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Integrity experts say former Victorian deputy premier James Merlino’s appointment as chair of the Suburban Rail Loop Authority is more evidence of a jobs-for-mates culture that is eroding trust in public organisations and accountability for governments.

Merlino has been handpicked to lead the Andrews government’s signature $125 billion Suburban Rail Loop project, taking over from Labor loyalist James McKenzie, who has been at the helm since 2019 and was one of the early architects of the project. His term wasn’t due to expire until November 2024.

Former deputy premier of the Andrews government, James Merlino.Credit: Paul Jeffers

Merlino will become the seventh member of the Suburban Rail Loop board alongside Julia Gillard’s former chief-of-staff, Ben Hubbard. MacKenzie, who is also chair of Labor-aligned lawyer firm Slater and Gordon, remains on the Suburban Rail Loop board as a director.

When contacted by The Age, Merlino said he comes to the role after 20 years as an MP – the majority of which he was a minister, including eight years as deputy premier. As education minister, Merlino said he delivered the biggest school-building program in the state’s history and had been involved in the rail loop since its infancy as a cabinet minister.

“I bring a range of skills and experience to this role,” Merlino said.“This is multi-year and multi-stage infrastructure, and I’m a custodian of a project that will transform the city.”

The announcement, which comes amid an ongoing probe by the Victorian Ombudsman into the politicisation of the state’s public service, has raised fresh concerns from integrity experts about the creeping politicisation of public bodies. That concern is not related to the competency of the candidates, but rather, the public perception of their appointment.

Grattan Institute chief executive Danielle Wood said Victoria had failed to embrace moves by the federal government to make board appointment processes more transparent.

“I don’t think political insiders realise how corrosive these decisions can be when you look at the wider ‘jobs-for-mates’ culture,” she said.

“If there is a sense a leader has been parachuted in, it can also erode trust within an organisation.”

Merlino worked as a union official and local councillor before entering parliament, where he spent more than a decade in the ministry over two stints – mostly in education, emergency services, police and mental health. He was deputy premier under Daniel Andrews from 2014 to 2022 and filled in as acting premier when Andrews was injured.

Merlino with fellow cabinet members Tim Pallas and Danny Pearson during State Budget lockup in 2021.Credit: Joe Armao

When asked about the processes involved to choose Merlino for the role, a state government spokesperson said he had “a proven ability to deliver complex infrastructure and policy agendas”.

“Mr Merlino has extensive experience in infrastructure construction and commercial contract management, as well as a deep understanding of public administration, public sector governance and stakeholder engagement and sits on non-government boards,” they said.

“Our chairs and board directors have extremely challenging roles, which is why there are robust processes in place to ensure prospective candidates have the appropriate experience before they are appointed.”

A 2022 Grattan Institute analysis found that in Victoria, 12 per cent of plum board roles were held by political appointees – most with ties to Labor.

Since then, former Andrews government ministers Martin Foley and Lisa Neville were appointed to health boards and former Brumby government minister Bob Cameron was announced as the chair of WorkSafe Victoria.

Accountability Round Table chair and former Democrats senator Lyn Allison said too many MPs from all sides of politics had been appointed to plum roles.

“Members of parliament may well be qualified for positions post-parliament, but boardroom stacking and entitlement for mates has become the norm,” she said.

“Liberal and Labor both indulge in this political patronage. But it can seriously undermine the governance and independence of these boards. Public service jobs should be awarded transparently and based on qualifications and experience, not just picking those who will toe the party line.”

Wood said political appointments can also feed the perception of a “jobs for mates culture” and negatively affect the morale of an organisation.

“The big concern is that if they have made an appointment without running a proper process, it means we might not get the right person for the job. And that matters for broader goals in terms of diversity, to minimise the risk the agency becomes politicised and whether the board will be independent,” Wood said, speaking generally.

In total, the Andrews government has given more than 20 former Labor ministers seats on various boards – including Theo Theophanous, who resigned from his State Trustees position after an adverse IBAC finding in February.

Merlino is expected to receive up to $99,000 a year to head up the authority, according to the Suburban Rail Loop’s most recent annual report. The board held eight meetings between December 1, 2021 and June 30, 2022 – the equivalent of $12,375 per meeting.

Merlino’s new taxpayer-funded salary comes in addition to a lifelong annual pension of between $84,000 to $126,000 as part of the defined benefits scheme that was closed to new MPs in 2004.

In December, Merlino was also appointed as the chair and director of Rest Super. While Rest’s remuneration report for the current financial year is yet to be published, the fund’s previous chair received a total package of $217,421 in the 12 months to July 1 last year.

The former deputy premier is also on the board of his beloved Hawthorn Football Club, but that position is voluntary.

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