Probe into ex-ministers’ jumps to private sector
By all accounts, EY was gleeful when it secured Christopher Pyne in his first role after politics. According to a partner at a rival top accounting firm, EY’s joy at the appointment was well known in the sector. “They boasted they had the keys to the filing drawer,” said the sector source.
The Morrison government this week had to tiptoe through the embarrassment of Pyne and former foreign minister Julie Bishop both taking highly paid jobs with private-sector organisations that operate within the remit of their previous ministerial responsibilities.
Pyne was defence industry minister from July 2016 to August 2018. He pushed and schemed to become defence minister, his dream job, which he left at the May election. He started with the big accounting firm EY (previously Ernst & Young) five weeks later, at which time the company had this to say: “EY is ramping up its defence capability ahead of a surge in consolidation activity and the largest expansion of our military capability in our peacetime history – $200 billion over 10 years out to 2026. We’ve engaged Christopher Pyne to assist with this.”
EY went on to say Pyne would also help “lead conversations about what South Australia needs to do to meet the challenges and opportunities this huge defence investment will bring”. The company’s enthusiasm at getting Pyne on its payroll, and the opportunities he presented for them, could not have been more obvious.
EY is one of the Big Four accounting firms – the others are KPMG, Deloitte and PwC, formerly PricewaterhouseCoopers. Between them, they carry out an increasing amount of consultancy work for the federal and state governments. In New South Wales, following collective donations to the Berejiklian Coalition of $915,000, the four won contracts worth $562 million in 2017-18. It was revealed in Brisbane this week that the Palaszczuk Labor government spent $300,000 on external consultants for its 2019 budget. The government confirmed that two of the consultants, from PwC and KPMG, previously served as chiefs of staff to former Labor Queensland premier Anna Bligh. The state’s under-treasurer said this was “normal practice”.
At a Commonwealth level, spending on consultancy services from the Big Four more than doubled between 2013 and 2018, when it reached $700 million, as Michael West revealed in this paper.
It is easy to see why a firm such as EY would be so excited about getting Pyne’s feet under an executive desk. However, after the initial enthusiasm, the company went a bit cool and Pyne began to backtrack on what he would be doing in his new role, emphasising how proper everything would be. After EY said it had brought Pyne on board to “assist” with that $200 billion pot of defence contracts, the former minister took to Twitter to say he knew his responsibilities and he wouldn’t be lobbying or have any dealings with government ministers. He wasn’t going to take “personal advantage of information I received as a minister”. He said he wouldn’t use any information that wasn’t available to the general public. It was a dramatic shift in just four days.
Bishop was also on the influence roller-coaster, taking a non-executive job with Palladium. According to its website, the front page of which features a smiling photo of the former foreign minister, the group “works with governments, businesses, and investors to solve the world’s most pressing challenges”. It has more than $500 million in contracts with the Department of Foreign Affairs. According to Palladium, in joining its board Bishop “brings a network of global contacts, years of public service experience and background in driving innovation in international development”.
To pick through all of this, the government set up a desktop inquiry, conducted by the Department of Prime Minister and Cabinet (PM&C) secretary, Martin Parkinson. This in-house probe involved Parkinson going through all information on the public record, including various news reports, and speaking with the two former ministers. Parkinson said Pyne told him EY was a client of the public affairs advisory firm GC Advisory, which the ex-minister operates with his former chief of staff Adam Howard. The EY contract is expected to run for six months and Pyne said he would spend about two days a month on matters involved.
Bishop told Parkinson she had not been a minister for almost 12 months prior to her association with Palladium being formalised. She added that the aid project that Palladium is most closely involved with in Australia had been recast during that time. Bishop told Parkinson her work with Palladium would be almost exclusively confined to matters relating to the United States and Britain.
Parkinson told Morrison in a letter, which has been considered by the governance committee of cabinet, that he was satisfied neither Pyne nor Bishop would be involved in work that would draw on their previous ministerial experience. He said he was satisfied they understood fully their responsibilities under section 2.25 of the ministerial code of conduct, which relates to how former executive members should behave after leaving parliament.
Other MPs do not share Parkinson’s confidence. Many members of the public are dubious this is anything more than another example of a former minister or senior MP taking their knowledge and expertise into a lucrative private-sector job. Parkinson this week announced his own retirement and will be succeeded as secretary of PM&C by former Morrison chief of staff Phil Gaetjens.
There is a long list of former ministers who have gone from politics straight to senior jobs in the sectors for which they had responsibility in government. In 2001, one of Pyne’s predecessors as defence minister, Peter Reith, walked out of parliament and into the offices of a major defence contractor. Former Rudd government communications minister Stephen Conroy jumped into a job at a gaming lobbying group, and former NSW Labor senior figures Karl Bitar and Mark Arbib joined the staff of casino kingpin James Packer. Former Liberal trade minister Andrew Robb walked out of parliament in 2016 and took up an $880,000-a-year job with the Landbridge Group – run by a Chinese billionaire with close ties to the Chinese Communist Party and involved in Beijing’s trade policy.
Political reaction to the Parkinson review has been curt to say the least. The senate this week established an inquiry that will examine the whole affair and may well call Pyne, Bishop and Parkinson. The senate’s finance and public administration references committee will examine the “compliance by former ministers of state with the requirements of the prime minister’s statement of ministerial standards”. The committee is chaired by Labor’s Jenny McAllister and has two other ALP members, two Liberals and Malcolm Roberts from One Nation.
Many MPs, including opposition figures who have previously turned a blind eye to these excesses due to a tacit understanding that no one would cut off lucrative future opportunities, want this senate probe to come back with some firm recommendations to clean up a system that is failing to meet community expectations. The adoption of stronger guidelines, similar to what is laid out for British former ministers, would be a good place to start.
The other aspect of the Pyne and Bishop cases that has drawn sharp, mostly private, criticism is that these two ex-ministers were among the last “Gold Lotto winners” – politicians who have left parliament with the old, very generous parliamentary superannuation scheme. Former prime minister John Howard killed off this scheme in 2004 after being challenged to do so by the Labor leader at the time, Mark Latham.
Labor MP Julian Hill referred to this when criticising Pyne and Bishop. “It’s especially tawdry from someone with a parliamentary pension. [Pyne] doesn’t need the money,” Hill told The Australian Financial Review this week. “I worry that in coming years as people retire who do not have a pension then we will see far more of this, and indeed people will be lining up work before they leave, which is even worse.”
Victorian Liberal Russell Broadbent also referred to the fact the pair had big super schemes. “My concern is that members of that era, of Christopher Pyne and Julie Bishop, were very well looked after by the old parliamentary superannuation scheme so I think they should have particular regard and respect for any decisions that they take soon after leaving politics,” Broadbent told Patricia Karvelas on ABC TV’s Afternoon Briefing.
The senate inquiry is expected to report back by September 10. It’s likely Pyne and Bishop will get away with their “tawdry” behaviour, but the affair may also herald much overdue change and reform.
This article was first published in the print edition of The Saturday Paper on Jul 27, 2019 as "Standards deviation". Subscribe here.