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Thursday, 4 December 1986
Page: 3393

Senator TATE —On behalf of the Standing Committee on Constitutional and Legal Affairs, I present the report on the Commonwealth Ombudsman's special reports, together with the transcript of evidence.

Ordered that the report be printed.

Senator TATE —by leave-I move:

That the Senate take note of the report.

Under section 17 of the Ombudsman Act 1976, the Ombudsman is empowered to present to the Parliament special reports upon investigations into alleged misconduct by a department or a prescribed authority. He may transmit a special report after a reasonable time has elapsed since the Ombudsman furnished a section 15 report, and the Ombudsman has informed the Prime Minister that the department or authority concerned has failed to make a response which is adequate and reasonable in the circumstances. It was considered that the Parliament ought not to allow these special reports to go unnoted. Consequently, this Committee sought and obtained from the Senate a reference to enable it to consider and, if necessary, report on the Ombudsman's special reports.

The Ombudsman has exercised this power only twice. In September of last year he presented special report No. 1, the Cotton case, involving the Australian Broadcasting Corporation, and in May of this year he presented his second special report concerning the Industrial Sugar Mills case, involving the Department of Defence. On 22 August the Senate referred these two reports to the Committee.

The Committee held a public hearing on the two special reports on 22 October 1986. The Commonwealth Ombudsman, Mr Geoffrey Kolts, QC, attended the hearing to speak to the special report No. 1, that is, on the Cotton case. The Australian Broadcasting Corporation was represented by Mr Stuart Revill, the Acting Managing Director, and Mr John Muldoon, the Head of the Ministerial and Correspondence Unit. The Deputy Commonwealth Ombudsman, Air Vice-Marshal Jordan, attended the hearing to speak to the special report No. 2, on the Industrial Sugar Mills case. Mr Maurice Kennedy, Assistant Secretary of the Accounting Policy Branch, Department of Finance, attended on behalf of the Department of Finance.

There were significant developments in the Cotton case in the weeks and days leading up to the public hearing. The newly appointed Ombudsman, Mr Kolts, entered into negotiations with the Chairman of the ABC, Mr Hill, with a view to, as he put it `clearing the air'. These negotiations resulted in a statement being broadcast on an ABC program in Perth five days before the public hearing. The original Ombudsman's report had recommended that such a broadcast be made. Unfortunately, the text agreed upon and broadcast differed from that originally recommended, further upsetting the complainant.

In the event, the Committee recommends that the ABC take a step further so that the `spirit of compromise' recognises Mr Cotton's expectations based upon the Ombudsman's special report to the Parliament. The Committee does not regard the broadcast statement as being adequate in this regard. It is confident that, with the aid of the public hearing held on 2 October 1986, the ABC can quickly move to a definitive resolution of this matter.

There was some discussion in material before the Committee that Mr Kolts was not empowered to persist with his efforts once he had delivered his special report. The Committee therefore recommends that the Prime Minister (Mr Hawke) examine the Ombudsman Act in light of the Committee's comments about the role of the Ombudsman. If necessary, the Act should be amended to ensure that the Ombudsman's role is not exhausted by the presentation of a special report to the Parliament.

The circumstances of the Industrial Sugar Mills case were less controversial. It arose out of a contract which, as a result of a negligent misreading of a tender, was not awarded to Industrial Sugar Mills Pty Ltd by the Department of Defence Support. The Ombudsman investigated the matter and recommended that the Department pay compensation. The Department of Defence, after examining the facts of the case, agreed with the Ombudsman's recommendation. This would have involved an act of grace payment, pursuant to section 34a of the Audit Act 1901. The Minister for Finance (Senator Walsh), who is taking a keen interest in my delivery of this report, whose authorisation was required for such a payment, declined to authorise the payment.

After holding a public hearing and examining the documentation involved in this matter, the Committee believes that the facts of the case, wedded to the recommendations of the Ombudsman and the Department of Defence, amount to `special circumstances' within section 34a of the Audit Act 1901 and justify the making of an act of grace payment. Further, the Committee is of the view that the fears of the Department of Finance about the precedent quality of compensation to ISM as recommended by the Ombudsman do not constitute `exceptional circumstances' of the type contemplated by the Prime Minister as being sufficient to justify setting aside the Ombudsman's recommendation.

The Committee therefore recommends that the Minister for Finance reconsider his decision in the Industrial Sugar Mills case in light of this further examination of the matter by the Senate Standing Committee on Constitutional and Legal Affairs. I commend the report to the Senate. I seek leave to continue my remarks later.

Leave granted; debate adjourned.