National Anti-Corruption Commission: Risks for private businesses that deal with the Commonwealth

Background

The newly elected Labor Government has a clear political mandate for its federal integrity commission proposal, particularly given that it is also a priority of the Teal independents and the Greens. In his first press conference as Prime Minister, Anthony Albanese said he had already tasked the public service with developing the policy, which he plans to legislate before the end of 2022.

What will the integrity commission look like?

The Labor Party didn’t release a detailed proposal prior to the election, instead releasing design principles with a promise of post-election consultation. That consultation will have to start shortly if the Government is to fulfil the commitment to legislate before Christmas.

However, there are clear indicators of what the future body will look like, and of its powers.

Labor’s integrity body, referred to as the National Anti-Corruption Commission (NACC), will at the very least have:

• Scope to make findings of corruption according to a new standard encompassing conduct that falls well short of criminality;
• Power to investigate conduct that occurred before it was established;
• Power to hold public hearings and act on referrals from any source; and
• Discretion to begin inquiries of its own motion.

During the campaign, then Shadow-Attorney General Mark Dreyfus indicated the Labor model would be “extremely similar” to the legislation that crossbench MP Helen Haines had introduced into Parliament in 2020.

This means the NACC will create myriad challenges that private sector firms will need to understand and anticipate. The Haines model arguably extends NACC oversight to every employee of a federal government contractor. In that respect, it is the same as the previous Government’s draft integrity commission legislation (criticised by many as being too weak). We think it is almost certain a future Labor model will follow suit.

We have conducted a deep dive into the Haines Bill and compared it to the commentary and design principles of the Labor Party. Through this analysis we can identify the likely structure of the NACC and the risks to businesses.

Risks to Commonwealth service providers

Private businesses that deal with the Commonwealth Government will need to ensure they are familiar not only with the investigative powers of the NACC but also with the new standards of conduct that its enabling legislation imposes. Matters that once gave rise to no more than disciplinary action against employees will now likely be at risk of scrutiny in public hearings. Documents that were once protected by legal professional privilege may now risk disclosure to the NACC (and through it, to the public at large).

Large procurement programs, such as those in Defence, will almost certainly face the integrity blowtorch — and Labor has pledged that its integrity commission will have the power to look at conduct that occurred before the commission itself came into existence. The body will likely prioritise investigations into serious or systemic corruption, which in practice will mean scrutiny of contracts and services of significant monetary value. In addition to defence procurement this is likely to include infrastructure projects, ICT services and professional services such as consulting.

Any business that provides secondees to government, as well as contractors (and subcontractors) that provide services to government, will also need to ensure that staff are adequately trained and familiar with the new standards and oversight mechanisms, including any mandatory reporting requirements. Firms that hire from the public sector will also need to be mindful of real and perceived conflicts of interest likely to attract NACC attention.

What should businesses be doing to prepare?

Private firms coming within the net of a federal integrity commission will need to closely scrutinise any draft legislation and provide detailed, persuasive, policy-based solutions if they wish to influence legislative drafting during the Government’s promised consultation process. This applies particularly to businesses that may deal in sensitive commercial or national security-related fields.

Once a federal integrity commission is operational, federal government contractors will need to develop comprehensive education, training and compliance policies for staff engaging with Commonwealth bodies. They will also need to be vigilant in managing the legal and reputational risks arising from any integrity-related allegations or referrals to the NACC involving them or their employees.

About the authors

CLA is a public policy and reputational risk advisory firm founded by two directors, Tim Wellington and Daniel Ward. In 2022 CLA and Norton Rose Fulbright entered into a strategic alliance in order to offer integrated policy and legal advice.

Tim is a former Chief of Staff to the Commonwealth Attorney-General and Minister for Industrial Relations. Daniel is a former General Counsel to the Prime Minister. In these roles they were involved in many of the most sensitive and complicated integrity and anti-corruption policy issues at the Commonwealth level. They were also at the forefront of designing the previous federal Government’s proposed Commonwealth Integrity Commission and its draft legislation.