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The invisible hand of ‘legal’ corruption costs every Australian

by Clancy Moore | Sep 9, 2023 | Government, Latest Posts

From the dodgy politician getting a mining license against the wishes of landowners, to the multimillion-dollar government IT contract awarded to a company belonging to a friend of a federal minister. Corruption is rarely visible but its impacts are felt by every Australian, Clancy Moore reports.

Most of us expect that a modern, well-resourced country like Australia would have little or no corruption. Yet people are often shocked by the scale of corruption that Australia’s laws allow. A nudge and a wink, a word in the right ear, a well-timed donation, it’s all part of the game of mates.

Or the white elephant infrastructure project that costs billions, helps win an election but doesn’t actually benefit business or local constituents.

So how does this happen?

Cash for access

Cash for access. Pay to play. Whatever you call it, some powerful industries and billionaires use their money and connections to influence government policy and public spending, often against the public interest.

Cash for access puts our parliament under the influence of a potent cocktail made up of political donations mixed with intense lobbying behind closed doors; often with a garnish of ‘revolving doors’ where MPs, advisors, and corporate leaders move between industry lobbying roles and political offices. This not only creates corruption risks, but creates an uneven playing field in our democracy. It means those with money and power get special access to and influence over our decision makers to further their private interest, often to the detriment of the public interest.

And who uses this (not so) secret sauce? Industries like the gaming sector, defence, energy, tech-billionaires, and, of course, the Big Four consulting firms.

Analysis by the Centre for Public Integrity found the big four consultancy firms – PwC, Deloitte, EY and KPMG – donated $4.3 million to the major parties over the last decade. Coincidently, over the same period, the value of their government contracts increased by 400%. Not a bad return on investment.

The Big 4, “business BS” and the beast with seven heads

Amid the extraordinary scandal that has engulfed PWC earlier this year, the consulting firm moved to jettison its political donation program.  The firm’s acting CEO Kristin Stubbins said the move to no longer make political donations was the best way of “ensuring the highest standards of governance”.

Tellingly, the other consulting firms did not follow suit. In fact, as part of the Senate Inquiry into the integrity of consulting services, one of the Big Four openly admitted that they would not stop using political donations unless the other firms did as this how they get access to politicians.

Alcohol and gambling

Alcohol and gambling companies and their lobby groups also help finance our major parties. In fact, they donated $2.165 million to Australia’s major political parties in 2021-22, representing a 40 percent increase on the previous year.

Addicted to donations: alcohol, gambling, fossil fuels, property sectors stump up big

The ‘Restoring Trust Bill’

So how do we safeguard our democracy against the rich and powerful?

Independent MP, Kate Chaney’s Restoring Trust Bill introduced to the House of Representatives a few weeks ago, would bring about much needed transparency and get the ball rolling on reforms.

The Restoring Trust Bill proposes thirteen changes to electoral and political donation laws, aimed at bolstering democratic integrity and rebuilding public trust in the electoral process.

From levelling the playing field so that new entrants can challenge incumbents, to banning untruths in political advertising, the Bill is, as others have noted, an important step towards a more accountable political landscape. This is the landscape that Transparency International Australia has been working for since the early 2000s.

However, the Bill leaves open a significant loophole for exploitation: the Bill only seeks to cap the donations from a relatively narrow range of industries – gambling, liquor and tobacco. Whilst these industries are harmful, this raises the potential for other industries to be targeted and shows the challenge of regulating political finance and donation laws.

For instance, most Australians don’t want Clive Palmer’s Mineralogy donating $116m to buy influence, but do we want our elected officials choosing which industries are banned and which are not?

Donation caps

The major parties are already racing to garner donations in anticipation of a political donations cap which Special Minister of State Don Farrell has indicated is intended to be legislated this year.

With the government set to introduce legislation in response to the Joint Standing Committee on Electoral Matter’s work, we need to have a mature conversation about political finance, donations, and campaign expenditure reforms. For example, one suggestion is to introduce a cap on political donations of $15,000 a year (or $45,000 per 3-year election cycle).

Real-time reporting

Another important reform is ‘real time’ reporting of donations, so there can be greater transparency and accountability – not the lamenting of conflicts, exposed long after the fact.

And we must shed a light on secret donations – we need all political donations over $2,500 to be publicly declared. This includes better defining ‘gifts’ – such as dinners and the hosting of political fundraisers – so that they are reported as a donation.

We know that 40% of donations at the last election were not disclosed, and shining a light on these secret donations is critical to create an even playing field.

Undisclosed donations

Given the colossal advantage of incumbency the two major parties have, and their long-standing support from powerful industries, any reforms must not only help get big money out of politics but also not disadvantage independent candidates and minor parties seeking to run in elections.

aec-undisclosed

Source AEC

Clancy is the CEO of Transparency International Australia. He brings over 15 years of advocacy and international development experience in the Solomon Islands, Myanmar, and Australia, including leadership roles with Oxfam and ActionAid. He previously led the Australian arm of the global anti-corruption coalition, He lectures at several Australian universities and appears regularly in the media.

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