SUBJECTS: Lavarch’s Interim Report from the review into the NSW Labor branch; public service shake-up; Government’s cuts to traineeships and apprenticeships.

ANTHONY ALBANESE, LEADER OF THE AUSTRALIAN LABOR PARTY: Can I begin by thanking Michael. Michael is an esteemed Australian, a former Federal Attorney General, someone who has expertise in governance issues and in organisational matters. And we were very pleased that Michael took up our invitation to lead this review. This is a comprehensive review. It will be released in full in the spirit of the review into the Federal Election campaign that we released a month ago. So, it will be able to be scrutinised by every Party member so that one of the things this is about is changing the culture of the New South Wales branch. But to change the culture you need to change some of the organisational structures. The recommendations that Michael has put forward have been adopted in full. They will go through a process now where they will go to the next meeting of the New South Wales Administrative Committee in February and between now and then, a series of rules and recommendations will be made. And that will go through the ALP National Executive meeting in February, using the plenary powers to impose these rules changes on the New South Wales branch that are about accountability, about transparency, about increasing democracy in the branch, and about ensuring that the mistakes of the past never ever occur again.
Can I go through just a couple of the matters? The new state Executive Board, that is a very important review, it will be responsible for the administration of the branch. And the New South Wales Administrative Committee will continue to play a role in political issues. As a part of that there will be a new Audit and Risk Committee, including four independent members potentially selected from outside the Party to provide an additional check and balance the reform of the way that the General Secretary and the two Assistant Secretaries operate and their accountability as well. We also have a recommendation that they will be, the General Secretary, will be barred from seeking elected office for five years from the date of their appointment as General Secretary. These reforms, these structural reforms, will ensure that the New South Wales branch never again commits the sort of mistakes that we have seen lead to embarrassment for ordinary Party members about the activities that have occurred in recent years. These are vital reforms. They have my support. And I'd ask Jodi to make some comments.

JODI MCKAY, LEADER OF THE OPPOSITION IN NSW: Thank you, Anthony. Can I also just thank Professor Michael Lavarch for the work he has done on this report. Before I make some comment as the state Leader, I do want to also acknowledge, and Anthony and I were just discussing this, the very difficult circumstances being experienced right across New South Wales right now as a result of the bushfires. We know that from the south coast all the way through to the border, we are experiencing very, very difficult circumstances. Now, I think both of us would rather not be talking about this right now. But we made a commitment to you that we would come back before Christmas with the Interim Report, which is what is before you now. As I said, Michael, I want to thank him for the work he has done. This is a good report. It is about sweeping changes to our Party. When Anthony and I announced this initially, we said that we wanted to let the sunshine in, that there were significant cultural issues within our Head Office. And I believe that this report will address many of those. It is a report that is detailed. There were more than 420 submissions received from our party membership, and that was during a short period of time. So, I want to thank all our P arty members who participated in this process as well. Their feedback has been included within this report. This report doesn't hold back. It clearly outlines some of the challenges that we face as a party, and then recommendations that are real and meaningful that will be implemented today. So, the Administrative Committee of our Party has met this morning. They've adopted all the recommendations. And now we set about making those changes within the Party structure. Can I also just reiterate the points that Anthony has made in regard to the key issues contained in this report. The General Secretary, for the first time, will have a position description and key performance indicators. They will be accountable. There will be transparency around the job that they do. And importantly, if they don't do that job, then they can be sacked. We have had a difficult time in the past. And I think what the events of ICAC showed is that we needed to have a mechanism in place that when the General Secretary didn't perform, didn't meet the expectations of our Party, that they could be released from that role. Under these recommendations, they can be. The General Secretary can be sacked by the State Executive Board and the Administrative Committee.
The State Executive Board is incredibly important because what it does is ensure that we have a focus on compliance and risk. It is all about governance. So, that has been removed from the Administrative Committee and is now in the hands of the State Executive Board. Importantly, and Michael will go into the details of this, there will be an Audit and Risk Committee. And what I like about this report is it also indicates that they do not have to be members of our Party. In fact, it would be my preference that they're not members of our Party, but they are skill-based. So, we've got the checks and balances through this entire process that we have been missing as a political party. I am so pleased that this report is being completed. It's an interim report, of course as Anthony said, the rules are now being drafted. It will go to the Administrative Committee in February. And then we've got the final report that Michael will present to us in in the future. That report will deal with things like our Labor Action Committees, which is like the Chinese Friends of Labor, so it will deal with issues such as that, but this is a really good report. It's comprehensive. It answers the questions that we needed resolved. And from this report, we will let the sunshine into our Head Office. It's professionalising our office. And I am thrilled with what this report contains. And I want to thank Michael for making sure that this was done quickly. It's comprehensive, and the recommendations and reforms are certainly sweeping. So, thank you to you, Michael. And I think we'll hand over to you to elaborate.

MICHAEL LAVARCH: Well, thank you very much, Albo and Jodi. What I found was that there was a significant gap between the culture and the aspirations of Labor members and the culture and the performance of the Head Office of the New South Wales branch. It was clear that the branch did need significant reform and it needed to overcome the problems that it had been facing over a number of years, once and for all. I'd like to think that the structures, the guiding principles, and the changes, which I've recommended, and I'm delighted to learn are going to be accepted, will place the branch with a foundation, which its Party members can be proud of, and will support the parliamentary parties in terms of their campaign to have Labor values and Labor policies adopted in the state and nationally.
In terms of the major recommendations, there's essentially two themes which run through the structural changes that have been proposed. The first is that there has to be a clear separation between the management of the office and the oversight of the office for way in which some of the structures had been constituted, was not leading to this clarity of management and oversight. That will be overcome through the establishment of the new structures, the State Executive Board, in which the senior managers of the Party, that is the General Secretary and the two Assistant State Secretaries will report to but will not be a member of. We will no longer have the case of management overseeing themselves, which was a fundamental weakness in the way in which the Party had been structured. This board, which will have a majority of skill-based members with expertise in law, organisational culture, in risk management, in finance, will be able to ensure that the Party's operation, in terms of all its public regulatory obligations, be those financial obligations or obligations which flow from the public funding of political parties, will come from the regulation of fundraising. And the requirement to disclose donations is being conducted in accordance with the law and indeed, in terms of best practice. And this will be a significant change to ensure that this oversight and assurance can be given. The further change is the development of the Audit and Risk committee which is made up of four independent members, that is completely independent of the management of the branch therefore not holding any state position whatsoever in terms of the Labor Party, not involved with any organisation providing any services to the state Party. Again, highly skilled, a forensic organisation, which essentially will be an internal probity auditor in the way in which the branch operates. Importantly, I've recommended, and it's been accepted that this committee will be authorised to go directly to the regulator, to the relevant regulator, if suspected illegalities are occurring, which the branch fails to deal with. And this will be a standard which will place the New South Wales branch of the Labor Party some distance ahead of any other political organisation, not only in this state, but in this country.
The second major theme that runs through is the separation of political administration and political decision-making from the regulatory oversight and compliance obligations of the Party. The Administrative Committee will remain, but its focus will be solely on political administration, Party pre-selections, election preparation, election reviews, and the like. All of the obligations in terms of ensuring that returns are made to the Electoral Commission, that all of the requirements in terms of the corporations’ law, in terms of the financial operations of the of the Party, all of those matters will go down the path of the state Executive Board and the Audit Committee. So, this division between the responsibility for the political side of the organisation and all of the regulatory and compliance side is a fundamental reform. Again, it gets rid of the confusion, and it removes the opportunity for there to be a confusion between management and the day-to-day running of things such as fundraising and the oversight in the scrutiny that that is occurring according to law and according with the best practices in terms of way which a political operation should operate. There will be significant change to the position and the operation of the General Secretary. The Party needs a CEO. The CEO needs to be appropriately empowered to run the organisation. But what the Party has lacked has been a proper definition of what the role is, proper delegations from the higher levels of the Party down from the conference and cascading down to the General Secretary. And then delegations between the General Secretary and the senior management team of the organisation, the two Assistant General Secretaries and the other senior officers, paid officers, in the organisation. I've also made recommendations in terms of things such as risk management, business continuity, delegations, registers of interest. These are all important reforms.
Finally, I've recommended a change into the power and the authority of the Party President to be an appropriate oversight of the General Secretary and the senior management of the organisation. The Party President plays a unique role, sort of a combination, if you like, between a chair of a board, and the Speaker of the Parliament. And just as the Speaker needs to be independent from the executive government, there needs to be an important independent of the President from the management of the organisation. And this will be enhanced both through changes around the job description, the authority and the delegation given to the President. But importantly, that the method of appointment for the President needs to be different from that of the secretarial level. And I'm pleased to say that that's been accepted through a recommendation that the President be elected by 75 per cent majority of the State Conference. This means that no one factional grouping will be able to determine the presidency. The President will need to have a broad support across the groupings in the Party and as a result, have that additional level of authority in terms of the oversight role that you expect a chair of a board to be able to play to a CEO. All of these changes collectively will position the Party in this state to operate lawfully for operating ethically, to focus its resources to the Labor aspiration of advancing our causes amongst the public policy debate, and to help get Labor governments elected. These are good reforms and I'm delighted that the Party has accepted them.

JOURNALIST: The State Executive Board, will that be made up of union leaders or union officials as the Administrative Committee is currently? And how many people will be on that board?

LAVARCH: The State Executive Board will comprise of nine members. Four of the members will consist of the Party President and the three Party Vice Presidents. That's four of the nine. The other five members will be selected on a completely skills matrix basis. And to ensure that, each of those persons will be elected requiring a 75 per cent vote by the State Administrative Committee.

JOURNALIST: Will they be members of the Party?

LAVARCH: The State Executive Board can be members of the Party, I would expect them to be members of the Party. The Audit and Risk Committee, which reports into the board, is a four-person committee and they will have those characteristics of independence I outlined before.

ALBANESE: If you're asking will it be business as usual? No.

JOURNALIST: Will the role of the General Secretary now be filled?

MCKAY: So, process today was the Administrative Committee considered the recommendations, accepted them in full. The rules that will see those come into place will now be drafted. I would expect that will go to the Administrative Committee again in February. And it's important we begin the process of electing a General Secretary, yes.

JOURNALIST: So, when do we expect for that role to be filled?

MCKAY: Well, I would expect that we won't say anything before February when the Administrative Committee considers the final rules and they open the call for nominations.

JOURNALIST: How have you ensured younger people in the Party office understand the new rules and that it is not business as usual?

MCKAY: Well, I think that's the process we now embark on. I think what we're saying today, Anthony and I standing up here with Professor Lavarch, is that things have to change. The culture starts from the top. And if we can change that, then that will ensure that in our Party structure, in our Head Office, that there is the behaviour that is expected of any workplace. So, I'm confident that will happen. I think it's important to remember that we have really good people in our Party and we've let them down. And this is about making sure that we rebuild trust with all our Party membership.

JOURNALIST: How can you be sure this will create real change? Because changing committees, and all these sorts of things, and giving the President more power is all well and good, and it's probably the right idea, but that doesn't necessarily translate when the similar sort of people end up in these positions, when the same sort of union leaders have a say, Mr Albanese. So, how can you give us an assurance this really will change?

ALBANESE: Because this is an organisational structural change which changes the power dynamic in the Labor Party. The fact is that people in the past have been able to use a majority 50 per cent plus one to argue the case, regardless the merits. When you change structures to ensure, for example, that the President has to have 75 per cent of support, you change the whole dynamic, you change the authority of the President, which hasn't happened in the past. Too much power has resided with the General Secretary. What these structures do by having the State Executive Board overseeing which the General Secretary and the Assistant Secretaries are not voting members, by putting in place that accountability, by assigning tasks for not just the General Secretary, but the two Assistant Secretaries, you change the whole dynamic which is there. You make it accountable. How is it, quite frankly, that some of the things that occurred is because there wasn't accountability. People didn't know about it. If people did know about it, you would have known about it and you would have reported, that's the truth. People did not know that these things were occurring. If you set up structures whereby people are accountable, where you have transparency, where you have including with the Audit Committee, people from outside the Party, with specialist skills, being able to oversee these activities, you will change the whole way that the Party functions. And that's what we want to do, because what the party organisation should be concentrating on is winning elections, getting Labor people elected doing it. Doing it in a way which complies with all of the obligations which are there.

JOURNALIST: How satisfying is it for you, as a former left Assistant Secretary, to give the left so much more power to the power of the New South Wales right through these reforms?

ALBANESE: Well, I've said for a long period of time that there was too much power placed in the Office of General Secretary of the New South Wales branch. It is true that that is not a new position for me to hold. And indeed, when we announced this review, I spoke about the concept of papal infallibility that was there in terms of the General Secretary not being able to be questioned. This changes that whole dynamic. This is a good thing, not for any particular grouping in the Labor Party, this is a good thing for the Labor Party as a whole. And it's a particularly good thing for the members of the Labor Party. Those people who don't get paid to do anything, who put things in letterboxes, who knock on doors, who make phone calls, who stand on polling booths from 8am to 6pm, local, state and federal, handing out how-to-votes just because they are passionate about the cause of Labor. My mom was a life member of the Labor Party. She joined when she was old enough to sign up and she was a member till the day that she died at age 65. She never held a single position in the Party. Not one. She wasn't a delegate to anything. She wasn't a Vice President. She was a member of Camperdown branch of the Labor Party. They are the sort of people who we can't afford to let down, those true believers. What this reform will do is make sure that the hierarchy of the Party keep faith with those people who believe, as I do, that Labor is the Party that represents the interests of the overwhelming majority of Australia.

JOURNALIST: Professor Lavarch, when it comes to illegal donations to the Party, which a lot of people are interested in, is the new Audit and Risk Committee going to be looking at any suspicious donations, all suspicious donations or does that go through some other process now?

LAVARCH: The day-to-day management of the Party is obviously by the paid staff, just as you'd expect with any organisation. The Audit and Risk committee will be, if you like, an internal probity board having a particular focus on all regulatory obligation, but obviously, particularly around the obligations regarding fundraising and disclosure of donations. They will receive and get reports from Governance Officer and Party administrators as to what is occurring. The board can go look itself. If it finds anything which it finds irregular, it will ask about it. If it finds anything it suspects could be illegal or improper in that sort of way, if it brings it to the attention and it's not dealt with, it can go directly to the regulator itself. So they will play an important role in ensuring that the sort of things which were revealed in the ICAC inquiry cannot happen again.

JOURNALIST: You accessed Operation Aero transcripts. What did you make of what you found in there?

LAVARCH: Yes, I did read. The ICAC is remarkably transparent in terms of its operations and it was one of the sources of materials that we looked at in terms of conducting a review. And I am mindful that ICAC has yet to report to make particular findings or recommendations. And indeed, my brief envisages that things may be revisited or further moved. I mean, it was quite shocking. It represented a distortion of what people have wrongly understood to be their obligations, that it was best to keep quiet about this and somehow it was in the Party's best interest to keep things quiet. Not even obviously taking the money in the first place but then when the matters were raised and requested clarification, that was not answered. So, I certainly took that evidence into account when making these recommendations.

JOURNALIST: Mr Albanese, you're arguing that it's no longer business as usual yet right now the Party is investigating branch stacking allegations against Laurie Ferguson and Julie Owens to state frontbenchers Julia Finn, and Linda Voltz. It's a hard thing to sell. What do you make of those four members?

ALBANESE: Well, those processes will take their place. But the brief that we have today is about making sure that the structural changes are being placed to make sure that Head Office is fixed so it is not business as usual and to make sure that there's transparency in regard to obligations and donations. What I would expect will occur as a result of this is real cultural change. Rules can change cultures. Because they impose a structure around which cultures operate. This is transparent. This will ensure there is accountability. And I would expect that will happen across the board in the way that the New South Wales branch functions. New South Wales branch historically has been a successful branch. We have been in Government in New South Wales for most of the last century. But, in recent times, the truth is that we've lost three state elections and three federal elections in a row. We need to do much better. This is a starting point for fixing that dynamic. With regard to federal issues, I intend to very much concentrate on them. I don't engage in the day-to-day activities of particular branches in every state and territory.

JOURNALIST: Any backlash any way along the line from the New South Wales right over these changes?

ALBANESE: This is a process where everyone, can I say this about my Federal colleagues, in the Federal Caucus from New South Wales. This is not a factional issue. People were shocked regardless of where they stand in the Party about what had occurred in New South Wales. And people were fully aware and very supportive of the change that was required. The National Executive has unanimously supported involvement in this process as well. And I would expect that there would be unanimous support at the National Executive in February for these rules changes.

JOURNALIST: How much confidence can Labor members have that this General Secretary role fundamentally changed? Kaila Murnain possibly would have met all those performance indicators?

MCKAY: There were no performance indicators.

JOURNALIST: But even if there were some implemented.

MCKAY: But this is the issue. There were no performance indicators. There was no position description. That's the problem and this report fixes that.

ALBANESE: And in addition to that, there was a culture whereby because the General Secretary had so much power, because the job wasn't defined in terms of what the tasks were, and what the responsibilities were, because there wasn't any independent oversight. You had a structure whereby people had an interest in not trying to hold the General Secretary to account because that might penalise their future career prospects. That's a culture which has applied for a long period of time. It is one which this seeks to address in a serious way. I was, frankly, surprised that Michael Lavarch didn't take two steps back when we asked him to undertake this task. This has not been done before. This branch will be the most transparent branch of any political party in Australia. New South Wales Labor. That will put New South Wales Labor in good stead. And can I say this, New South Wales Labor is also led by someone who's been to ICAC, putting people who've done the wrong thing in their place. Someone who stood up with integrity, in Jodi McKay. I am someone who has always stood up in the Labor Party over many of these issues, over a long period of time. I'm very confident about today's reforms. It's good that they've gone through the Administrative Committee. I think this represents an absolute turning point in the culture. Thanks very much.

JOURNALIST: On Scott Cam, do you think $345,000 for 15 months of work passes the pub-test?

ALBANESE: Well, people will make their own judgment about that. What they should also give consideration to though, is how this Government has cut TAFE. In one year by more than $300 million dollars, that there are 150,000 less apprentices and trainees today than there were when this Government was elected in 2013. I think that's the big issue. That's the big issue rather than any individual personality. But the appointment of a personality shouldn't also hide from the record of this Government, which is that they have a terrible record when it comes to apprentices and skills. And what they have relied upon is the importation of temporary labour from overseas for jobs that should have been filled by the young people doing apprenticeship or training, or by older workers being retrained in what would be new jobs for them.

JOURNALIST: Ms McKay given today's themes of transparency and a break with the past. Will you not consider stepping down your two frontbenchers who are under investigation by your own Party?

MCKAY: Can I just say they have my full confidence. What I will say is that my understanding is today the Administrative Committee has put on hold all membership renewals relating to five branches in that area. And there is an independent review which is now underway into those branches. But all membership, membership renewal, of five branches has been put on hold.

JOURNALIST: Mr Albanese are you concerned public servants will lose their job in this public service shake-up?

ALBANESE: Yes, absolutely. I'm concerned that public servants will have a pretty rotten Christmas not knowing what their future is. I'm concerned that five departmental heads lost their jobs yesterday, the same time as Angus Taylor has kept his. How many crises does this bloke have to be responsible for before he loses his job? He has had months to say where the document came from, on the City of Sydney website. It quite clearly didn't come from the City of Sydney. It was given by his office to the Daily Telegraph. They reported it. Facts that couldn't possibly be true, by the way. $1.4 million in domestic travel per year, for ten people. $14 million to ten people. They would have had to spend their entire life just on planes going to and from around the country to rack up that sort of a bill. But Angus Taylor was more interested in having a cheap shot at a local mayor than he was doing his policy, of doing his job, of actually having an energy policy.
So, I'm very concerned about this Government's priorities. I'm also concerned about some of the restructuring. Think about the Department of Agriculture, Environment and Water being together. That means, what you have to get best policy outcomes is coordination. And you have the different interests which are there about the environment, about water, about agriculture, that by definition, must not be all the time a common interest. Because agriculture and the environment are competing for water for some of the time, that's an issue. They're all in one place. This is all about a centralisation of power in the hands of a Prime Minister who doesn't have confidence in his team. And I'm not surprised that that's the case. But he's keeping them there, even though they're not doing their day job. So, I am concerned about all those public servants who will face a very difficult Christmas, not knowing what will be going on in future years. And I was Minister for Infrastructure, at one stage I was Minister for Infrastructure and Minister for Communications in separate departments. In what world is communications in 2019 something that's just an add-on? Communications and the digital economy in the digital age is what is driving our economy as we change. You're sitting there, I'm sure with devices recording, sending things out, using social media, engaging immediately.
The world is transforming. Australia is falling behind in broadband. We're not even in the top 50. And what we have is a Government that has put all of that together, 'by the way, Art has been thrown in there somewhere as well'. This is a bad change that was also done without any consultation with the departments that have been effectively abolished or merged in together, and I just find that completely extraordinary.

JOURNALIST: On the NAPLAN Interim Report, what did you think?

ALBANESE: I'm sorry, I haven't seen that as I have been travelling up from Canberra.

JOURNALIST: (Inaudible).

ALBANESE: He hasn't asked for one. And by the way, the Minister can stop anyone coming in that they want, now under existing laws. Thank you.
ENDS