In the Public Interest 150 years of the Victorian Auditor-General’s Office Peter Yule Copyright Victorian Auditor-General’s Office First published 2002 This book is copyright. Apart from any use permitted under the Copyright Act, no part may be reproduced, stored in a retrieval system or transmitted by any means or process whatsoever without prior written permission. ISBN 0 7311 5984 5 Front endpaper: Audit Office staff, 1907. Back endpaper: Audit Office staff, 2001. iii Foreword he year 2001 assumed much significance for the Victorian Auditor-General’s Office as Tit marked the 150th anniversary of the appointment in July 1851 of the first Victorian Auditor-General, Charles Hotson Ebden. In commemoration of this major occasion, we decided to commission a history of the 150 years of the Office and appointed Dr Peter Yule, to carry out this task. The product of the work of Peter Yule is a highly informative account of the Office over the 150 year period. Peter has skilfully analysed the personalities and key events that have characterised the functioning of the Office and indeed much of the Victorian public sector over the years. His book will be fascinating reading to anyone interested in the development of public accountability in this State and of the forces of change that have progressively impacted on the powers and responsibilities of Auditors-General. Peter Yule was ably assisted by Geoff Burrows (Associate Professor in Accounting, University of Melbourne) who, together with Graham Hamilton (former Deputy Auditor- General), provided quality external advice during the course of the project. The publication of this history recognises and honors all those members of the Office, past and present, who have contributed to the work of the organisation. It provides testimony to their skills, dedication and commitment in helping to forge for the Office a reputation, both nationally and internationally, as a leading edge public sector auditing body acting at all times in the public interest. Staff currently serving within the Office and those who will take their place in the future face the ongoing challenge of continually building on the great foundation now in place so that the Office is always seen by the Parliament and community to be meeting their needs and expectations in an exemplary fashion. Readers of the next history of the Office, whether it occurs in another 20, 50, 100 or 150 years, will surely expect to see that this challenge has been successfully met. They will wish to find that the Office has continued to meet its obligations to Parliament and the community with distinction. Wayne Cameron Auditor-General v Contents Foreword................................................................................................................................iii Acknowledgements...............................................................................................................vii Prologue ................................................................................................................................. 1 Chapter 1 The origins of the office of the Auditor-General ............................................................. 5 Chapter 2 Foundation of the Auditor-General’s Office, 1851–52 .................................................. 11 Chapter 3 ‘Harassed by a desire to distinguish himself’: Hugh Childers as Auditor-General, 1852–53.......................................................................................................................... 23 Chapter 4 Crisis and reform, 1854–57............................................................................................ 33 Chapter 5 ‘Watchmen on the tower’, the Commissioners of Audit, 1857–83................................ 43 Chapter 6 The Lands Department and the O'Ferrall case ............................................................... 59 Chapter 7 The Audit Office and the constitutional crises of 1865 and 1878.................................. 69 Chapter 8 ‘Ornamental men’, the Commissioners of Audit, 1883–1901........................................ 79 Chapter 9 Federation to war ........................................................................................................... 95 Chapter 10 Prophet in the wilderness — John Norris as Auditor-General, 1919–37 ..................... 113 Chapter 11 Tension at the top — the era of Edwin Peverill and Wilton Cove ............................... 133 vi Chapter 12 Gone bush .................................................................................................................... 147 Chapter 13 Winds of change, 1957–77........................................................................................... 157 Chapter 14 ‘There’s not a lot of fun in auditing, just a lot of hard work’: work and play in the Audit Office, 1957–77 ................................................................................................. 171 Chapter 15 Transformation, 1977-86.............................................................................................. 187 Chapter 16 The Auditor-General’s Office and the fall of the Labor Government, 1986-92........... 203 Chapter 17 Storm clouds brewing: Ches Baragwanath and the Kennett Government, 1992-96 .... 229 Chapter 18 The greatest challenge to the independence of the Auditor-General, 1996-98 ............ 243 Chapter 19 Reaffirmation: the restoration of the Auditor-General's Office, 1998-2001 ................ 277 Index ................................................................................................................................... 295 vii Acknowledgements or 150 years the Victorian Auditor-General's Office has played a central role in Fmaintaining the accountability of the executive government and its agencies to the Parliament and the public. Researching and writing the history of the office has been a fascinating and fulfilling task, which would have been impossible without the help I received from many people. In particular I owe much to Jim Woods, Ted Bennett, Flav Belli, John Kehoe, Eileen Bell, John Whelan, Gwen Marks, Bruno Dinelli, Neville Eyre, George Rorke, Leon Fewster, Alan and Julie Meggs, Jim Wenmouth, and Una de Burgh. Former Auditors-General Bruce Hamilton, Brian Waldron, Richard Humphry and Ches Baragwanath were generous with their time and their insights added greatly to my understanding of many issues. In particular I would like to thank Bruce Hamilton for sharing with me his unparalleled personal knowledge of the Auditor-General's office and the Victorian public sector dating back to the 1930s. Sam Furphy did a wonderful job as my research assistant. He showed great flexibility and ingenuity in tracing sources and remarkable persistence in ploughing through many obscure documents to find valuable information. Mrs Jill Heathcote provided me with useful information on the career of Frederick Bruford as did Mr Duncan van Reyswoud on John Norris and I thank them both. My understanding of the events of the 1980s and 1990s benefited greatly from conversations with Ken Coghill, Roger Hallam, Bruce Chamberlain and Graeme Weideman and I thank them all. I would like to thank the Parliamentary Librarian, Bruce Davidson for giving me access to his wonderful library, and Jon Breukel and the library staff for their patient assistance with my research. The Auditor-General, Wayne Cameron, and all his staff made me very welcome and feel part of the office while writing this history. Elna Manning, Sandy Brooker and Joan McConnell guided me through the complexity of a large office; Barry Hyde and the IT staff showed great patience with my requests as did Margaret Frewin, Ainslie Sefton and Dianne Ryan, while Paul Martin, Margaret Salter, Michelle Kaye and the rest of the staff on the 35th floor accepted my presence with great equanimity. I owe much to Russell Walker for the use of his collection of press cuttings and for his helpful comments on the last four chapters. viii John Olesky and Kim Nolan guided the book from manuscript to finished product with skill and professionalism. It was a great pleasure working with the office’s history committee, Joe Manders (Assistant Auditor-General), Graham Hamilton (former Deputy Auditor-General) , Geoff Burrows (Department of Accounting, University of Melbourne), and the late Jan Tranter. They were unstinting in their enthusiasm and support, while allowing me complete freedom in my approach to the history. The work of the committee, and the office as a whole, suffered a great loss with Jan Tranter’s tragic illness and death in October 2001. She had provided much of the inspiration for the history and her calm and methodical ways were vital in guiding the project to fruition. She is greatly missed. Note on spelling and terminology We tend to think today that earlier generations were pedantic about spelling conventions and that there has been a recent trend towards simplification. This is not so. For example, during the research for this book the author noted that many words such as favour and harbour were, before the 1940s, almost invariably spelt without the phonetically superfluous ‘u’, as ‘favor’ and ‘harbor’. The Geelong, Melbourne and Portland Harbour Trusts were always referred to as Harbor Trusts until the 1940s, and in the Auditor-General's reports as late as the 1970s. Similarly the belief that ‘ize’ endings are an Americanism is refuted by the fact that they were regularly used in official documents in the late nineteenth century. Frequently, a word