Con men, swindlers and cheaters pay bribes.
Sophisticates hire lobbyists because lobbyists
get better, more lasting results while only rarely
landing in the slammer.
Former Prime Minister Kevin Rudd’s announcement in May 2010 of a super profits resource tax triggered the most ferocious lobbying campaign ever seen in Australia. Global giants Rio Tinto, BHP Billiton and Xstrata joined local mining houses in forming a multimillion-dollar slush fund to stop the tax becoming law. They hired a string of lobbyists across the country with serious expertise in crafting campaigns on behalf of big business. Their principal job was to feed a stream of anti-tax ‘horror’ stories to handpicked newspaper columnists and radio shock jocks. Lurid articles were planted, suggesting that overseas investment in Australia would dry up, tens of thousands of jobs would be lost and the mining boom, the saviour of the economy, would grind to a halt. The influence-pedlars had the unqualified support of Tony Abbott’s federal Opposition, so they concentrated on Labor MPs in marginal seats, particularly in Queensland and Western Australia, warning that they faced political oblivion if they supported the new tax. They also supplied them with ‘independent’ polling showing that the measure was deeply unpopular in their electorates and suggested they do everything to halt its passage.1
One Sydney-based lobbying firm doubled its staff and offered a twenty-hour information service to clients, sending them press briefings each morning on anti-tax comments made overnight by politicians and resources companies in Britain, South Africa, Canada and the United States. The lobbying machine provided a steady stream of ‘talking heads’ to the commercial television networks: the support of channels Seven, Nine and Ten was a foregone conclusion after the mining companies showered them with prime-time advertising vilifying the government’s tax plan as un-Australian and anti-Australian. The no-tax campaigners included the Business Council of Australia, the Minerals Council of Australia, the federal Opposition and Rupert Murdoch’s News Limited newspapers. Liberal Party leader Tony Abbott helped to promote the panic with his claim that the tax was ‘a dagger aimed at the absolute heart of our economy’. The 2010 anti-tax campaign was new to Australian political life because it was organised and financed by the private corporate sector in the interests of its owners and investors. Such tactics are very familiar in the corporation-driven politics of the United States, where Washington lobbying is a US$3.3 billion industry employing 12,633 lobbyists.2 That’s about twenty-three lobbyists for every member of the House (435 members) and the Senate (100 members).
Selling the tax scheme to the Australian public should have been as easy as shifting meat pies to spectators at the MCG. It would add $9 billion to the budget bottom line, putting the economy into a generous surplus and making it the envy of comparable economies around the world. The overseas mining giants were pocketing an absolute fortune, while local mining entrepreneurs such as Gina Rinehart, Andrew Forrest, Clive Palmer and Nathan Tinkler packed the top end of the Business Review Weekly’s annual Rich List. From 1999 to 2009 the value of coal and iron ore exports rose almost sixfold from $12 billion to $69.4 billion, and it is expected to reach $100 billion by 2014.3 Export sales have risen, on average, at a rate of 20 per cent per year, yet the lion’s share of the mining ‘boom’ went into the pockets and offshore accounts of the mining conglomerates, their directors, senior executives and institutional shareholders.
The nation’s finite mineral resources, owned by the Australian people through the Commonwealth Government, which awards mining leases, were being quarried and shipped to China and India to sustain their epic economic growth while Australians were not receiving a return that was either adequate or fair. Those who attempted to argue sensibly and rationally for a mining tax to underpin the nation’s long-term economic security were out-gunned by the mining industry and its high-powered lobbying campaign. ABC TV reporter Andrew Fowler reported: ‘In the forty-one storey tower block that houses BHP Billiton’s headquarters in Melbourne, the company established a war room with a team of hired guns: pollsters and strategists. They planned a multimillion-dollar advertising campaign against the mining tax proposal. Other companies weighed in too with their own campaigns.’4
The anti-tax campaign came at a time when Rudd was vulnerable. During 2008 and 2009 he had held an unassailable position as the most popular political leader in Australia’s history with an approval rating of 73 per cent,5 but in 2010 his numbers began to crumble, particularly when he announced the scrapping of the Carbon Pollution Reduction Scheme, having previously declared climate change to be ‘one of the greatest moral, economic and environmental challenges of our age’. When he unveiled the mining tax on 2 May 2010, it was meant to rescue his reputation as a decisive leader and reinstate his command of the Cabinet, the government and the nation. It didn’t. Instead, the anti-tax campaign kicked in and Rudd’s Canberra office began to look like the Alamo, surrounded on all sides by mercenary forces and with no place to hide. His ministers and backbenchers were spooked into believing they were on the road to an electoral wipe-out and trade union leaders with members in the mining sector were told that existing industrial relations arrangements would be torn up unless they did something to stop Rudd’s tax. This doomsday scenario was fed into the parliamentary party by the right-wing faction leaders, including then senator Mark Arbib, who was identified in WikiLeaks disclosures as ‘one of the US embassy’s valued confidential contacts, providing inside information and commentary on the workings of the government and the ALP’.6
Canberra’s political atmosphere became toxic. The lobbyists’ demand for an end to the mining tax morphed into a demand for the end of Rudd. The mining giants succeeded beyond their wildest dreams when the Labor Caucus ousted Rudd and replaced him with Julia Gillard on 24 June.7 At a stroke the supertax on mining profits was dead and the more pliable Gillard began negotiations with the big miners to introduce the much milder minerals resource rent tax. It had taken just fifty-three days from the announcement of the government’s mining tax proposal to the overthrow of its author, the prime minister. No election, no vote in parliament, no public debate. Greens leader Bob Brown said the mining companies spent $27 million on their lobbying campaign and saved themselves $10 billion when Gillard restructured the tax package. ‘A very good campaign,’ Senator Brown said, ‘the like of which should not happen again.’
Books have been written about the 2010 Canberra coup and there have been post-mortems aplenty, but the role of lobbyists representing vested private interests has been largely ignored. All the emphasis has been on the Labor personalities involved in factional plotting. This has obscured the fact that they were mere instruments of the immensely powerful business interests that made it all happen. The overseas media, however, have been more forthcoming, with London’s Independent being dismissive of the mining companies’ arguments and giving this summary of the fateful events in Canberra:
The message is clear: Australian politicians tangle with the mighty national mining industry at their peril. The former Australian Prime Minister, Kevin Rudd, tried to impose a 40 per cent ‘super-tax’ on the profits of the coal and iron-ore extracting multinationals. The mining industry responded with a huge and aggressive advertising campaign against the tax. The result was that Mr Rudd’s popularity plummeted and he was removed in a palace coup by his own party last week. One of the first acts of the new prime minister, Julia Gillard, has been to ditch the super-tax and impose a watered-down substitute with significant concessions for the big mining firms.The original super-tax proposal was economically sound. The former system imposed a flat tax on production. A tax on profits would have been more efficient. And there was no evidence to support the claims of the industry that the tax would stall investment, cost jobs and put Australia’s miners at a competitive disadvantage. Rudd might have been clumsy in the manner in which he went about implementing his plan, and it was not the only factor behind his downfall, but the awesome political power of the mining companies that has been revealed by this affair is, nevertheless, breathtaking. 8
Toronto’s leading daily editorialised succinctly: ‘In banana republics, coups d’état often occur when the leader is out of the country. In Australia, the conspirators opted not to wait a day. Instead, Kevin Rudd was dispatched by his deputy the day before he was to depart for the G20 meeting in Toronto.’9
In February 2010, BHP Billiton, which had howled loudest in opposition to the Rudd tax—and admitted spending $4.2 million lobbying against it—declared a record six-month profit of $10.5 billion in a profit jump of 71.5 per cent for the second half of 2010. Treasury rubbed salt into the public wound by issuing figures showing that the original resources super profits tax would have raised almost $100 billion in revenue between 2012–13 and 2020–21, while Gillard’s revised minerals resource rent tax is forecast to yield just $38.5 billion in the same period.10 Her remodelled tax went through parliament without a murmur from the mining giants. For their compliance they received a Christmas bonus from Gillard: at the ALP national conference in Sydney in December 2011 she took centre stage to persuade delegates to end Labor’s long-standing ban on uranium sales to India.
If the prime minister of a democratically elected federal government could be removed from office two and a half years into his first term by colleagues who were spooked by a combination of corporate bullying and high-powered lobbying, how robust was our liberal democracy and what chance did less powerful figures—state premiers and local mayors—have against such odds? This question went unasked and undebated as Canberra’s attention soon focused on a fresh election, which produced a hung parliament and the formation of a minority Gillard government kept in office by a fragile arrangement with the Greens and three independents.
However, in August 2010 there was an unexpected turn of events in Sydney. The baleful influence of lobbying on the political process became the subject of a full public inquiry launched by the NSW anti-corruption commissioner, David Ipp. He took the unusual step of using his statutory powers to initiate his own investigation into lobbying. (In most cases, Independent Commission Against Corruption investigations are prompted by official references from a minister, a government department, the police or a whistleblower.11) ‘Over the years, ICAC has received a substantial volume of complaints about the activities of lobbyists,’ said Ipp, a South African–born lawyer who resigned from the NSW Court of Appeal to head ICAC. ‘There have also been a significant number of reports in the media over the years that have implied that decisions were made as a result of inappropriate or corrupt lobbying.’ Ipp’s inquiry was not exclusively concerned with corrupt practices among politicians, councillors, lobbyists and big business, but with loftier matters of good governance: ‘A widespread perception of corruption in the community in the government decision-making process has the capacity to adversely affect the proper working of our system of democracy,’ he said. ‘Once citizens believe that government is corrupt, and that government decisions are corruptly made or influenced, the belief in the rule of law will diminish, and our way of life will ineradicably alter. This has proven to be the case in other jurisdictions.’12
Political scandals in Britain, the United States and his native South Africa, where politicians and influence-pedlars had been caught red-handed in corrupt practices, appeared to have motivated, at least in part, Commissioner Ipp’s inquiry. Four members of the House of Commons, all ex-cabinet ministers, were exposed by the media after promising clients they could provide access to serving ministers in return for a healthy fee. One of the former ministers was Australian-born Patricia Hewitt, daughter of Canberra mandarin Sir Lenox Hewitt, and another was Geoff Hoon, a former defence minister and Iraq War enthusiast. The scandal came on the heels of the ‘cash for peerages’ revelations in which prominent New Labour supporters were given life peerages and seats in the House of Lords in return for million-pound loans to the party’s election coffers. In Washington, lobbyist Jack Abramoff was jailed for six years while two White House officials, a congressman and nine other lobbyists and congressional aides were convicted following an investigation into corrupt lobbying on Capitol Hill during George W. Bush’s administration.
A sensational corruption scandal nearer home must have contributed to Ipp’s decision to act. His predecessor at ICAC, Jerrold Cripps QC, another former NSW Supreme Court judge, had provided much public entertainment in 2008 during a trawl through the murky world of Wollongong City Council.
Beth Morgan joined Wollongong council in 2000 as a development project officer. An attractive and ambitious young woman, Morgan gained successive promotions and advanced her academic credentials with a Bachelor of Science degree and a Graduate Diploma in Urban and Regional Planning. As the south coast property boom resulted in rapid increases in real estate prices, Morgan found herself in a powerful position at the heart of the council’s planning department. By the mid 2000s, she was the ‘go-to’ officer for development and rezoning applications and helped write the council’s guidelines on ethical dealings with developers. She became the first (and only) woman to be a guest at the notorious ‘table of knowledge’, a regular gathering of local politicians, council officers and developers at a kebab café in North Wollongong. Over morning coffee, cakes and toasted sandwiches they gossiped and discussed the city’s lucrative development projects.
Morgan’s activities became so scandalous that an anonymous whistleblower contacted ICAC to report that she was sleeping with developers and accepting their gifts of perfume, counterfeit designer handbags and travel junkets—and then giving their projects the green light. With the start of ICAC’s investigation she was sacked. Over weeks of public hearings, ICAC heard evidence from fifty witnesses in scenes that were reminiscent of episodes of The Sopranos. The final report, made public in October 2008, made corrupt conduct findings against Beth Morgan, two property developers, three of Morgan’s superiors at the council and four former Labor councillors. The report said: ‘As a result of its investigation, the Commission found that Ms Morgan actively pursued close personal relationships with three local developers in order to ingratiate herself with them to try to secure them as future clients for a proposed consulting business she wanted to establish.’
In this one critical sentence, ICAC established motivation for her corrupt conduct: she was building a client base for the consulting business she planned to start. This wasn’t a novel career plan: it had already become an established pathway into the private sector for former politicians and former ALP staffers. The big lobbying firms recruited dozens of political insiders and advertised their close personal ties to ministers to market their services. Indeed, the practice of switching from full-time politics to full-time lobbying appeared to be encouraged by the hierarchy of the NSW Labor Party. The arrangement represented a win-win for all concerned: the developer got a satisfactory result from the council or government department; the consultants received a handsome fee; and an undisclosed ‘commission’ based on the value of the development frequently went into ALP coffers.
ICAC’s three-part response called for the sacking of Wollongong City Council and the appointment of administrators until it returned to ethical and administrative health; asked the director of public prosecutions to consider the prosecution of eleven people for specified criminal offences; and made a total of twenty-seven corruption prevention recommendations—two to the minister for planning, four to the Department of Planning, one to all NSW local councils and twenty to Wollongong City Council. (Despite the adverse finding against her, Beth Morgan was never charged.) At the 17th Annual Public Sector Fraud and Corruption Conference 2010 held in Canberra, town planner John Mant, a former ICAC commissioner, declared that the NSW planning system was ‘corruption friendly’ and facilitated more corrupt behaviour than in other states. He added:
The ICAC’s hearing into planning decisions at the Wollongong City Council demonstrated that the corruption of the planning system in that region was systematic and touched State politicians, local business figures, Council politicians and several levels of Council staff. This was not a case of one rogue council officer or councillor. The report of the hearing demonstrated a deep-seated cultural corruption and suggested that there was more to uncover. In my view, the Wollongong Inquiry demonstrated the long-term failure of the ICAC to convince itself, the State government and, particularly, the Department of Planning of the need to put in place a fair and transparent planning system. Symptoms have been treated, but not processes that lack transparency and fairness. In fact many of the recent so-called reforms to the system in New South Wales have made the system less rather than more transparent.
The business community wasn’t blameless in creating the corruption at the heart of public administration. It hired lobbyists and introduced government lobbying as an arm of its own commercial operations. The ALP machine put the hard word on boardrooms, saying: Come and talk to us, we’re open for business. When they came through the door, CEOs were told: If you want to do business with us, you should contribute to the party. They often suggested a Labor-friendly lobbying firm to ensure fast and satisfactory results. The approach was upfront and barefaced. Companies soon got the message and fell into line. At the NSW elections in 2003 and 2007, ALP spending was twice that of the Liberals. Most of the money came not from traditional sources such as the unions and the branches, but from big business. It had become a party beholden to the big end of town and not its membership or even the voters.
In launching his inquiry into lobbying, Commissioner Ipp was relying on the high level of public disquiet about the stench of corruption at local and state levels of government and the findings from Wollongong. In July 2010 I received a questionnaire from ICAC asking for my views of the lobbying industry after many years as state political editor with the Sun-Herald covering NSW politics and politicians. Here is an edited extract of the questions and my answers:
ICAC Rightly or wrongly, to what extent do lobbyists rely on individual journalists and the media more generally to exert pressure on government decision makers?
Alex Mitchell Lobbyists outnumber the NSW Parliamentary Press Gallery by a significant number—at least two or three to one. Big lobbying firms have lists of all metropolitan journalists and the areas they cover. Each journalist is rated according to his or her influence, approachability, susceptibility and potential usefulness. Individual lobbyists are given the responsibility of forming a relationship with an individual journalist and giving him/her exclusive stories, tip-offs or gossip. I was in a unique position: I loathed the lobbyists, told them what I thought of them and they gave me a wide berth. However, other Gallery journalists took a very different view and kept close professional relationships with lobbyists who became a significant source for their articles. I am sure I missed some stories because I declined to deal with lobbyists but I also picked up a lot of stories because I ran a maverick operation.
The whole purpose of articles from lobbyists is to influence ministers and backbenchers: it is a subtle (or unsubtle) way of putting pressure on them to expedite decision-making in a certain direction or to favour one proposal over another. The stories can involve transport, health, planning, education and involve hundreds of millions of [dollars in] public money. Companies are willing to pay big money to lobbyists if they feel they can obtain a satisfactory outcome. The commercial pressure from those companies is exerted through lobbyists onto Gallery members.
ICAC From your experience covering NSW politics, can you provide any examples of lobbyists using or attempting to use the media to peddle dishonest or grossly exaggerated statements and claims? If so, how is this done? How often?
AM In the early 2000s, then treasurer Michael Egan proposed a gaming tax to be introduced incrementally over several years to siphon super-profits from poker machines into the Treasury. The Registered Clubs Association, now Clubs NSW, mounted an advertising and lobbying campaign claiming the clubs industry would go broke, that tens of thousands of club employees would lose their jobs and that thousands of local sports groups, community organisations and pensioner bodies would face ruin because clubs would no longer be able to support them. Lobbyists crawled all over the NSW parliament threatening to campaign against Labor candidates at the 2005 election and giving alarmist stories to journalists. The government lost its nerve and when Morris Iemma replaced Bob Carr as premier in 2005, a new deal was cut with the club industry lowering the pokie tax rate. Egan was left to fight the battle alone. I can’t remember the Premier or a single Cabinet minister supporting him. They ran for cover and the Gallery swallowed the scare stories hook, line and sinker.
ICAC Are journalists under any pressure or incentives to report the statements and claims of lobbyists without performing the necessary fact checking?
AM Usually, the briefings supplied by lobbyists are meticulously researched and the information is footnoted and sourced. The lobbyists are very often former journalists and they know that information fed to journalists won’t be taken seriously if it is written on the back of a bar mat. To give the information credibility—and to guarantee publication—it is usually high-quality material. Naturally, however, it is exclusively from the perspective of the client and is therefore one-sided, biased research. Lazy journalists working close to deadlines are willing to take the research at face value and run with it. What they should be doing is submitting the research to further investigation by talking to rival groups, academics or experts to provide alternative viewpoints. Lobbyists hate this approach and a journalist who files a story with contradictory viewpoints is likely to find that they are left off the list of ‘most favoured’ reporters.
ICAC Can you give any other examples of tactics or methods used by lobbyists to get their message into the media?
AM The simplest way to occupy the airwaves of commercial radio is to buy a large slab of advertising on high-rating programs. In return for buying advertising, clients can—and do—negotiate favourable coverage of their pet projects. It is also the surest way of having your client interviewed favourably.
In rural and regional New South Wales, where advertising revenue has collapsed in recent years, well-placed advertising dollars can earn a company a prime radio or TV spot.
ICAC Given your experience covering NSW politics, do you think that ministers, MPs and staffers who go on to become lobbyists can obtain unfair or preferential access to decision makers (i.e. their former colleagues)? Can you point to any examples of this happening?
AM It is self-evident that ex-premiers, ex-ministers, ex-MPs and ex-senior staffers enjoy a special status when they put out their shingle and become lobbyists. It is their experience in Cabinet and in government that they are selling. It is their ticket to new careers and they offer their services with the enticing claim that they can obtain ‘exclusive access’ to ministers, that is, their former colleagues. Once an ex-premier, ex-minister or ex-MP shows that he or she has those connections, then their reputation spreads by word of mouth and their fees rise accordingly. I have no proof, but I have been told that lobbyists with backgrounds in Cabinet share their fees with the minister they introduce to a client.
Say, for example, the boss of Acme Industries wants to meet the minister for sanitation, the ex-minister says it can be done for $10,000 for one hour of the minister’s time. After the meeting is finished and the invoice is paid, the ex-minister takes $5,000 and the minister receives his $5,000. If the meeting is brokered by senior functionaries from the NSW ALP in Sussex Street, then the ALP receives some of the fee as a commission. I don’t have ironclad evidence of ex-ministers receiving preferential treatment with serving ministers but, anecdotally, it is certainly the case. They are people who trust each other, because they have grown up in the same party and they can be absolutely confident there will be no breach in their unofficial relationship.
When Commissioner Ipp commenced public hearings in Sydney in August 2010, I was called to give evidence as an ‘expert witness’. Before replying to questions from the commissioner and the counsel assisting, Jeremy Gormley SC, I made an oral submission:
Lobbying has become a blight on public life in New South Wales. It has a corrosive and corrupting impact on state politics and on local government. It has become the high-dollar pathway for powerful private interest groups to obtain law changes and administrative decisions which are favourable to them and not necessarily in the public interest. It means that high-level decision-making is often skewed in favour of those with the deepest pockets who employ the most artful, persuasive and well-connected lobbyists. And it all happens behind closed doors without any real attempt at transparency or accountability. No wonder the public perception of lobbyists is so poor and their tradecraft is regarded with such suspicion …
The lobbying industry has become such an all-pervasive presence at all levels of government that it claims to be an accepted and acceptable part of the democratic process. It even goes further, and often claims to help the efficiency of government and streamline its decision-making. In my view, these claims are utterly self-serving. In the absence of any real information about who they meet, what is discussed, who is paying their fees etc. some lobbyists—not all—leave themselves open to the charge that they are an insidious force working for outcomes for clients whose motives are little removed from pure greed. In New South Wales, in the rivalry between public interest and vested interest, invariably, vested interest triumphs, due in no small part to high-powered lobbying.
After hearing forty-eight witnesses during eleven days of public hearings, Commissioner Ipp issued a report that made seventeen recommendations. They included new legislation to regulate lobbyists, such as the establishment and management of a new lobbyist register, as well as mandatory standards of conduct and procedure for lobbyists. Ipp also urged that the occurrence of meetings and other communications between lobbyists and government representatives be recorded and made publicly available.13 He was taking aim at the lunches in Sydney’s Chinatown and the coffee appointments in Chifley Square where many of the deals between government and developers were done. Under Ipp’s new rules, contacts were to be noted, minuted and be available to the media, the Opposition and the public. I’ve been told this recommendation has ended the ‘table of knowledge’ culture that infested the administration of local and state government for the past couple of decades in New South Wales.
One of the unrecognised aspects of private lobbying is its devastating impact on the public service. In Canberra and Sydney lobbyists often hold more sway than public servants. Take the hypothetical case of a minister who is weak, incompetent and out of his/her depth and only holds a portfolio thanks to factional loyalties. Such a minister becomes a target of lobbyists looking for a ‘result’. If their proposal is frustrated by the minister’s senior and mid-ranking public servants, the lobbyist will try to have the recalcitrant public servant demoted or transferred to another department. In my experience in New South Wales, this happened time and again when lobbyists identified independent-minded public servants and set about undermining their careers with comments such as ‘he’s not a team player’ or ‘he’s against job creation’ or ‘she’s out of touch’. As a result, public servants were constantly looking over their shoulders or reluctant to give advice that ran counter to the proposals being promoted by politically connected lobbyists.14 Some of the most senior and best-qualified public servants in New South Wales simply left government service after their reputations were mauled by lobbyists working for major developers and other corporate interests. As a result, weak, lazy and incompetent ministers (there were a number in the previous NSW Labor government) bowed to the wishes of well-connected lobbyists rather than heed departmental advice.
At the March 2011 state election, the Labor Party, once considered the ‘natural party of government in New South Wales’, suffered its worst electoral defeat in more than a century. It was in no small part due to the corruption among big business and lobbyists that had infested the corridors of public administration.15 ‘The scale of Labor’s loss can be explained only by the endless wave of scandal and corruption,’ wrote Christopher Pearson,16 while David Penberthy wrote on The Punch that the state election was ‘a plebiscite on the awesome unpopularity of a government which for the past six years has been beset by scandal and plagued by incompetence’.17
Electors saw politicians profiting from their indecent relationship with the hotel, club, gaming, property development and construction industries—a relationship that was facilitated by a virtually unregulated private lobbying sector.
Before the voters despatched the ALP government at the ballot box, the party’s leadership had undermined the ALP from within. Branch life, the party membership and policy ideas were brushed aside in a race to attract donations from big business to win elections. Fundraisers were no longer held in back yards or workers’ clubs or at barbecues in local parks, they were 700-seat affairs at five-star hotels at $100 per head or $1000 per table. Lobbyists instructed their clients to buy tables if they wanted preferential treatment and CEOs were seated at tables with Cabinet ministers. The ALP Business Dialogue was another Sussex Street invention and attracted members at $15,000–$20,000 per head. It organised private dinners at which business executives, mainly developers and publicans, could talk to ministers. Members of the business community paid hefty fees to attend the party’s annual conference traditionally held at Sydney Town Hall and to attend private briefings at the conclusion of each session. In recent years the number of business observers outnumbered the public observers.18
It was the NSW Greens who asked the fundamental question, cui bono? (who benefits?), and blew the whistle on the corrupt relationship between the NSW government and developers. During the final decade of Labor’s rule in New South Wales, academic Norman Thompson worked as a policy researcher for the Greens’ Lee Rhiannon, then a member of the NSW Legislative Council (she is now a Senator). Over a period of years he researched the returns held by the Australian Electoral Commission and the NSW Election Funding Authority and made a list of all the political donations to the major parties. Then he tracked planning applications filed by developers using data from the Department of Planning, newspapers, annual reports and the internet. He found that those developers who made generous donations to the ALP had a higher success rate in gaining ministerial approval for their pet projects. His research became the framework for a Greens-sponsored website appropriately called democracy4sale.org, which has achieved widespread popularity among the citizenry but notoriety in the boardrooms. Although the Greens research did not provide solid proof of anything untoward, it showed a pattern of coincidence that was highly damaging and unhealthy. Major planning approvals made at the sole discretion of the minister reached more than 150 in 2007 and 2008 and jumped to 250 in the following year. Quentin Dempster, host of ABC TV’s Stateline, itemised in a program titled ‘More Slush Funding’ some of the major developments approved at the same time donations were made to the NSW Labor Party. These included: Johnson Property Group, North Coorangong residential precinct, $322,350 donation to the ALP; Stocklands Development, Ermington former naval stores site, $79,950; Management Services, Breakfast Point Silkstone precinct, $194,150; Brookfield Multiplex, Auburn Hospital, $105,160; Mirvac Projects, Royal Newcastle Hospital redevelopment, $131,100; Manildra Park Pty Ltd, Liquids Facility, Kooragang Island, $316,450; Payce Properties Ltd, Homebush Bay West, $105,000.19
Dempster told his audience:
Former anti-corruption commissioner Tony Fitzgerald QC has warned that Queensland is falling back into its dark past, where a white shoe brigade of National Party cronies, property developers and influence pedlars effectively ran the state. Premier Anna Bligh has banned her ministers from slush-fund access dinners and is distancing her government from lobbyists, many of whom are Labor Party mates and notables.
Bligh appeared on Stateline, saying:
My message to the business community of Queensland is very clear: if there is a lobbyist out there telling you that you need their services to do business with my government, they are lying to you. They are lying to you because they’re trying to make money out of you. Don’t believe them.
In the first session of the new NSW parliament in 2011, Premier Barry O’Farrell introduced the Lobbying of Government Officials Bill, which made it a criminal offence for a lobbyist to be paid a success fee, punishable by a fine of $55,000 for a corporation and $22,000 for an individual lobbyist. O’Farrell told MPs on 4 May 2011:
This bill is part of a series of measures that the government will take to restore confidence in public administration in New South Wales—confidence destroyed by 16 years of a Labor government and a decisions-for-donation culture that had grown up.
Lobbyist success fees raise questions about not only access but also decisions. The fees create incentives for lobbyists to cut ethical corners and they undermine public confidence in government. The decisions (by Labor) were not being made in the interests of their communities or the public but in the interests of developers or others who were paying dollars into the Labor Party machine.
The Premier’s rhetorical bombast should be taken with a pinch of salt. By outlawing success fees and criminalising them, the Liberal leader knew full well he was striking a direct blow at the ALP’s fundraising capacity—and Labor could not openly complain.
Lobbying is now the subject of regulatory regimes in most Western democracies, but they are largely window dressing. The industry is thriving and its influence on legislators and the media continues to grow. In a 2009 survey, Craig Fagan, a senior policy coordinator with Transparency International, wrote: ‘There are now an estimated 15,000 lobbyists who have put down their roots in Brussels, striving for their voice to be heard by the EU. In the US, American lobbying expenses have almost doubled over the last decade, reaching US$2.8 billion in 2007.’ In that year, veteran journalist Robert Kaiser wrote a twenty-seven part series for the Washington Post on the unstoppable rise of lobbying in the US capital. The series, entitled ‘Citizen K Street’, later became a book called So Damned Much Money: The Triumph of Lobbying and the Corrosion of American Government. Asked how he chose the title, Kaiser said he asked lobbyist Bob Strauss why the industry had boomed in the thirty-five years he’d been in it. Kaiser wrote: ‘He [i.e. Strauss] thought about it for a minute and then he said, “You know, there’s just so much money in this.”’ Commentator David Boaz explained the lobbying boom this way: ‘If you want to drill an oil well, you hire a petroleum engineer. If you want to drill for money in Washington, you hire a lobbyist. And more people have been doing that.’20
Washington’s lobbying industry has become so powerful that it has managed to hamstring the Obama administration, frustrating its efforts to introduce health care reforms for needy Americans, clean energy legislation, Wall Street financial reforms, a fairer tax system and gay rights. Obama hasn’t even attempted gun-law reform due to the all-powerful influence of the the body representing the gun lobby, the National Rifle Association, and his proposed cutbacks to America’s military budget will be a bare-knuckled fight with the spruikers for the armaments industry in the lead-up to the presidential election in November. Oil companies spent a reported US$169 million lobbying in the United States in 2009, while the biotech giant Monsanto, which is pushing genetically modified crops, spent more than $6.5 million lobbying the Obama administration in 2010. Some cynics say that Obama is paying the price for his pre-election rhetoric when he told a cheering crowd: ‘I don’t take a dime of their [i.e. lobbyists’] money, and when I am president, they won’t find a job in my White House.’ He’s been copping payback ever since.
In Australia, politicians in federal and state parliaments aren’t heavied to the same degree as their counterparts on Capitol Hill. Nevertheless, the mining and gas industries, big pharma, the liquor and gambling industries, the insurance companies, banks, the media and big retailers represent a formidable set of vested interests. They have shown how they can bend parliamentary decision-making to their liking—and even remove politicians who stand in their way.
Federal parliament and state parliaments in Australia have taken steps to regulate lobbyists with the establishment of a registration system and a set of lobbying protocols. The challenge is to introduce a uniform nationwide system so that MPs, public servants and industry executives all abide by the same set of rules. If nothing is done to tighten regulations, we will slip further down the American path where, in the words of Mark Twain, ‘we have the best government money can buy’.
© Alex Mitchell 2012
- Author’s interviews with Labor members of the House of Representatives in 2011.
- Centre for Responsive Politics website, <OpenSecrets.org>.
- DFAT research paper Australia’s Coal and Iron Ore Exports 1999 to 2009.
- ABC Television, Four Corners, ‘The Comeback Kid?’, 13 February 2012.
- Newspoll, 2008.
- Philip Dorling, ‘Yank inthe ranks’, Sydney Morning Herald, 9 December 2010.
- ‘Gillard ousts Rudd in bloodless coup’, <abc.net.au>, 24 June 2010.
- Editorial, ‘The real political power Down Under’, Independent, 3 July 2010.
- Editorial, ‘Coup has little grace’, Globe and Mail, 28 June 2010.
- The Australian, 16 February 2011.
- ‘ICAC calls for submissions on NSW lobbying’, ICAC press release, 18 May 2010.
- ICAC report, Investigations into Corruption Risks Involved in Lobbying, November 2010.
- ICAC report, Investigations.
- Public servants interviewed by the author in 2011.
- NSW Parliamentary Library Research Service, Key Issues and Regional Profiles for the 55th Parliament, Background Paper No. 2, April 2011.
- Christopher Pearson, ‘Keating tells it like is is for NSW Labor’, Australian, 2 April 2011.
- David Penberthy, ‘Kissing another state Labor government goodbye’, The Punch, 20 March 2010.
- Former NSW planning minister Frank Sartor interviewed by former NSW education minister Rodney Cavalier, Southern Highlands Branch Newsletter, Number 179, November 2011.
- ABC Television, Stateline, 4 August 2009.
- David Boaz, ‘The lobbyist scandals’, Pittsburgh-Tribune Review, 15 January 2006.