Lobbyland. Fixing corruption risks in lobbying

Oct 5, 2020

‘A lot of money can depend on the success or failure of a lobbyist’s representations to Government.’ That statement, in a report by the NSW Independent Commission Against Corruption (ICAC) in 1990, was about lobbying by property developers, particularly in local government, but it is true of a great deal of lobbying at national, State and local levels. 


Credit – Unsplash

Lobbying about legislation, about taxation, about grants, about industry development or protection, aged care, health, social security, the award of government contracts including defence procurement (the biggest) or even employment, can all affect the way governments collect or dispense ‘a lot of money’ to the benefit or detriment of those who employ lobbyists, or lobby on their own behalf.

On the other hand some lobbying of governments by, for example, non-profit organisations such as charitable or religious institutions may not involve commercial or business interests or outcomes. But lobbying of this variety is a miniscule proportion of the lobbying that occurs in Canberra and elsewhere.

It is a measure of the successful lobbying of those lobbyists who are primarily on the ‘lot of money’ side of the lobbying divide that Australian governments have adopted a very benign view of the activities of lobbyists. If you read the prefaces to the various codes of conduct that have been adopted for lobbying in Australia you would be left with the impression that lobbying is a process that greatly benefits the process of government.

For example, the Commonwealth Code says in its preamble:

‘Lobbying is a legitimate activity and an important part of the democratic process. Lobbyists can help individuals and organisations communicate their views on matters of public interest to the Government and, in doing so, improve outcomes for the individual and the community as a whole.’

Lobbyists would have said much the same thing if they had written in praise (or defence) of their role.

On the other hand ICAC, which is currently conducting its second review of lobbying – a decade after the NSW Government failed to implement most of the recommendations in its first report – has found that ‘lobbying attracts widespread community perceptions of corruption and involves a number of corruption risks’.

And the High Court, based on ICAC’s reports, has decided that the corruption risks are so great that it is legitimate for governments to ban a certain class of lobbyists – property developers – from making political donations.

ICAC’s current inquiry is examining whether ‘there are inherent corruption risks in relation to direct and indirect lobbying’. It plans to say whether the present regulatory regime in NSW needs to be revised, in which areas of lobbying there is a recognised or an unacceptable risk of corruption or undue influence and whether changes should be limited to those areas, what those changes should be and whether regulatory changes to implement appropriate transparency and accountability measures should be directed at elected or appointed public officials. 

ICAC’s issues paper and its decade-old prior report make clear the concerns that is has about the inadequacy of the present regulatory system. By any measure the system must be judged completely inadequate and unfit for any purpose involving transparency and accountability – two of the measures ICAC considers to be most important in assessing corruption risks.

The Commonwealth and most of the States have adopted a very light-touch approach to the regulation of lobbyists, based of codes of conduct which provide definitions, establish registers of lobbyists and set out rules governing contact between lobbyists and government representatives.

 Most of the schemes are not statutory – they depend for their effectiveness on government representatives not allowing themselves to be lobbied by people who are not on the lobbyists register and who do comply with its demands. Being registered facilitates lobbyists obtaining passes to enter Parliament House. 

Most of the codes also set down rules that are supposed to prevent former ministers and senior public servants from lobbying for prescribed periods after they leave office – generally about 18 months. This requirement, like most in the codes, is easily avoided.

The Commonwealth code defines lobbying activities as ‘communications with a Government representative in an effort to influence Government decision-making, including the making or amendment of legislation, the development or amendment of a Government policy or program, the awarding of a Government contract or grant or the allocation of funding’. There are a number of exclusions, including responding to requests for information or submissions or tenders and statements made in a public forum.

Most lobbying is directed at ministers, ministerial staff and senior public servants, though backbench MPs and Senators are also sometimes targeted. Some lobbying is indirect – aimed at influencing public opinion through individual journalists or direct advertising.

The biggest problem with the current system of regulating lobbying in Australia is that a huge proportion of the lobbying that occurs – and probably the most effective lobbying – is simply not covered. It falls outside the regulatory regime.

The current Commonwealth system (together with those of most States) is concerned only with what are called ‘third-party lobbyists’. These are people or organisations who lobby on behalf of third-party clients. There are lots of them – the Commonwealth register in mid-September included 272 separate lobbying entities, employing 595 individuals representing 2,204 clients. Another register, under the foreign influence transparency scheme, had the names of 73 entities, representing 148 foreign principals. There is some overlap between the two registers.

There are two major problems here: these are only a small proportion – probably about 20 per cent – of the active lobbyists in Canberra; and as a group, they are not even the most effective or important lobbyists.

The Commonwealth and most of the States exclude from those they call ‘lobbyists’ three extremely important groups who are extraordinarily active lobbyists. First are non-profit organisations ‘constituted to represent the interests of their members’. These include really heavyweight lobbyists, such as the Business Council of Australia, the Minerals Council of Australia, the Australian Petroleum Production and Exploration Association, the Australian Bankers Association, the Property Council of Australia, Medicines Australia, the Pharmacy Guild of Australia, the Australian Medical Association (AMA), the Australian Council of Trade Unions (ACTU) together with organisations representing some religions.

Most do not disclose details of their lobbying operations, but a recent annual report of the Property Council revealed that it had spent more than $8 million on ‘advocacy’.

A second extremely influential group who aren’t counted by the various codes as lobbyists are people and organisations lobbying on their own behalf. These include virtually all the major corporations. When BHP or one of the major banks or Qantas wants to influence a government decision they don’t rely primarily on a third party lobbyist (though they may have one). Rather they use their in-house government-relations staff to back direct contact by their CEO or the chairman of the board with the Prime Minister, the Treasurer or the relevant senior minister.

The third group who lobby but don’t have to register as lobbyists are professionals such as lawyers, accountants, town planners and engineers. These days many are heavily involved in government in their own right as highly paid consultants. With a foot already in the door, they are in a prime position to know where and how to make pitches on behalf of their clients. It is here, incidentally, where former senior politicians and public servants often go in their retirement and through their former colleagues provide access to government decision-making processes – raising further corruption or integrity concerns.

All three groups can be involved in what may be described as government initiated or internalised lobbying. This is where the government takes the lead in bringing lobbyists into its decision-making processes.

This, again according to the formal definitions in the various codes, is not lobbying.

It is, however, one of the significant ways in which entities outside the government are able to influence government decision-making. It is not regulated in any way. It is as open or as secret as the government decides it should be. And there is no way the public can monitor what is advised, accepted or rejected.

One current example illustrates how important the process might be.  Back in March the Prime Minister announced his creation of a National COVID-19 Coordination Commission to provide ‘a business perspective to Government on Australia’s economic recovery’. It operates in secret, untouchable by Freedom of Information laws. Two of its members, with backgrounds in oil, gas and energy, have just retired. Their input no doubt contributed to the government’s just announced decision to back, and if necessary build, a gas-fired power plant in NSW and underwrite the construction of new gas pipelines.

Mostly, however the lobbyists who aren’t officially lobbyists contribute to government policy in the background, providing input into policy development and particularly the drafting of legislation – well before the public is informed, or occasionally, consulted.

The various lobbyists’ codes of conduct do not catch these activities. They should. The Organisation for Economic Cooperation and Development (OECD), of which Australia is a member, has developed what it calls Principles for Transparency in Lobbying, divided into three sections:

  • Building an effective and fair framework for openness and access;
  • Enhancing transparency, and
  • Mechanisms for effective implementation, compliance and review.

Australia’s system satisfies very few of the principles – openness, access, transparency and compliance being almost completely lacking. This need not be the case. Canada has had a very effective system in place for many years, requiring the registration of all those who actually lobby government – including those the Australian codes specifically exclude from coverage such as industry groups and large corporations lobbying on their own behalf.

 Transparency requires that contacts between lobbyists and government officials – ministers, their staff and public servants – should be disclosed publicly. As should the subject matter of the lobbying (subject to appropriate commercial-in-confidence rules). 

Fairness dictates that access should not depend on monetary considerations. Political donations can and do influence government decision-making. They certainly affect access to decision-makers. If the system were to be truly fair, lobbyists would be banned from gift-giving and making political donations.

An effective regulatory system also needs an independent regulator (not a public service department), armed with power to enforce standards and, if necessary, prosecute breaches. 

The problem is that the lobbyists have so much influence and power that governments are unwilling to take the steps necessary to ensure that lobbying is corruption-free.

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