Federal public servants are set to face scrutiny from a powerful new corruption watchdog, with the introduction of legislation to establish the National Anti-Corruption Commission introduced this week.

But corruption experts warn the new body will be limited in its capacity to investigate third parties who are trying to involve innocent public officials in corruption.

The commission will have broad jurisdiction to investigate corruption across the entire Commonwealth public sector, including government employees and contractors, attorney general Mark Dreyfus said.

“The Federal Anti-Corruption Commission will aim to eliminate corruption in the federal public sphere to restore trust and transparency,” Mr Dreyfus told parliament on Wednesday.

“It will be able to investigate serious or systemic corruption affecting any part of the federal public sector.”

The commission will operate independently of government and will have the discretion to launch its own inquiries in response to referrals, including from whistleblowers and the public, and to hold public hearings when it’s considered in the public interest.

Companies colluding to corrupt a procurement process … will not be covered by the bill in its current form.

Stephen Charles

The commission will be able to investigate allegations retrospectively and will be able to make findings of corrupt conduct and refer its findings to the AFP or DPP.

The legislation also provides protections for whistleblowers and exemptions for journalists.

The new watchdog will be funded $262 million over four years and will be overseen by a statutory parliamentary joint committee.

Lack of jurisdiction over third parties

The Centre for Public Integrity has welcomed the tabling of the legislation, but said it lacked the jurisdiction to investigate third parties or fraud on an innocent public official

This means that third parties who are acting to corrupt public officials, where the officials themselves are innocent, won’t be covered by the bill.

“For example, companies colluding to corrupt a procurement process … will not be covered by the bill in its current form,” said CPI director Stephen Charles.

“All state agencies, except WA and Tasmania, have this power to investigate third parties. The Commonwealth bill would have one of the narrowest jurisdictions in the country if it is enacted without amendments.”

Powers of the commission

• Investigative powers of a Royal Commission, with coercive powers to compel documents and witnesses

• Ability to begin investigations based on referrals, public complaints (including anonymous complaints) and own motion

• Ability to search public premises without a warrant

• Search and surveillance powers

• Low threshold to begin investigations, without need for any evidence of a criminal offence

• Ability to investigate MPs and the public sector

• Ability to investigate third parties when the honesty or impartiality of a public official’s conduct is, or could be, adversely affected

• Ability to investigate retrospectively