Rinehart’s secret millions to the IPA
The Institute of Public Affairs is the voice of freedom in our country, so its latest annual report says.
Over and over again, the word is repeated, like a mantra – freedom. On one particularly busy page, it appears 16 times. Freedom of speech, freedom of religion, freedom of association. Freedom to own private property. Freedom that is the legacy of Western civilisation. Freedom that is under threat from overbearing government. Freedom that can only flourish when humans “have the dignity to make their own decisions”.
The IPA is big on freedom, except perhaps freedom of information. If you want to know who funds this right-wing “think tank”, it won’t tell you.
Over the years, we have gleaned fragments of information about the institute’s backers. We know big tobacco was attracted to the IPA’s resolute opposition to “nanny state” regulation and kicked in funds; that the fossil fuel industry supported its climate change denialism; that Rupert Murdoch, whose father, Keith, was a co-founder of the IPA more than 70 years ago, was as one with it in its opposition to the funding of the ABC.
With a few minor exceptions, however, there was never much of a money trail. Despite promises it would reveal the sources of its funds, the IPA has not been forthcoming with details about who donates, how much they donate, and to what ends.
That changed significantly last week, courtesy of a long-running legal battle within the family of Gina Rinehart, one of Australia’s richest people. It was revealed in proceedings before the New South Wales Supreme Court that Rinehart donated $2.3 million to the IPA in 2016 and another $2.2 million in 2017.
These are tiny sums relative to Rinehart’s net worth, estimated by The Australian Financial Review in May to be $12.68 billion. But they loom very large for the IPA.
The institute’s annual reports tell us its total revenues were $4.96 million in 2015–16 and $6.1 million in 2016-17. Thus Rinehart’s money, given through her company, Hancock Prospecting, made up almost half the IPA’s income in one year and well over a third in the other. She has, in effect, a controlling interest.
You would never know that by looking at those yearly financial statements, though. They contain no hint of the extent to which the so-called think tank is dependent on a single donor. Indeed, they seem to hide the fact.
In its 2015–16 report, the IPA claimed 91 per cent of donations came from individuals, while foundations, companies and “other” sources each contributed 3 per cent. In 2016–17, it claimed 86 per cent of revenue was from individual donations and only 1 per cent from companies.
In words and colourful graphs, they give the impression of broad-based financial support from thousands of individuals, of an organisation not beholden to corporate supporters.
But Hancock Prospecting is clearly a company. By phone and email The Saturday Paper sought an explanation from the IPA for this, but did not get one.
Sadly, the Supreme Court revelations related to just two years. Rinehart has been a major force within the IPA – and presumably a major donor – for far longer than that. In 2013, the institute presented her with a special “free enterprise leader award” and in 2016 it bestowed on her an honorary life membership, in recognition of her “commitment … to the work to the Institute of Public Affairs over many years”.
Rinehart has looked for influence elsewhere, with less success. She sold out of a 19 per cent stake in Fairfax Media without getting the board seat she had wanted, and had lost as much as $150 million on her investment in the Ten Network before it was sold to CBS.
The IPA is an altogether more cost-effective way of exerting influence. The demand of the 24-hour media cycle for opinionated commentators sees institute associates regularly given airtime to spruik views that happen to accord with Rinehart’s own. The 2017 annual report boasts that people have spent a total of 1.49 million minutes watching IPA videos, although it is not clear what is meant by “IPA videos”. The claim is illustrated by a screen shot of the institute’s Georgina Downer – now the Liberal Party candidate for today’s Mayo byelection – on Sky News.
The institute has a long history as a feeder organisation for candidates for the Liberal and National parties. Conservative politics at both state and federal level is replete with IPA alumni: Mitch Fifield, James Paterson, Tim Wilson, Mike Nahan, and David and Rod Kemp, to name but a few.
In 2013, at a 70th anniversary bash for the institute, in front of guests including Murdoch, Cardinal George Pell and Rinehart, Tony Abbott lauded the organisation’s political partisanship and influence, saying of its executive director and Liberal Party preselection candidate John Roskam: “John, you’ve done very well with just 20 staff – but remember what Jesus of Nazareth did with just 12, and one of them turned out to be a rat.’’
The IPA has done well in advancing the interests of its backers. One example is the Northern Australia Infrastructure Facility, a $5 billion unaccountable, secretive, conflict of interest-ridden boondoggle.
Rinehart and the IPA had long pushed for the establishment of such a facility, to fund major projects such as ports, mines, dams, rail et cetera, which could not otherwise get financed. This advocacy of government funding is hardly consistent with the institute’s claimed dedication to the principles of smaller government and market forces, but its support for such a body has been strong. The fund was established in 2016, and although it hasn’t ruled directly on Rinehart projects it is considering projects that may benefit Rinehart ventures.
The IPA is commonly described as a think tank but it might equally be considered an associated political entity or lobbying organisation. It is registered as a non-profit with the Australian Charities and Not-for-profits Commission and has deductible gift recipient status, meaning its donors get a tax break. It also gets other tax exemptions that apply to philanthropically supported organisations.
Which leads us to a much bigger question. Given that the IPA and other think tanks have a significant influence on government policy, should the public not know more about their financial affairs?
John Daley, the chief executive of the Grattan Institute, thinks so.
“I do think it reasonable that donors be disclosed, and the reason is this: think tanks have a profile in the community and in the media as entities that purport to be independent,” he says. “Consequently, the work they produce is given a status that it would not have if it came simply from a lobby group.
“It is of concern if you use that brand as a think tank to pursue a vested interest, without disclosing that is what you are doing.”
That concern is all the greater, he says, when a think tank is dependent on a single source for much of its funding.
Says Daley: “When a single donor provides somewhere between a third and a half of your revenue, and that donor has very clear personal financial interests, and when your organisation espouses positions consistent with those interests, at the very least people are entitled to know that and form a judgement.”
The Grattan Institute is entirely open about its sources, and it can afford to be. It was established 10 years ago with a number of large grants.
“We got $15 million from the Commonwealth government and $10 million from the Victorian government and $4 million from BHP and $1 million from NAB,” Daley says.
“That was one-off money, given at the beginning, with the very clear understanding that those donors could not get their money back.”
Grattan’s independence, Daley says, is protected by the fact it is not reliant on pleasing recurrent funders. His claim is supported by the record: Grattan has not pulled any punches in its policy analysis.
And, says Daley, his institute has never and will never allow itself to be co-opted into paid policy formulation or analysis.
“We will never take money from a government department to review a government policy. Never,” he says. “You can’t possibly be independent when you do that.”
Let’s go to the example of another politically impactful think tank, the left-leaning The Australia Institute (TAI). It does not reveal the identity of all its donors, although its executive director, Ben Oquist, says several of the largest are well known.
The Kantor family, related to the Murdochs, was TAI’s largest donor for its first decade of existence, Oquist says. Other significant funders include the McKinnon Family Foundation, David Morawetz’s Social Justice Fund, a subfund of the Australian Communities Foundation, Diana and Brian Snape, and the Susan McKinnon Foundation.
Oquist says this money is altruistic. “The strength of our ideas is the main reason why our donors choose to financially support the institute,” he says. “If we were to allow donors to dictate our research I suspect our donations would dry up pretty fast.”
Where the institute does commissioned research – for non-government organisations, church groups, companies or unions – that is clearly disclosed. “We are careful that our commissioned research work also does not compromise our independence,” Oquist says.
Still, the question of transparency troubles The Australia Institute. One of the organisation’s directors, Elizabeth Cham, is arguably Australia’s foremost expert on philanthropy. She has worked in the sector for 25 years, set up the peak body Philanthropy Australia and, with David Gonski, persuaded the Howard government to change tax laws, which resulted in the establishment of 1500 new charitable foundations.
Cham wants the law changed to force greater transparency around philanthropic giving.
“Philanthropy is very much linked to tax,” she says. “Treasury estimated in 2008 that every philanthropic dollar receives a minimum of 45 cents from the public purse. Other people estimate about 50 cents.”
Cham points to the United States, which has a much more established tradition of philanthropy, and which decided in 1969 – after 10 years of debate – that taxpayers had a right to know who contributes.
“People in this country argue the same thing they argued in the US 50 years ago: It’s private, it’s private, it’s private. Well, actually, it’s not.
“Whether you’re talking about Gina Rinehart and the IPA or some of our funders, that attitude – that it’s a wholly private matter – has to change.”
In particular, it has to change for think tanks. As Cham says: “ ... when you fund think tanks you are funding ideas, which is the most important thing you could fund. And we should know who is funding which think tank to what end.”
In Rinehart’s case at least, we do.
This article was first published in the print edition of The Saturday Paper on Jul 28, 2018 as "Rinehart’s secret millions to the IPA". Subscribe here.