This is about more than a bottle of wine

Apr 19, 2014

To mix my metaphors, the bottle of red wine that Barry O’Farrell received is only the tip of an iceberg – a sleezy world of lobbying, influence-peddling and corruption.

It is really about the covert influence of political power players in undermining our democratic system. No wonder there is a growing alarm.  People with money and power have access to decision-makers and with influence and outcomes that the public is not aware of, or at least until it is too late.

Nick Di Girolamo was doing more than slipping a $3,000 bottle of Grange Hermitage. He is at the centre of a searching ICAC investigation into the lobbying activities of Australian Water Holdings which sought a billion dollar contract with the NSW government. He was also a major fund-raiser for the Liberal Party. Barry O’Farrell didn’t send just one personal note of thanks to Di Gerolamo. He had ten meetings with him. They called each other by phone once a fortnight with speed dialling.

We have seen the awful underbelly of the ALP in NSW. Now we are seeing the sleazy underbelly of the Liberal Party.

We should consider the relationship between Barry O’Farrell and Di Girolamo in the context of the widespread pattern of privileges dealt out to powerful insiders.

  • The concessions to James Packer without due process for his high-rollers casino at Barangaroo. There was no tender process and no genuine community consultation. A deal was fixed by lobbyists for the insiders
  • The banks and the financial advising industry through lobbying persuaded Arthur Sinodinis to skew the finance advising sector in their favour.
  • The Rudd Government was abysmal in its handling of the super profits tax for miners, but the Australian Mining Council and the big miners, for an investment of $22 million in advertising and lobbying saved the mining industry over $60 billion in tax over ten years. I don’t know that we have ever had a heist like this in our history.
  • The polluters and their lobbyists are successfully rolling back the penalties that they should be paying for the pollution that they put into the atmosphere. They are despoiling and violating our fragile planet.
  • All political parties are at the beck and call of the alcohol and hotel lobby. It took months for the O’Farrell government to take action against alcohol-fuelled violence. Right to the end O’Farrell was unwilling to make the trading hour changes that had been so successful in Newcastle. Alcohol sponsorship dominates our major sports. We have a ‘war’ on illegal drugs but the alcohol industry causes much more damage than illegal drugs. But the alcohol industry prevents effective government action against the alcohol industry. And guess who is the Chief Executive of the NSW Hotels Association? It is Paul Nicolaou who was engaged by Australian Water Holdings as a lobbyist in 2007.At that time he was Chairman of the Millennium Forum, the NSW‘s Liberal Party’s major fund raising body.
  • The gambling and clubs industry lobbying effectively stopped attempts to curb problem gambling.
  • The superannuation industry is relentless in its lobbying to defend the taxation concessions for superannuation which Treasury advise cost $ 32b p.a. These concessions massively favour the wealthy.
  • The health lobby – the AMA, the Pharmacy Guild of Australia, Medicines Australia and the Private Health Insurance industry oppose almost every government attempt to reduce wasteful health expenditures and improve efficiency. They are the rent seekers par excellence. The problem is not with Medicare. The problem is with the vested interests who exploit Medicare. The AMA opposes almost all attempts to modernize the 19th century work practices that are widespread in the health sector. The Pharmacy Guild is vehemently opposed to competition. Medicines Australia charges $2b more p a compared with what New Zealanders pay for the same medicines. And our PHI companies undermine Medicare and receive a $5b annual subsidy, far more than the auto industry received. The health lobby has all politicians at their beck and call.
  • Senator Nash survived as Assistant Minister for Health after it was revealed that she had ordered the Department of Health to take down its junk food rating website.  We found out later that her former Chief of Staff had a shareholding in a firm that lobbied for junk food companies.

Professor Ross Garnaut expressed his frustration about the powerful vested interests who are imperilling good policy development in Australia, particularly in the climate-change area. He described these lobbyists and vested interests as representing a ‘diabolical problem’. They are blocking the necessary but politically difficult paths of reform.

The former head of the ACCC Graeme Samuel warned recently that “a new conga line of rent seekers  is lining up to take the place of those that have fallen out of favour’ with the change of government in Canberra

What can be done to turn back the insidious rent seeking culture that lobbyists are driving?

We have a register of lobbyists in Canberra and most states, but it is woefully inadequate as events in the ICAC show.

First, we don’t have any information about who ministers and officials are dealing with. Their diaries should be publicly available, showing details of all major matters discussed between ministers/officials and lobbyists. This information should be publicly available within ten days of any such contact or meetings – either direct or indirect.

Secondly, the lobbyist register in Canberra, for example, includes over 900 full time lobbyists but it does not cover firms and organisations who directly lobby, e.g. Minerals Council of Australia, AMA, Business Council of Australia and the PHI industry. In almost all cases these major organisations do not employ third party lobbyists but influence ministers and officials directly. This is a gaping hole which needs to be addressed if we are to achieve transparency on the role of influence peddlers. These in- house lobbyists are not registered yet they are far more powerful.

Third, we need improved disclosure of political donations as a result of the High Court decision. Disclosure of political donations should not be for individuals only but for companies and other organisations.

Fourth, ministers and senior officials should be prohibited from employment and lobbying for at least 3 years with firms and interests that they had dealings with as ministers or officials.

It should not be left to occasional interventions by the ICAC and their counterparts in the other states. We need a root and branch review of how powerful people and organisations are able to bend public life to their benefit. We usually only find out when we are confronted with a fait accompli, like Barangaroo.

We face an enormous problem that goes far beyond a bottle of Grange wine. There is a seething mess of influence peddling by vested interests who are winning the day at the public expense.

Unfortunately we only get a glimpse of this dark underworld by occasional disclosures by the ICAC or similar bodies.

(See also my blogs of January 24 ‘The scourge of special interests’ and February 14 ‘Corporate bullies.)

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