2016-05-03
Ms PENNICUIK (Southern Metropolitan) — I would like to make a statement today on the Independent Broad-based Anti-corruption Commission report entitled Operation Ord — An investigation into the conduct of officers of the Department of Education and Training, in connection with the use of 'banker schools' and related activities. This report outlines the conduct of Operation Ord, which has been complex and protracted due to the considerable subterfuge involved as well as constraints on the availability of financial data.
The report also outlines departmental practices, organisational culture and the failing of systems and controls which contributed to the corrupt conduct going undetected for so long. I might say that that state of affairs has been allowed to develop by both previous governments. We know that at least $6.3 million has been caught up in the corrupt payments and is likely to be considerably higher than that. Detailed financial analysis is still continuing.
There was mixed evidence of the involvement of principals and business managers in the conduct under investigation. However, there is evidence that certain of them at some banker schools received tangible benefits that at least by inference may reasonably be thought to have been related to their school's participation in the banker school practices. These benefits included bonuses, invitations to conferences or functions, overseas travel and promotion to more lucrative positions. The investigation obtained evidence that not only deputy secretaries but also regional directors used between one and five schools each as banker schools. I have to say that the concept of banker schools is highly questionable.
The report also found:
There was a significant lack of transparency in relation to funds transferred into and out of schools for these purposes. The lack of accountability and transparency clearly suited the purposes of certain senior officers, who were using the banker schools either corruptly or inappropriately.
And:
People who tried to challenge elements of this culture were sometimes subject to significant adverse consequences such as their positions being made redundant, being sidelined or being denied salary increments.
IBAC also considered there to be an acute public interest in this issue:
Many parents and other school community members are also members of school councils. It appeared likely that school councils of certain banker schools had approved expenditure that included payments of false invoices. Many cheques or approvals for those payments were countersigned by a school council member who was not a department employee (usually a parent).
There was thus considered to be substantial interest among a wide cross-section of the Victorian community in exposing any misapplication or waste of those limited resources —
in the education department —
and the weaknesses in the processes and systems that allowed that misapplication to occur over an extended period of time. In particular, members of school councils who may have unwittingly facilitated the misapplication of department funds have a compelling interest in understanding fully how their trust in the system may have been misplaced.
Page 94 of the report says:
The autonomy provided to schools may also have led to questionable conduct including recruitment of family and associates, and inappropriate purchasing.
There was evidence that:
… schools were encouraged to be autonomous but they did not necessarily have the skills or resources to govern themselves in a way consistent with the expectations of public servants.
The new Secretary of the Department of Education and Training, Ms Callister, agreed 'that there is something of a divide between those working in the department' and 'has recognised this was a problem'.
I have to say that this report highlights the risks associated with devolving financial decision-making to schools without the appropriate training and resources for the staff at schools, for principals who may be trained teachers but are not trained in financial management and also for volunteers, who include parents and others. This devolving of financial decision-making to schools was coupled with a general lack of transparency as to the expenditure of public funds by the department, particularly regarding capital works. Increasing school autonomy has been touted by all governments, with little or no evidence, as improving educational outcomes. The risks to schools in terms of leaving them unsupported have been dismissed. However, increasing autonomy is also a financial risk and needs to be the subject of greater scrutiny and questioning than is the case now by the current government and previous governments. I recommend that people read this report because what has been allowed to go in the Department of Education and Training for many, many years is quite concerning.