The new normal: the former ministers racing down the Gold Brick Road (Part 1)

Feb 22, 2021

This is a three-part look at the afterlife of former Commonwealth ministers of the Crown. Because of space limitations, the inquiry focuses on the notorious post-politics employment of two defence ministers, Christopher Pyne and Brendan Nelson, and one foreign minister, Julie Bishop.

I say “notorious” for a particular reason. In the past 50 years Australia has had 17 defence ministers and 13 foreign ministers. In their post-politics years, some of these people faded into obscurity. Others continued to serve their country by taking on further public positions in their political afterlife. Former defence minister, Ian Sinclair, became the president of Austcare, and former Foreign Ministers, Nigel Bowen, transitioned to Chief Judge in Equity in the NSW Supreme Court and Bill Hayden became Governor-General of Australia.

Another group of ex-ministers had salt and pepper careers after politics. They mixed public work while harking the siren calls of the private sector. Kim Beazley became a professorial fellow at UWA, then Ambassador to the USA, then Governor of Western Australia. Between these jobs he joined the board of Lockheed Martin.

There is a growing number of ex-ministers running down that gold brick road to lucrative placements in the private sector. I refer specifically here to former defence ministers Peter Reith, Robert Hill, Brendan Nelson, Stephen Smith, David Johnston, and Christopher Pyne. All these men transitioned, with unseemly speed, from defence minister to lucrative positions in the defence private sector. Reith to Tenex, Hill to Dragoman, Nelson to Boeing, Smith to EY, Johnston to Saab Technologies and Pyne to EY.

This is the new normal. And we should be quite worried about it. Ex-ministers commodifying knowledge gained in public office should be a national disgrace. Made worse by the risk that such knowledge transfers could be contrary to our national security. Yet the issue sleeps in the backrooms of our consciousness and the Morrison Government has done zilch to respond to it. The government has no effective restraint on ex-ministers hawking knowledge in their political afterlife, Both it and the Opposition have no appetite to stop this exploitation in fear they will tear up the gold brick road that they themselves could walk out of politics.

Christopher Pyne, Julie Bishop, and Brendan Nelson mixed in the highest public power circles in the land. The level of unaccountable power they exercised would surprise ordinary Australians. All moved from senior Liberal ministerial positions to lucrative employment with private organisations that they had strong, material, and ideological alignments with.

In the first part of this series, we turn our attention to the behaviour of Christopher (“Poodle”) Pyne. In August 2018, the parquetry Jarrah floor in the Liberal Party Room in Parliament House was slippery with Malcolm Turnbull’s blood. The assassins, Tony (“Lizard”) Abbott and Peter (“Drork”) Dutton, did not get their way and Scotty Morrison gingerly, but enthusiastically, took the crown. A third of the Coalition Cabinet quit in the months following. The “Poodle” was one of them.

Pyne was elected to the House of Representatives for Sturt, South Australia, in 1993. A popular member, he was elected a further 8 times until his retirement prior to general elections in 2019. Across his parliamentary career he held five portfolios. The relevant ones for us here are, Minister for Defence Industry, July 2016 to August 2018, and Minister for Defence from August 2018 to May 2019. Think of these appointments as once in a lifetime opportunity to bag defence knowledge for future financial gain. As Pyne’s retirement date was set, defence contractors circled, desperate to access what is in the bag, like kids scrambling for a sugar hit.

In April 2019, while he was still the Minister for Defence, Pyne met with EY [old Ernst Young] to discuss “his interest in utilising his experience as a politician and Minister to assist a professional services firm grow their private sector defence industry business” (emphasis added). This candidness was not a stumble moment for EY. It could boldly declare why they wanted Pyne on board because they knew that no legal impediment existed to stop it.

There has been no better time to be getting into the emerging Australian arms manufacturing business as now. Under the new Force Structure Plan announced by “Holidays” on 1 July 2020, the Government intends to provide Defence, including the Australian Signals Directorate, with total funding over the decade to 2029-30 with a massive injection of $575 billion, including $270 billion in capability investment. There is going to be a huge demand for more war toys with “Made in Australia” stamped on them. Lots of money will be made.

Within the Force Structure Plan is a new defence export strategy that the “Poodle” drove in both his portfolios. There are now over 4,000 businesses employing approximately 30,000 staff with Defence contracts. An additional 11,000 Australian companies directly benefit from Defence investment, and when further downstream suppliers are included the benefits flow to approximately 70,000 workers in total. Investments set out in this Plan will support continued growth of Australia’s defence industry.

Pyne has long been an advocate of private sector involvement of the Australian defence industry. For example, he pushed for more private involvement in the Joint Strike Fighter program. So far Australia had won JSF contracts totalling $1 billion.

This is Christmas in July for the arms manufacturers. While Minister for Defence Industries Pyne advanced private sector involvement in an initial ten “sovereign industrial capability priorities”. All operationally critical to the Defence mission announced in July 2020. There include, Collins-class submarine maintenance and technology upgrades, munitions and small arms research, design, development and manufacture, and combat clothing survivability and signature reduction technologies.

It a new gold rush for the defence contractors. The competition between them will be fierce. The arms dealers will need to constantly establish and maintain critical relationships with government. They are going to depend more and more on people with superb network knowledge. Did anyone mention the “Poodle”?

Nine days after his meeting with EY, a formal offer of employment was made to Pyne. The “Poodle” took only three days to consider and accept the offer. He formally ceased as Defence Minister on 29 May 2019, when Scotty’s second ministry was sworn in. Thirty-nine days later he was behind a desk at EY. That is 39 days. Not the 504 days required by the Standard.  Yet Scotty found nothing wrong, Martin Parkinson, Secretary of the Department of Prime Minster and Cabinet, found nothing wrong, and Mathias Corman, then Government Senate Leader, found nothing wrong. Amazing! Parkinson, on an annual salary of just under $1million, carried out the Pyne conflict of interest investigation in such a shallow way that it attracted the rebuke of a Senate Committee.

Like all prudent businesspeople, Christopher always had a few irons in the fire. He was a part owner of GC Advisory, a public affairs, strategic communications advisory company. GC Advisory is on the Lobbyist Register and Pyne is listed as a Registered Lobbyist. One of GC Advisory’s clients was the duMonde Group. Austender records show that duMonde received $6 million in contracts from the Department of Defence, including during the period that Pyne was minister. GC Advisory removed duMonde Group from the registry after questions were asked as to whether GC Advisory connection to the duMonde Group breached the Statement of Ministerial Standards.

This was the Standard that Scotty issued on 30 August 2018, after the cleaners had been into the Cabinet Room. This statement has been re-issued with revisions by every prime minister since 2007, when Kevin (“Two Times”) Rudd issued his, with a paltry non-engagement period of 1 year. Six years later the non-engagement period was extended to a still paltry 18 months period by the “Lizard”, in December 2013.

Scotty’s Ministerial Standard read:

Ministers are required to undertake that, for an eighteen-month period after ceasing to be a Minister, they will not lobby, advocate or have business meetings with members of the government, parliament, public service or defence force on any matters on which they have had official dealings as Minister in their last eighteen months in office. Ministers are also required to undertake that, on leaving office, they will not take personal advantage of information to which they have had access as a Minister, where that information is not generally available to the public.

Nice try Scotty, but no cigar. No penalties for infractions make this Standard useless. It is all very woollen jumper. Cosy and easy to put on and take off. It ignores the fact that ex-ministers are under no legal or moral obligations to put Australia’s need before their own anymore. The Standard is couched in the soft words of ex-ministerial honour when it should be phrased in the hard words of the law.

The Standard only focuses on “information” obtained by ex-ministers while in office. EY and the other corporates that circle ex-ministers have no interest in “information”, particularly when it is 18 months old. What they want is entry into the mind of the big people in government. The ones who sign off on contracts. They want reflections, opinions, insights into government processes and gatekeepers. These valuable informal insights stretch from the serious (“I think he is coming around. I’ll talk to him”) to the idiosyncratic (“don’t mention cats, she hates cats”). They want Pyne to evaluate their schemes. They want responses from Pynes before they commit millions. They want to hear him say “that’s a good approach” or “I would not go in that direction”. And more than anything they want his thinking on defence directions, that he had such a significant role in shaping.

In fact, a document exists that spells out exactly what EY wanted from the “Poodle”.

  • make defence industry clients aware of EY when a request is made of him for a recommendation of a relevant professional services firm;
  • meet with EY’s defence industry team to advise them on how best to engage with the defence industry, based on his 26 years’ experience as a politician;
  • attend initial meetings with private sector clients to introduce EY as a reputable provider of professional services;
  • speak at relevant defence industry events as a representative of EY;
  • advise EY’s defence industry team on our growth strategy; and
  • provide advice on the interpretation of Department of Defence policy documents, such as the Defence White Paper.

Some of the items on EY’s errand list for Pyne are getting close to acts of industrial espionage.

S.91.1 of the Criminal Code Amendment (Espionage and Related Matters) Act 2002, says,

2)  A person commits an offence if:

(a)  the person communicates, or makes available:

(i)  information concerning the Commonwealth’s security or defence; or

(ii)  information concerning the security or defence of another country, being information that the person acquired (whether directly or indirectly) from the Commonwealth; and

(b)  the person does so:

(i)  without lawful authority; and

(ii)  intending to give an advantage to another country’s security or defence; and

(c)  the person’s act results in, or is likely to result in, the information being communicated or made available to another country or a foreign organisation, or to a person acting on behalf of such a country or organisation.

Penalty:  Imprisonment for 25 years.

EY is a mega world organisation with a mixed corporate ethics record. It is conceivable that Pyne briefings could go through EY’s complex global data circuitry and be incorporated in reports available to other countries to be used in a way to compromise our national security.

There should be a strong law prohibiting private sector organisations from circling ministers before that leave parliament. And there should be an equally strong law upholding a decent non-engagement period for ex-ministers. My suggestion is that this period should be 5 years.

Two other worrying consequences of this unseemly pact between Pyne and EY surface here. Pyne is selling something he does not personally own. The information and experiences that is now commodified were all obtained in his public capacity. He cannot now use this for profit.

Second, by EY securing this priced-up service from Pyne, a market distortion is occurring. No level playing field here between the defence contactors.

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