A rum state of affairs

As a new Premier of New South Wales Barry O'Farrell will face a mountain of challenges few leaders of governments in developed democracies face.

It's not just that O'Farrell will inherit a legacy of corruption, scandal and wasted taxpayer money, but the very structures of how government functions and the cultures around them in NSW are damaged. The problems are multi-layered and interconnected.

Two stories perhaps paint the picture. In the 'sex and money for planning approval' scandal that rocked the City of Wollongong, one developer who was interviewed early in the inquiry was genuinely surprised at all the fuss. In all the years the developer had operated in NSW, from his perspective, what he had done was simply 'normal business'.

Former NSW Federal Court Judge Marcus Einfield has just been released from jail after being convicted for making a false statement with the intent to pervert the course of justice. He was interviewed in 2009 as he drove to court to hear his sentence. In the interview he continued to profess his 'goodliness' and how much he stood up for the 'oppressed' in society. It was as if he hadn't even heard the words of the convicting judge who described his actions as striking "at the heart of the administration of justice."

The developer and Einfield both displayed a disconnect from reality and the normal morals and ethics of society - even when publicly caught in wrong-doing. It's a disconnect that's not isolated to individuals in NSW, but has spread through the administration of NSW government. Take some examples:

The NSW Independent Commission Against Corruption has described the corruption inside the NSW rail authority RailCorp as systemic. ICAC has been exposing the soliciting for and payment of bribes inside RailCorp since 1992. But ICAC says that RailCorp fails to fix the problem. In other words, RailCorp knows that corruption is embedded in its culture and practices - yet it's incapable of stopping the practices. This demonstrates a monumental collapse of normal public service systems of control and ethics.

Outright corruption displays the extreme end of damaged NSW public sector professionalism. But its ugly sides crop up in other ways. The NSW WorkCover Authority is a glaring case study:

Since 2008 WorkCover has been facing allegations of repeated bullying and harassment of its own staff. Yet this is the public service authority that is responsible for investigating, prosecuting and preventing bullying in NSW workplaces. In 2010 WorkCover was again accused of covering up evidence of internal bullying and another inquiry was announced. Early this year the NSW Greens claimed the problem continues and called for a parliamentary inquiry.

I'm not surprised to hear the bullying allegations. In 2006 I reported on the treatment of small business people in NSW being audited by WorkCover for workers compensation premium payments. I meet many small business people being audited, studied their files and can only describe the behaviour of WorkCover as allegedly that of harassment with WorkCover allegedly in breach of its own legislation.

One such victim was June Gibson. She's a grandmother and her husband was a bricklayer. WorkCover claimed other self-employed brickies he did jobs with were his employees. They moved against the Gibsons resulting in the loss of their house. They are now in rental accommodation - their retirement nest egg destroyed. WorkCover continues these attacks against small businesses today.

WorkCover is also responsible for NSW work safety prosecutions. Their behaviour is appalling. A senior NSW judge accused NSW WorkCover in the 'Gretley' case (2006) of engaging in 'persecution' rather than 'prosecution' and of 'having compromised the processes of this court'. When the High Court effectively found the NSW Occupational Health and Safety laws to be unconstitutional in the Kirk case (2010) the High Court also discovered, for example, that WorkCover had breached the Evidence Act. WorkCover has not demonstrably revisited prosecutions to undo injustices.

It is evident that the NSW WorkCover public service has lost its sense of justice, fairness, propriety and professionalism. It has descended into a dysfunctional environment where bullying and harassment both internally and externally toward the people of NSW is systemic. When I last wrote about this, NSW WorkCover responded seeking to defend their operations. But nothing they said seemed to reflect a grasping of the points I made above.

These two examples of severely dysfunctional NSW public service authorities are not isolated instances. They reflect a wider environment of a collapsed capacity within the NSW public service to undertake its public duties in a professional manner within a clear line of authority to cabinet and parliament. Instead what's on display are fiefdoms of unaccountable power acting as rogue institutions. Individual public servants of integrity and competence are as much victims of this as is the NSW public.

It's no wonder that the Keneally government found itself in trouble (again) a year ago when it announced plans to compulsorily acquire private homes to enable higher density residential development. It's as if the government and its urban taskforce authority hadn't even heard of the fundamental right to property ownership. This again demonstrated a disconnect from fundamental principles of justice that enable a settled and stable society to function.

There are many reasons for this state of affairs in NSW. Some are structural and some attitudinal.

On the structural side a major issue is the powers of the NSW Industrial Relations Commission. The IRC should not be thought of as an industrial relations body but rather a legal competitor to the Supreme Court of NSW and the High Court of Australia. The unique legislation of the IRC prevents anyone appealing its decisions to the Supreme Court or beyond, giving the IRC a unusual power not existing in any other state . But even though this was declared unconstitutional by the High Court in early 2010 (Kirk case mentioned above) no attempt has been made to change the legislation or the behaviour of the IRC. It continues as before.

What the IRC effectively does in NSW is to create a mask for anti-competitive and allegedly even corrupt 'mates' dealing making in NSW that sits beyond normal law. For example in the transport sector the public disclosure of dubious payments by businesses to union funds was only ever subject to a union investigation and never went further. The payments exceeded $1.1 million. Many other examples could be cited. The point is, that most of this dubious behaviour is only possible because it's done within the ambit of the NSW IRC, literally a law unto itself protecting 'inside' players.

This has allowed and even created a culture where a comparatively tiny segment of the NSW population operates within a protective bubble where 'normal' law has difficulty touching them. It's largely enabled what many refer to as the culture of Sussex St. This is the Sydney CBD street where NSW unions have their headquarters - but more - it's the area to where developers and sundry dealmakers gravitate to curry favour. Clutches of select lawyers and financiers massage deals through the unique NSW environment creaming off their fees as they go. It's 'business' NSW. It's the Sydney establishment. And as they go about their deal making they pontificate a claim to a high morality of protecting the disadvantaged. It's the same moral claim Einfield made as he went to jail.

There are other issues such as complex 'advisory' committee structures that seem to shadow every activity of the professional public service in NSW. The structures link strongly back to the Sussex St culture in a way that arguably calls into question the ability of the NSW Parliament to direct and control the activities of the public service. The complexity of this is enormous, but probably explains much of why the NSW public service has so much difficulty actually delivering what a government would want it to do.

What this amounts to is that the task facing O'Farrell is huge. The Sussex St establishment in it's many shadowy guises will have moved early and probably already be positioned to 'control' the new government. They are the establishment after all and will expect some cosmetic changes but nothing of real substance to upset their operations. This is Sydney remember, the home of the Rum Rebellion. The challenge for O'Farrell will be to assert the authority of the peoples' parliament and the duly elected Cabinet over the establishment that currently rules.