Yesterday, 12 November 2020, Jenny Leong MP introduced a bill to stop the corrupt tendering practices that have been exposed at the workers compensation nominal insurer iCare.
"There is no question that icare has been a disaster. In day after day of hearings at the recent Standing Committee on Law and Justice inquiry we heard evidence of extraordinary levels of mismanagement at the workers compensation insurer, icare. The Liberal‑Nationals Government and the Treasurer in particular would like to sweep it under the rug, but we cannot allow that to happen. The icare scandal has exposed a problem with our laws in New South Wales: a loophole that has allowed a greedy few to game the system for their own financial benefit and that has exempted icare from the normal integrity rules that apply to public sector tenders. The consequences have been the misuse of an immense amount of public funds and the failure to care for tens of thousands of New South Wales workers who got sick or were injured on the job. It is crucial that we close that loophole. The Public Works and Procurement Amendment (Workers Compensation Nominal Insurer) Bill 2020, first introduced in the other place by my Greens colleague Mr David Shoebridge and supported by the Legislative Council, now comes to our House for consideration.
It is clear that there is a loophole that must be closed. While I acknowledge that there is an inquiry still ongoing in relation to those broader scandals, it is absolutely important that we act now. The bill sets out to close the loophole to ensure greater integrity and transparency in the way funds are set aside to help injured workers. Icare is responsible for somewhere between $17 billion and $18 billion in trust for the purpose of paying out compensation to injured workers in New South Wales. Some of that money has been supplied by employers in New South Wales who have done the right thing to ensure that if their workers are injured in the course of their jobs they can be adequately cared for, live with dignity, have their medical costs and lost wages covered and be supported to return to work wherever they can. But asFour Corners reported back in July, and as has been revealed during the inquiry, that is not what icare has done. Instead it has funnelled hundreds of millions of dollars of public funding into the pockets of its mates and has underpaid injured workers by upwards of $80 million.
It is absolutely crucial that we act quickly to put in place the measures that are enacted by the bill to make sure that this type of scandal does not continue. The object of the bill is to amend the Public Works and Procurement Act 1912 and the Workers Compensation Act 1987 to provide that the Workers Compensation Nominal Insurer is a government agency for the purposes of part 11 of the Public Works and Procurement Act. Part 11 puts in place clear obligations on government agencies in relation to the procurement of goods and services, such as transparent tenders and public notifications of contracts. That sounds pretty standard. Without these elements, as we have seen and as was probably predictable in the case of icare, tender processes which represent huge sums of public money can easily be corrupted.
It is vital that if millions of dollars of public money are to be transferred into private hands via contracts that a process is in place to ensure that it is done fairly, transparently and most importantly in the interest of the public. This is what the people of New South Wales expect—and rightly so. The bill amends section 162 of the Public Works and Procurement Act 1912 to include unambiguously in the definition of "government agency" the "workers compensation nominal insurer", which was established under section 154A of the Workers Compensation Act 1987. This change closes a loophole. It puts in place a transitional provision, new section 179, to avoid causing contractual uncertainty. New section 179 provides:
This Part does not apply to an agreement for the procurement of goods and services entered into by the Workers Compensation Nominal Insurer before the commencement of thePublic Works and Procurement Amendment (Workers Compensation Nominal Insurer) Act 2020.
Finally, this bill amends the current provision in the Workers Compensation Act 1987 in section 154A, which expressly states that the nominal insurer is not covered by the Public Works and Procurement Act. As we heard in the inquiry, the loophole that this bill seeks to close has allowed for $1 million to be given to the wife of the former icare CEO under a contract that never went to tender—and that is just one example of many. We also heard about the millions of dollars that were handed over to a corporation owned by an icare employee and his son—a corporation with no history in the field—to craft the net promoter score, which was later used to give the icare executives staggering bonuses. That contract was awarded without a tender process.
In his speech in the other place, my Greens colleague David Shoebridge listed many more examples like those, all of which highlight the urgent need for this bill in order to put an end to the shocking misuse of public funds that has gone on within icare under the nose of the New South Wales Treasurer for several years. It is worth noting that the Treasurer is not present in the Chamber, is not engaging with this process and is trying to distance himself from the scandals and despicable behaviour we have seen from icare in recent times. In fact, back in February, in response to immense pressure from The Greens, NSW Labor—and I note that the Hon. Daniel Mookhey is in the gallery—Unions NSW and the media, icare finally published dozens of contracts worth more than $150 million on the New South Wales contract database. Some were more than two years old and none had been disclosed within the required 45 working day period. There were contracts worth $118 million that had never been put to tender.
The extent of this scandal continues to unfold. Just two weeks agoSydney Morning Herald journalist Adele Ferguson—who has worked tirelessly to shed light on the issues at icare, and I acknowledge her work in exposing these scandals and corrupt conditions—reported on another raft of contracts that were awarded on the basis of rushed or sham tenders. The tender process for a $360 million contract to build a new claims and billings platform, for example, took less than three weeks—a time line so rushed that several credible vendors pulled out, leaving the Guidewire and Capgemini consortium, which had a close association with then icare CEO Vivek Bhatia, the only valid candidate.
Let us go with that for a second. We are talking about a tender process for a $360 million contract to build a new claims and billings platform that took less than three weeks. The only valid candidate was a consortium that had close associations with former icare CEO Vivek Bhatia. According to statements made by brave whistleblower and former icare employee Christopher McCann, when concerns were raised with Mr Bhatia about this contract in particular he yelled and swore at Mr McCann, banging his fists on the desk and denying that his friendship with the owner of Capgemini was a problem. Mr McCann was then forced out of icare—the result of an ongoing campaign of bullying and intimidation—and forced to sign a confidentiality agreement, which he bravely breached in order to expose the truth.
According to reports from journalist Adele Ferguson, documents show that at least one of the alternative bidders, FINEOS, wrote to icare just before the deadline to warn icare that it was pulling out of the time line because it was "extremely aggressive" and "unrealistic" for such a complex and lucrative project. It said that continuing to participate and meet the deadlines posed a reputational risk, but icare proceeded regardless. Unsurprisingly, the $360 million new claims and billing platform was ultimately a disaster, leading to huge problems for injured workers in accessing assistance. In fact, it denied service and payments to thousands and led to a huge decline in return-to-work rates—a key indicator of how workers compensation schemes are performing.
Let us remember that the kind of deals and arrangements that have been taking place under the nose of the New South Wales Treasurer have been happening within a body that should be supporting and protecting injured workers and providing assistance and support. Instead, what we are seeing is hundreds of millions of dollars of dodgy tenders and scams being handed over to mates of former CEOs and family members of those associated with icare. Government members talk about integrity and the idea that people in New South Wales are struggling and need all the help they can get to make ends meet, and the Treasurer will come in here next week and pretend that he is delivering gifts to the people of New South Wales because he cares about them and is somehow providing them with support. But at the same time, right under his nose and at this very moment, this kind of practice is going on and millions of dollars of public money—money that should be going to injured workers in this State—is being handed over to family members and close business associates of people who are just simply in it for their own interests and for making a buck. That is truly disgraceful.
Group Executive Rob Craig took home a total salary of $870,878 this year in wages and bonuses. Then chief executive John Nagle was paid a base salary of $700,000 in the 2018-19 financial year, plus a $106,000 long‑term performance payment. These icare executives were likely the highest paid in the New South Wales government sector. Let us think about that for a minute. Let us think about the fact that one individual, Rob Craig, got a salary of $870,878 and John Nagle got a base salary of $700,000 and then another $106,000. That kind of money is clearly a problem. I do not care how hard a person works, no-one works hard enough to earn that kind of money and certainly these people did not deserve that kind of money when they were actually scamming injured workers in this State out of their rightful support and assistance to get back to work and to live with dignity and respect. It is nothing short of disgraceful.
All of the money for the wasteful contracts, the huge executive bonuses, the handouts to family and mates should have been going to New South Wales workers who were ill or were injured at work. That is why this bill is so important. Greedy and immoral executives should not be given the opportunity to pocket vast sums of public money that has been set aside for vulnerable people who rely on this support to survive. That is why it is urgent that this bill is passed. While an inquiry is still going on, it is crucial for us to recognise that these dodgy deals, favours for mates and greedy actions by immoral executives can continue to occur under the nose of the Treasurer. In fact, the Treasurer should be thanking us for this bill because it will pull them into line and stop them from tainting his record by his overseeing of this outrageous scandal, which continues to happen in New South Wales.
This bill is the culmination of months of exhaustive and forensic work. I acknowledge my Greens colleague David Shoebridge, MLC, and his team for the work they have done. I acknowledge NSW Labor's Daniel Mookhey, MLC, for the work that he and Unions NSW have done to push and to campaign publicly on this issue. I acknowledge all of them for their strong work in this area, as well as the forensic and investigative journalism by Adele Ferguson in exposing these scandals. We should not have a situation where these scandals have to be exposed. We should not require investigative journalists, members of the upper House and inquiries using public money and media resources to expose this kind of scandal. It should never happen.
The Treasurer should have noticed it and he should have investigated what was happening. Someone being paid $800,000 a year should have done their job and thought that handing out millions of dollars in contracts and tenders to mates was not an ideal practice. Instead, we have a "gotcha" approach to corruption in this State, which basically means that you can continue to do dodgy things until you get caught and then you apologise or you spin the situation in your favour. I am sick of it and the people of New South Wales are sick of it. They expect more from a government that should be using taxpayer money in the interests of the public to serve their interests. They are sick of people pocketing large salaries but failing to do the basics of their jobs—which, in this case, is supporting injured workers at an incredibly difficult time.
The bill needs to pass now. It has been informed by courageous former icare employees like Christopher McCann, who came forward to put his concerns on the public record through detailed statements to the regulator. On behalf of all members who want to see these problems stamped out through improved integrity standards, I sincerely thank them for their bravery in coming forward. The Parliament placed this loophole in public tendering controls five years ago, and it is the responsibility of members to fix it. We are at a point where icare executives need to be told explicitly by Parliament that the public money they control does not belong to them. They cannot use it however they like; they cannot give it to their wives, brothers or mates. They cannot hand out public money earmarked for injured workers to whomever they choose without due process.
Unless urgent action is taken, there is nothing to stop icare continuing in this manner. This vital legislation should have come from the Government, yet The Greens have introduced this bill. After all the evidence and all the revelations, the Treasurer has done nothing to stamp out these practices. In the absence of any action from the Treasurer, the Premier or the New South Wales Government at large, it is up to members opposite to put a stop to dishonest practices. That is why this bill must be supported. I do not want to hear Government members say that there is currently an independent or upper House inquiry underway. I do not want to hear about delays, because every bit of public money we have available in this State should be going to vulnerable people who need it and not well-paid executives and their family members making business deals. That is called corruption, and we should not stand for that kind of shit in this place."