E.12 Service charters provide the framework for compensation but agencies need to comply with the legal rules for providing it. There are two broad categories of people: those to whom the Commonwealth owes money and those to whom it does not. Requests for compensation based on a moral obligation on the Commonwealth fall into two broad
categories: those without merit and those where anyone would have sympathy for the person. Requests in the latter category are the most difficult to determine.
E.13 The FMA Act framework fosters devolution rather than centralised control. DoFA are considering whether to recommend that the act of grace and waiver powers be devolved to agencies, because they are in the best
position to know how best to manage their risks. The crucial question is to ensure accountability. Accrual budgeting will promote accountability for the exercise of these powers. There would be some financial limits, with DoFA retaining power in respect to large amounts. Whether a payment would create a precedent is also important. DoFA have tended to consider whether a payment would create a precedent and whether it is in the interests of the taxpayer, that is, whether the Commonwealth has a moral obligation to pay.
E.14 Most agencies have power to write off debts but not to waive
recovery of them, whereas DoFA has power to waive recovery but not to write them off. DoFA would rather an agency write off a debt than seek waiver, but they are considering whether agencies should be able to exercise both powers themselves.
E.15 The Ombudsman’s role is to draw conclusions about defective administration. He is authorised to recommend a remedy, but his recommendations cannot fetter the agency decision-maker’s discretion.
DoFA’s role is to set the framework for payment of compensation. Both the Ombudsman and DoFA need to discuss the matter.
E.16 If compensation is warranted it would not have been Parliament’s intention that the Ombudsman not pursue it because an agency is
resistant. Likewise, it would not have been intended that the agency give in to the Ombudsman when they are not satisfied that they should pay.
Sometimes resolution of a complaint will be protracted, eg, if there is a dispute about the facts. There is a tension there that needs to be addressed.
The Ombudsman’s office needs to examine its own methodology. There is a lot of room for behind the scenes negotiation, for the Ombudsman’s office to gather a few complaints together for discussion with the agency concerned.
E.17 It was suggested that where there is disagreement between the Ombudsman and the agency concerned, there should be a consultative mechanism to try to break the deadlock. Options include a standing committee; a panel to call on ad hoc; parliamentary committees or staff;
and
an independent expert.
E.18 Service charters lead to expectations that compensation will be payable but we need to ensure we are not creating false expectations that lead to disappointment. There is a general perception that Australians are becoming more litigious. We have to be careful of paying unmeritorious claims. Commercial considerations are important but the
Commonwealth’s policy on handling monetary claims requires some likelihood of succeeding in court. The Auditor-General needs to be satisfied that money has been spent properly.
E.19 There are two ends of the spectrum: defending the indefensible and compensating for every error, regardless of whether it amounts to
defective administration or involves special circumstances. Neither of these extreme approaches is appropriate.
E.20 The existing compensation ‘system’ is not fundamentally bad, but it needs to be simplified, especially the legal liability and defective
administration rules. Agency guidelines are too complex at present. What we need is a set of principle based rules with examples of circumstances in which compensation is and is not payable. The DoFA guideline on the CDDA scheme may be sufficient, if combined with the principles on which legal liability and act of grace payments are made and some examples.
E.21 It would be helpful to negotiate with the Ombudsman’s office as suggested in the discussion paper by reference to the DSS (UK) model, but the arrears rules in the social security legislation would remain difficult to overcome. Another interesting approach is in human rights
discrimination cases that have gone to a full hearing. These decisions are developing a ‘tariff’ for particular kinds of discrimination.
E.22 There was general support for the suggestion that the CDDA rules be clarified to ensure that an agency’s acceptance of the Ombudsman’s
recommendation for compensation for defective administration would be sufficient basis for making a payment.
E.23 The CDDA scheme was intended as a last resort, with DoFA hoping agencies would fix the systemic problems that triggered the compensation payments. But it appears that some agencies just keep paying
compensation instead of fixing the problems. It was suggested that fixing a problem may sometimes be more expensive than paying the
compensation it generates.
E.24 Most agencies did not favour any additional system for review of compensation decisions. Act of grace decisions are subject to judicial review. Most agencies considered that Ombudsman review was sufficient for the other mechanisms.
E.25 The Jones decision is a reasonable one but it does have some limits.
If an agency wants the protection of statutory review rights to defend an action of breach of duty of care, it must comply with its statutory
obligations and give proper notice of those review rights.
E.26 The main points agreed during the meeting were:
• the existing compensation mechanisms are fundamentally sound but need some fine tuning, including the suggestions that agency guidelines be simplified and that the CDDA rules be clarified to ensure that an agency’s acceptance of the Ombudsman’s conclusion and
recommendation is sufficient basis to pay compensation;
• the act of grace and waiver powers should be devolved to agency heads;
• the DSS (UK) model is a useful basis for further discussion between the Ombudsman’s office and agencies; and