How business lobbyists trump your vote
Today, election day, voters can revel in the knowledge that their elected representatives really are listening to them. It is the natural wonder of polling day. At other times in the electoral cycle, however, the civic downtime if you like, our elected representatives are likely to be bending an ear to lobbyists and party overlords, corporate donors and the agendas of big media.
The rise of private power is far more critical to the future of Australians than are the policy tweaks on offer from the major parties in today’s election.
Vested interest groups are more prolific and more powerful than ever. At the time Kevin Rudd was deposed as prime minister, the Minerals Council of Australia – whose TV campaign led to his demise – enjoyed revenues of $35 million. That buys influence.
Its advertising bill in the year to December 2010 was $15.8 million, consultants’ fees were almost $6 million, and key executives were paid $3.1 million for their advocacy. Rudd’s mining tax was duly jettisoned.
A slew of others, such as the Business Council of Australia, the Australian Institute of Company Directors, the Property Council, the Australian Bankers’ Association and the Corporate Tax Association, also boast multimillion-dollar budgets, each one bigger than that of most newsrooms in the country and easily outstripping campaign spending from the major parties.
Their objectives are to peddle influence for their members, often multinationals, and they do this by bombarding politicians, bureaucrats and media with endless press releases, day in, day out, and by slinking around the halls of power ingratiating themselves with whomever might deliver their desired outcomes.
These are the things of government that voters rarely glimpse. The Hawke–Keating stewardship – their bold reforms – have been mentioned in this election campaign, by both Labor and the Coalition. That was a different time, when peak bodies were in their infancy and PR people and lobbyists were well outnumbered by journalists. Now the ratio of communications types to journalists must be 20 to one.
When this writer covered Woolworths’ profit result as a cadet reporter in the early 1990s, the phone call went straight through to chief executive Paul Simons.
Now, the few reporters who are left in mainstream media would be lucky to draw the head person in the phalanx of “communications” operatives. Same deal for all top companies. The point is that there is a plague of “influencers” in Western democracies, whether for government or media, and they are richly remunerated to pursue vested interests over community interests. Neither they nor our politicians can be blamed for this; it is merely the natural course of pluralism in democracy.
It has led, however, to a torpor in reform. When Bill Shorten announced Labor’s negative-gearing policy – which, incidentally, makes sense – it was shot down by the Property Council. Same deal when Labor proposed a royal commission into the banks – it was mauled by the banks and the Bankers’ Association, among others. It is hard to trump strategic campaigns, targeted influence and party donations with good policy, let alone common sense.
This may have been a dreary election campaign but it was not as “policy-less” as some. There is a clear choice between the parties.
The rub is that neither choice addresses the impending blowout in funding needs for Australia’s aged and our healthcare system, or the likes of infrastructure needs and education for that matter.
Although they have declared, with rather optimistic assumptions, their plans to return to budget surplus in the outer years, both major parties are essentially spruiking a three-year management pitch designed to capture votes rather than meet the challenge of long-term structural reform. Just as incentive pay deals for executives can play havoc with long-term corporate decisions, short termism is the bane of Western politics.
It is growing inequality, however, alongside the power of vested interests, that is driving disenchantment with the political process. Hence the rise of political outsiders Donald Trump and Bernie Sanders in the United States. That politics is largely bought and paid for is widely accepted and anathema to voters.
As evinced by a host of studies, the rich have got richer but the poor have not got richer. Their ranks are swelling, in Europe, the US and Australia. This, despite the greatest resources boom in history and the consequent boon to Commonwealth coffers.
The dramatic growth of China has subsided now, and most of the profits here are raked offshore by multinational corporations. It is futile to pine for what might have been; a sovereign wealth fund, less complaisant government. To learn the lesson is the only resort.
Xenophobia played a large part in Brexit but Britain’s vote to leave the European Union also comes down to inequality and a widespread disaffection with politics. It was not just that there were six years of austerity in Britain; it was that austerity was foisted on the poor and the middle classes but not on the rich. The latter got tax cuts.
A 2013 study on inequality by The Australia Institute found the richest seven individuals in Australia held more wealth than 1.73 million households in the bottom 20 per cent.
Worryingly, it was not just a widening gap between richest and poor but between the rich and the average, a politically dangerous cocktail in the longer term. Senior executive pay was 150 times greater than the average wage.
The point in this is that rising inequality is contaminating the political process. When the Turnbull government sought a public imprimatur to lift the GST, voters rightly asked why they were being urged to pay more tax when the wealthiest institutions in the world were paying little or none, and merrily siphoning off their profits to tax havens.
It is no accident that burgeoning inequality has been accompanied by the rise in private power.
The rise in “influencers” and the fall in public confidence in government has left us with virtual policy stasis and little scope for significant reform. Every time reform is mooted, it receives scare-campaign treatment by one interest group or another. The claims of plunging property prices in the event of negative-gearing reform spring to mind.
The remedy for the rise in private power is clear. If there is to be confidence in government, there must be transparency. The endgame for a democracy without transparency and the timely flow of information is plutocracy, then class warfare.
Reform therefore to our opaque regime of political donations is critical. If a corporate donor chasing a political outcome donates tomorrow, that donor does not have to disclose the transaction until 2018, by which time their casino, property development or tax law amendment has long been waved through.
Then there’s the disclosure threshold set at $13,000, which, as donations campaigner Stephen Mayne argues, should be lowered to $1000.
Further, “donation splitting” – where donations are spread between different branches of political parties and associated entities to avoid disclosure – should be banned. Likewise anonymous donations. Alongside this, there should be decent penalties for those who break the rules.
Australia is a nation of oligopolies. From power networks to supermarkets, newspapers, packaging giants, banks and oil and gas majors.
For a nation enormous by landmass and tiny by population, this may be unavoidable. It means, though, that transparency is even more critical. Take energy policy. Both major parties seem content to allow what is effectively a cartel to run the gas sector: no visibility on gas reserves (supply) or of corporate sales (demand and price) means it is hardly a “market”.
As a result, domestic consumers and businesses have had extortionate prices foisted upon them thanks to an industry scare campaign claiming a gas shortage – a “supply cliff”, according to AGL – just before, globally, gas prices went through the floor. High energy prices are a drag on the entire economy. They affect everybody. And in electricity, where returns are regulated, the story has been similar: consumers skewered with rampant price increases because, under the government model for establishing prices and network returns, the more the networks spend, the more revenue they make – resulting in executive bonuses.
Meanwhile, thanks in large part to the money swishing around in the energy sector for lobbying politicians and bureaucrats – the oil and gas peak body, the Australian Petroleum Production & Exploration Association, is one of the most heavily funded of them all – we have an energy policy put to shame by the likes of China and India.
Lumbering white elephants such as Adani’s Carmichael thermal coal project in the hinterland of the Great Barrier Reef, a project ludicrously uneconomic, is still backed in principle by the Coalition and Labor, although its bankers have long fled the scene.
A policy of, to paraphrase, digging holes in the ground willy-nilly to saturate a market in decline is sadly last century when renewable energy presents such brilliant opportunities.
Our elected representatives do listen, when the roar of public disapproval is loud enough. So, both major parties – indeed minor parties and independents, too – were moved to act against the scourge of multinational tax avoidance last year. Labor again has been more proactive in this area than the Coalition, but both still have timid policies. Their citizens are meanwhile being short-changed by billions every year while private power – largely wielded by the big four global accounting firms, which both advise government on tax and their corporate clients on how to best avoid it – infiltrates government agencies.
Once again, transparency is key. Transparency on secondments between the private and public sectors, transparency on policy formation, far greater transparency on the tax affairs of large corporations and wealthy private companies. For functioning democracy, this is what is necessary. Without it, we see demure policy made in the shadow of burgeoning private power. We see governments unable to act on ambitious reform as they are shackled to power wielded not by them but by business.
This article was first published in the print edition of The Saturday Paper on Jul 2, 2016 as "Conflict of influence".
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