Millions at risk in Mathias Cormann’s govt travel contract
When Finance Minister Mathias Cormann announced last December that one company would take over as the government’s sole travel manager from this July, replacing a panel of five, it was all about streamlining processes and reducing costs.
The four-year $66 million contract for the successful company, QBT, to provide travel services worth about $2.1 billion to 150 different government agencies and departments was reportedly the biggest such deal in the country. The Australian Financial Review wrote that it eclipsed travel contracts with corporate giants BHP Billiton and Rio Tinto.
But just one month into the new regime, the government is facing a taxpayer-funded travel fiasco that would dwarf Bronwyn Bishop’s expenses. The Department of Finance, which is investigating her $5227 helicopter ride from Melbourne to a Liberal Party fundraiser in Geelong, is also understood to be locked in sensitive negotiations with QBT over the fate of tens of millions of dollars of travel credits. The credits are granted instead of refunds when flight bookings are cancelled, but they must be used within a year of being generated.
The Saturday Paper understands that travel managers in a number of departments are frustrated that credits, generated on their budgets in dealings with the companies that previously organised their flights, are not being recognised by QBT. Yet QBT is the only company that can now book their travel.
If the stand-off is not resolved, the value of these credits will be forfeited to the airlines.
The Department of Finance will not reveal the value of these tickets in credit, but did confirm it was in talks with QBT.
The department did not deny there were problems with QBT accepting the credits held by the four other companies: American Express Global Business Travel, Carlson Wagonlit Travel, Flight Centre’s FCm Travel Solutions and Hogg Robinson Australia. It clearly hopes the issue can be resolved.
“Consistent with industry practice when transitioning to new travel management arrangements, the Department of Finance is working with QBT, airlines and former travel management companies to obtain refunds for applicable tickets or to use credits for future air travel,” a departmental spokeswoman said.
A spokeswoman for Cormann said the talks with QBT and the other travel companies were “still in progress” and the value of the tickets in credit would not be forfeited.
But The Saturday Paper understands there is anger in other departments that Finance did not resolve the issue before QBT started as the government’s sole travel provider. Announcing the contract in December, Cormann said the transition to the new provider would start immediately and it would be “fully operational” by July 1. His spokeswoman said that objective had been achieved and agencies were already making bookings under the new travel management arrangement.
A QBT spokeswoman said the contract with the government was private and it could not discuss the details, referring The Saturday Paper back to the Department of Finance.
The management of tickets in credit is a perennial issue for the Department of Finance, which has in the past urged government travel managers to remember to use these credits when making bookings, rather than paying for a whole new flight.
Nevertheless, their value is often lost. Each month, the former government travel management companies were required to report how many tickets in credit had been accrued, used, expired and forfeited.
“The Travel Contract Management Section is aware that a number of agencies have a considerable quantity of Tickets in Credit and unclaimed refundable fares,” said one such reminder from the department in January 2013.
“Please be aware that these fares will expire after a period of 12 months from booking date and the value of the fare is forfeited to the airline.”
Now QBT’s reluctance to accept the credits from other companies has vexed departments, which are trying to do the right thing and follow this advice.
Independent Senator Nick Xenophon, who makes a virtue of his frugality, flying economy and staying in budget hotels, says it would be extraordinary if the value of the credits was lost.
“Surely this government, which prides itself on efficiency and value-for-money for taxpayers, would insist on those credits being used by the new travel company,” he says. “It must be a condition of any transfer of accounts.”
It would be ironic if the shift to one travel management company led to significant waste, as it is part of a broader push that started under former Labor finance minister Lindsay Tanner in 2010 to slash spending on government travel, then worth an annual $500 million. The idea was to use the government’s collective buying power to secure a better deal for taxpayers.
Department of Finance documents show that, in 2013-14, the government spent $377 million on flights, involving 1.34 million bookings for about 100,000 travellers.
The most common domestic route was Sydney to Canberra, followed by Melbourne to Canberra. Australia’s offshore detention centres seem to generate the most international travel, accounting for four of the top 10 international routes: Perth to Christmas Island, Port Moresby to Manus Island, Brisbane to Port Moresby and Cairns to Port Moresby.
The now-famous Melbourne to Geelong helicopter hop was, unsurprisingly, not among the top 10.
The furore over Bishop’s travel claims has occasioned many a reference to a cover story in the now-defunct weekly news magazine The Bulletin, on November 9, 1993, which posed the question: “Will Bronwyn be our first female prime minister?”
Now the revelations of her taxpayer-funded travel bring to mind another famous Bulletin cover, from October 7, 1997, bearing the headline: “Howard’s End?”
With hindsight, the questions posed by both headlines seem absurd, but in that week in 1997, Howard was fighting for survival after sacking three ministers for travel rorts.
“This time they could not accuse John Howard of weakness or indecision,” wrote columnist Laurie Oakes. “The prime minister moved with almost shocking speed, ruthlessness and determination. He decided the travel rorts affair had to be totally ringbarked, no matter what the cost. The cost turned out to be three ministers and his trusted chief of staff. Surviving ministers were left last week shaking their heads in disbelief at the carnage.”
The so-called travel rorts of 1997, just 18 months after the Howard government came to power, involved secret repayments of wrongly claimed travel allowances. The ministers had already repaid the money, but they still lost their jobs.
Fast-forward 18 years and ministers were left this week shaking their heads in disbelief that a defiant Bishop was clinging on as speaker. It was not until Thursday, more than two weeks after the first reports emerged of her extravagant travel claims, that she deigned to apologise, during an interview with Alan Jones, for an “error of judgement”. While insisting she had done nothing wrong, she agreed to repay expenses claimed to attend colleagues’ weddings, as well as the helicopter flight.
This time they could accuse Tony Abbott of all sorts of weakness, perhaps dating back to Bishop’s appointment. Bizarrely, he placed Bishop on “probation” last week, implying she was subject to his will, while still defending her.
The stark constitutional fact is that the noble notion of the speaker’s independence, of which Bishop’s performance has made a mockery, means that only she – or a vote of the House of Representatives – can decide when it is time for her to go.
One Liberal MP who knows well how expenses scandals are viewed is first-term Liberal MP Craig Laundy, a former western Sydney publican, who this week added his voice to those of Greens and senate crossbenchers calling for a review of parliamentary travel entitlements.
As for the Department of Finance, which oversees it all, it has in the past week dismissed Labor concerns about the rigour of its inquiry into the speaker’s helicopter flight. This followed a report by The Saturday Paper’s columnist Chris Wallace that the department’s secretary Jane Halton had, two days before the “Choppergate” case was referred for departmental investigation, discussed at a women’s forum how it showed sexist double standards and that it would probably not have been a story had Bishop been a man.
In light of such interest, the travel credits story becomes more acute. As each day passes, more credits are at risk of being forfeited. It will be some time before they can be tallied up, or the Department of Finance admits the figures in play. But set against Abbott’s promise to “end the waste” and Joe Hockey’s claim that “the age of entitlement is over”, any squandering of travel funds, whether by politicians or bureaucrats, would represent a senseless hole in the budget.
This article was first published in the print edition of The Saturday Paper on Aug 1, 2015 as "Millions at risk in Cormann travel contract". Subscribe here.