Murray McCully National Party MP

19 December 2005

Report shows a saga of monumental incompetence

The report of the Auditor-General into Health Ministry contracting released today is "a saga of incompetence on a monumental scale," and shows a Ministry in "total disarray," according to the MP who originally complained to the Auditor-General, National's Murray McCully.

The investigation focused on 60 contracts awarded to two former Ministry officials, trading as Allen and Clarke, worth over $1.5 million. Only 4 of the 60 contracts were the subject of competitive tenders.

Mr McCully says the Auditor-General's report shows the Ministry, which receives nearly $10 billion a year from taxpayers, "does virtually nothing right".

"The report points to inadequate contracting rules, breaches of those rules that do exist, internal auditors being ignored, a lack of competent staff, breaches of conflict of interest rules, a failure to ensure value for money, a lack of monitoring of contractors' performance, and a lack of ministry records.

"Indeed, the report states (pg 20) that the absence of files on the Allen and Clarke contracts meant the Auditor-General's staff were 'presented with files that had been created recently and specifically for the purposes of our inquiry'." Mr McCully is highly critical of the fact that the initial eight contracts were awarded to Allen and Clarke by the Ministry of Health while both were still employees of the ministry.

"If ever there was proof of the unhealthy and incestuous relationship between key figures in the Ministry and this firm, it lies in the fact that the initial contracts were awarded while they were both still insiders as employees of the Ministry. The awarding of 60 contracts to Allen and Clarke over four years, only four of which were the subject of competitive tender, demonstrates an unwholesome, unprofessional, unethical culture within the Ministry. The circumstances described by the report of the Auditor-General are a perfect breeding ground for corruption and abuse."

The report, which contains 17 specific recommendations for changes within the Ministry, follows an investigation which began in April this year. The then Health Minister, Annette King, took seven months to answer a Parliamentary question for written answer, provoking the intervention of previous Speaker Jonathan Hunt. The initial answer, detailing 24 contracts between the Ministry and Allen and Clarke, was corrected three times as the Auditor-General investigated, with a final total of 60 contracts being listed.

"It is especially galling that this matter began with a barefaced attempt to thwart the accountability of the Ministry to Parliament. The fact that the previous Minister allowed herself to become complicit in a cover-up on this scale is to her eternal discredit.

"If it had not been for the intervention of the Auditor-General then, as the result of the total failure of the Minister to perform her duties, this matter would have been swept under the carpet. Parliament can have no confidence in a Ministry that is guilty of such sustained evasion and calculated deceit," says Mr McCully.

"I have previously raised the matter with the State Services Commissioner, who decided to await the Auditor-General's report before taking the matter further. Today I am demanding that the Commissioner take action to restore public confidence in the Ministry and its systems."

ENDS

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