Integrity experts have urged the Andrews government to act swiftly to tackle the risk of "grey corruption" by political staffers, after a damning report by the state's anti-corruption watchdog.
On Wednesday, the Independent Broad-based Anti-corruption Commission (IBAC) handed down its findings in Operation Daintree, which explored the awarding of a lucrative contract to a Labor-allied health union in 2018.
The commission found that senior political advisers working for Premier Daniel Andrews and two former health ministers interfered and pressured public servants to award the $1.2-million contract to the Health Workers Union, without a tender process.
"The combined effect of these failings and unethical conduct resulted in a contract that should not have been entered into with the union and an outcome [that] was not in the public interest," the commission found.
The IBAC found the behaviour of the advisers constituted "grey corruption", which it defined as "the bending or breaking of rules, even if that might not amount to criminal behaviour, but that unfairly favours the allies, friends and networks of decision-makers".
Call for overhaul of the IBAC's definition of 'corruption'
Retired Supreme Court judge Stephen Charles — who sits on the board of the Centre for Public Integrity — said the reason IBAC stopped short of a finding of corruption was because it was limited by Victorian legislation.
"The definition of corruption in the IBAC legislation requires that the conduct in question also constitute a relevant offence, so it has to involve criminal conduct as well as conduct which is objectionable," he said.
Mr Charles said it was "reasonably clear" from the report that the authors believed "that had there not been that definition in the IBAC legislation, the conduct would have been found to be corrupt".
"This is a very serious finding … it reflects very seriously on this government and its attitude to matters of integrity," he said.
He said the government needed to urgently overhaul the laws governing the IBAC, to bring its definition of corruption in line with that used by Transparency International, which is "the abuse of entrusted power for private gain".
The IBAC report made 17 recommendations, many of which are focused on upholding higher standards of conduct by ministerial staff.
Several of them built upon recommendations made as part of Operation Watts, a separate IBAC probe that found "extensive misconduct" by Labor MPs, including nepotism, misuse of public resources and a culture of branch stacking.
On Wednesday, the premier said his cabinet would closely consider the recommendations made in what he called an "important educational report".
He said the staff referred to in the report no longer worked in government, but declined to comment on findings about the extent of grey corruption, saying "sweeping" points canvassed in the report were captured in its recommendations.
Premier hits back at claim of highly centralised power
The IBAC's report also expressed concern over an ongoing deterioration in the observance of political conventions, "which have affected the role and independence of ministers and their departments, and furthered the increasing influence of ministerial advisors and the centralisation of power in the PPO [Premier's Private Office]".
In her evidence to the IBAC, former health minister Jill Hennessy said she had seen a "significant expansion" in the number of staff in the PPO since she entered parliament in 2010.
The report said Ms Hennessy had observed the greater centralisation of power had occurred across several Westminster governments, partly in response to greater complexity in government, 24/7 media cycles and faster decision-making.
She told the IBAC this was fuelling short-term policy development and a "lack of policy ambition" and noted there was a power imbalance between ministerial office advisers and the PPO, which meant the PPO staffer would "usually win the day" in any dispute.
Former health minister Jenny Mikakos told the IBAC the PPO had "its tentacles everywhere" and there was "constant tension" between ministers' offices and the premier's office.
"Ms Mikakos, in her submission in response to the draft report, said that the Westminster tradition of ministerial responsibility was meaningless when minsters and their staff could be directed by others in government as to how to oversee their departments," the report said.
However, Mr Andrews told reporters he did not accept the former ministers' characterisations.
"Yeah, I saw their comments in the report," he said.
"I don't think that's accurate … [they were not] concerns that were ever raised to me in thousands of interactions with the two people you've just cited over 20 years and, in fact, longer than that, actually."
The premier said his office was working hard to deliver on its election commitments and he rejected the suggestion that power had been centralised.
"We're about getting things done … and I'll put it do you that I've got a pretty active understanding of how the show works," he said.
"It's my office."
The Victorian ombudsman is currently investigating claims that the state's public service has become unduly politicised during the Andrews government's time in power.
'Incredibly serious' issues for government to address
The opposition called on the premier to consider his position over the latest IBAC report making critical findings about the way Labor operated.
"This is just another example where the Labor government treat public money … as being for their private political use," Shadow Attorney-General Michael O'Brien told ABC Radio Melbourne.
"I don't know how the premier can just dismiss all this and pretend that there's nothing to see here."
The Greens seized on the report to renew calls for ministerial diaries to be published, a measure previously backed by the IBAC to provide more transparency around lobbying.
Transparency International Australia chief executive Clancy Moore said the government must implement all 17 recommendations from the report in the next few months.
"The report highlights some incredibly serious issues," he said.
"It points to declining integrity standards in Victoria … these are all very serious issues which the government should address."
