard to isolate
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the effect of a specific integrity agency. Nevertheless, Cowdery (2017, p. 8) notes that ICAC has been
successful in winning “broad political, public and media support.”
Independence
In addition to the criteria above, the independence of ICAC from government is crucial to ensuring
ICAC can fulfill its anti-corruption role. While the independence of ICAC is assured in legislation (see
Appendix 1 – ), in practice this can be compromised by political processes. Some of the issues raised
in the literature include:
• the lack of transparency and independence in existing financial arrangements. Decisions
about ICAC’s annual appropriation are made by Cabinet and therefore not subject to scrutiny
(Audit Office 2020). Furthermore, there is the risk that those who make budget decisions
could themselves be involved in an ICAC investigation (Audit Office 2020). Moreover, there is
no formal mechanism for applying for additional funding. ICAC makes requests to the
Department of Premier and Cabinet (DPC) and, in some cases, to the Premier directly (Audit
Office 2020).
• the ability of government to curtail ICAC’s scope, as was the case in the aftermath of the High
Court decision of ICAC v Cunneen [2015] where an additional clause was added to the
legislation limiting ICAC’s jurisdiction to investigations of ‘serious’ and ‘systemic’ corrupt
conduct (Cowdery 2017).
• the restructuring of ICAC’s executive from one to three commissioners in 2016 by the Baird
Government in what was viewed as “a retaliatory measure against the Commissioner for
investigating Liberal MPs for electoral misconduct” (Ankamah 2019, p. 491).
Conclusion
The outcomes of integrity agencies are difficult to measure, however there is general agreement that
success cannot be measured by the number of convictions alone (Bersten & Hogg 1990; De Sousa
2009). Rather, “the measure of [ICAC’s] success will be the enhancement of integrity and, most
importantly, of community confidence in public administration in [NSW]” (Greiner 1988 in Cowdery
2017, p. 23). ICAC is part of a coherent integrity system which values cooperation between agencies.
Considered in isolation, the scrutiny of ICAC has contributed to improved handling of integrity matters
within the NSW public service and has, ultimately, been successful in winning “broad political, public
and media support” (Cowdery 2017, p. 8; Smith 2005). However, the capacity and independence of
ICAC is threatened by a lack of transparency in existing financial arrangements and potential
interference by the Government. It is therefore recommended that an independent funding model is
established for ICAC with increased transparency and accountability, and with contingencies which
allow for fluctuations in corruption matters.
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References
Ankamah, S.S. 2019, 'Why do “teeth” need “voice”? The case of anti-corruption agencies in three
Australian states', Australian journal of public administration, no. 4, pp. 481-96.
Audit Office of NSW 2020, The effectiveness of the financial arrangements and management
practices in four integrity agencies, Sydney, NSW.
Bersten, M. & Hogg, R. 1990, 'ICAC and NSW Inc. 18 Months On', Legal Service Bull., vol. 15, p. 251.
Cowdery, N. 2017, 'Lessons from the NSW ICAC: 'This watchdog has teeth'', paper presented to the
Accountability and the Law Conference 2017, Canberra, 17 August 2017, viewed 10 July
2021, teeth/>.
De Sousa, L. 2009, 'Does performance matter to institutional survival? The method and politics of
performance measurement for Anti-Corruption Agencies'.
Hobbs, H. & Williams, G. 2017, 'The case for a national whole-of-government anti-corruption body',
Alternative law journal, no. 3, pp. 178-83.
Independent Commission Against Corruption 2020, Annual Report 2019 – 2020, viewed 10 July 2021,
< https://www.icac.nsw.gov.au/about-the-nsw-icac/nsw-icac-publications/nsw-icac-corporate-
publications/icac-annual-report-2019-20>.
Independent Commission Against Corruption Act 1988 (NSW) No 35 (Austl.).
Committee on the Independent Commission Against Corruption 2020, 'Review of the 2018-2019
annual reports of the ICAC and the Inspector of the ICAC', Committee on the Independent
Commission Against Corruption, Sydney, NSW.
Parliament of NSW 2020, Review of the 2018-2019 Annual Reports of the ICAC and the Inspector of
the ICAC, Sydney, NSW.
Remeikis, A. 2019, 'LNP MP may cross floor over federal integrity commission legislation', The
Guardian, viewed 16 July 2021, news/2019/nov/21/lnp-mp-may-cross-floor-over-federal-integrity-commission-legislation>.
Sampford, C., Smith, R. & Brown, A.J. 2005, 'From Greek Temple to Bird's Nest: Towards A Theory of
Coherence and Mutual Accountability for National Integrity Systems', Australian journal of
public administration, no. 2, pp. 96-108.
Smith, R. 2005, 'Mapping the New South Wales public integrity system', Australian Journal of Public
Administration, vol. 64, no. 2, pp. 54-61.
Uhr, J. 2005, 'How do we know if it's working?', Australian Journal of Public Administration, vol. 64,
no. 2, pp. 69-76.
Word count (body of report): 1644
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Appendices
Appendix 1 – Independent Commission Against Corruption Act 1988
The following excerpts have been taken from the ICAC Act 1988 (emphasis added):
2A Principal objects of Act
The principal objects of this Act are:
(a) to promote the integrity and accountability of public administration by constituting an Independent
Commission Against Corruption as an independent and accountable body:
(i) to investigate, expose and prevent corruption involving or affecting public authorities and
public officials, and
(ii) to educate public authorities, public officials and members of the public about corruption
and its detrimental effects on public administration and on the community, and
(b) to confer on the Commission special powers to inquire into allegations of corruption.
12A Serious corrupt conduct and systemic corrupt conduct
In exercising its functions, the Commission is, as far as practicable, to direct its attention to serious
corrupt conduct and systemic corrupt conduct and is to take into account the responsibility and
role other public authorities and public officials have in the prevention of corrupt conduct.