As the election campaign grinds on, the focus is on set-pieces and stunts, the sideshows of glitches and trainwrecks. But behind the scenes a frenzy of political fund-raising has been under way for months.
Fund-raising from donors has long been controversial, with criticism of the loopholes that allow donations to be hidden, the high threshold limits for disclosure – over $13,000 this year, about 22 per cent of average annual earnings – and the long delays in public disclosure.
Glamour couple: James Packer and singer Mariah Carey. Photo: Justin Chin/Bloomberg
We won’t know who kicked in to party coffers in 2015-16 until February next year, long after the heat and noise over special interests and undue influence has died down and the public’s ability to let that help them decide who to vote for has passed.
For donors wily and secretive enough to make their contributions in the next financial year – on July 1, the day before the election – all will not be revealed until February 2018. That’s more than halfway to the next election.
And of all the electoral donations regimes in all the states of Australia, the one that operates in Victoria is the most lax, the least transparent.
Aim for the sky: James Packer wants to build Australia’s tallest building, linked to Crown Casino in Melbourne. Photo: Supplied
In New South Wales, property developers and gaming, alcohol and tobacco interests are banned from donating, other donations are capped at $5800, and all political gifts of more than $1000 must be disclosed.
Not here. In Victoria, lobbyists donate on behalf of their clients; business buy “soft power” with political parties by attending their conferences, hiring their alumni, paying for some of their costs.
Victoria has no legislation of independent disclosure of any of these practices. If a Victorian company wants to buy influence with a Victorian political party over a development, or a law that affects Victorians, their transaction is reported only through the much-ridiculed regime administered by the Australian Electoral Commission in Canberra. If it’s reported at all.
Developer Michael Yates was the beneficiary of a controversial intervention by then planning minister Matthew Guy, which led to a windfall profit. Photo: Luis Ascui
Does this mean that the dodgy political donations and alleged buying of influence uncovered recently in NSW could also happen here?
Yes, experts say. That is a real danger.
While it’s difficult to make any direct link between a donation to a political party and a favourable outcome for a company – and our politicians deny furiously that such links exist – the fact that both political parties seem content with no disclosure regime at all suggests that both have something to hide.
John Woodman at his Martha Cove property.
“As we’ve seen in NSW from [corruption] inquiries, cases where huge amounts of wealth can be created at the stroke of a ministerial pen, such as land-use decisions, is where corruption is likely to occur and does occur,” says Monash University governance expert Ken Coghill.
While there’s no suggestion that any of the Victorian individuals or companies mentioned in this story have acted improperly, Coghill is concerned that the state’s lax oversight here of political donations is a problem.
Money spinners: the known knowns
Mark Triffitt, political scientist, argues the real cost to the public interest of such a dysfunctional system is the development of bad policy. Photo: Penny Stephens
Millions of dollars of political donations made each year to Victorian party branches and their associated fund-raising entities would be disallowed if NSW-style bans on political donations were introduced in the state.
According to the most recent disclosures made to the AEC, $1.45m of declared donations to the Victorian branches of the ALP, Liberal and National parties in 2014-15 came from interests associated with property development alone.
Among the donations to the Liberal Party was one of $20,000 from developer Michael Yates, who was the beneficiary of a controversial intervention by then planning minister Matthew Guy, which led to a windfall profit.
Jason Aldworth, managing director Crosby Textor Financial.
In February 2014 the minister allowed Yates to alter plans he had for part of a South Yarra site he’d bought for $19 million three years earlier. The new plans had two buildings comprising 321 units. One of the buildings was 29 storeys high. It later emerged that Yates had simultaneously negotiated an off-market deal to sell the site to a Chinese developer for a reported $30 million – an $11 million profit.
The $20,000 donation came to the Liberal Party in July the same year – a few months after the decision. It was Yates’s first donation in three years, even though he is a key member of the Liberals’ election fund-raising body, the Enterprise 500 Club.
The Linfox Group, which has airport as well as transport and logistics interests, made an undated $18,000 contribution to the Victorian branch of the National Party in 2014-15. Patriarch Lindsay Fox family has been a long-term Liberal supporter, although this was likely tempered in 2014 by a row over the family’s land grab of public beach in front of their sprawling Portsea holiday compound, which reportedly incensed Mr Guy.
Linfox’s property assets include a lease over Essendon Airport (the site of a business park and shopping centre as well as air services) which sits on Commonwealth land. In September 2014, Essendon Airport’s proposed masterplan (including a hotel and conference centre and 150,00 square metres of office space) was approved by then minister for Infrastructure and regional development – and leader of the National Party – Warren Truss.
Take a look down the list of property developer Victorian donors and the largesse of the billionaire-owned Gandel Group (which gave $25,000 to the ALP state branch and $40,500 to the Liberals) and fellow BRW Rich Listers the Liberman family (which chipped in $20,000 to the Liberals via a company called Bileel) are outdone by a boutique planning and development consultancy on the Mornington Peninsula.
Watsons contributed $80,000 to the Victorian Liberals in 2014-15, and is another long-term political donor. Specialising in projects with features such as marinas and golf courses (its portfolio includes Wyndham Harbour and Martha Cove), Watsons may not be a household name but its client list is a who’s who of Melbourne, including the Fox, Myer, Ansett and Baillieu-Myer clans.
Led by millionaire John Woodman, Watsons’ website boasted in March of its prowess in “successfully rezoning large tracts of farmland and land within ‘green wedges’ for residential, commercial and industrial developments”. That claim was later quietly removed, but in the past five years, Watsons has produced 20 per cent of the 52,082 housing lots released by the Victorian government for development.
Green wedges – an initiative of the Hamer government to preserve swathes of undeveloped land as a community asset – have had their planning protections weakened by successive governments.
“These green wedges were supposed to be free from changed use – use for housing or business uses – forever,” says Coghill, a former state Labor MP and Speaker, now director of the Parliamentary Studies Unit at Monash University. “Those are the very case in which there are extremes in wealth creation at the stroke of a ministerial pen.”
Meanwhile, gambling, liquor and tobacco interests contributed $857,000 to Victorian parties and entities in 2014-15.
Australia’s most powerful gambling lobby, the Registered Clubs of NSW, is unable to donate to the NSW state branch under state laws that ban money from gaming, boozing and smoking interests, but they donated $10,000 to each of the Victorian Liberal and National parties in 2014-15.
Lobby group the Australian Hotels and Hospitality Association had deeper pockets, throwing $171,000 to the ALP and $243,149 to the state Coalition parties. Policy changes that benefited their interests at the time included the Napthine government’s weak smoking reforms in 2014 (a new ban was introduced in areas near playgrounds and sports grounds, but not extended to outdoor smoking and dining areas, lagging behind all other states) and the Andrews government’s 2015 ban on powdered alcohol amid industry fears patrons would order water and add their own booze.
Crown Resorts was unable to match that generosity because its donations are capped at $50,000 per party under the electoral act. The casino developer favoured the Liberal Party ($45,479) over the ALP ($22,990) despite Lloyd Williams’ startling admission that Crown mogul James Packer would “kick every goal he can” for Daniel Andrews during the 2014 election campaign (a pledge picked up by Channel 10 camera during a Melbourne Cup photo opportunity).
Relations between the Coalition and the casino magnate had been strained by then treasurer Michael O’Brien’s plan to raise taxes on Crown’s poker machines, made in late 2013. Crown’s largest Victorian donation – $30,000 – was paid to the Liberals on July 4, 2014. The following month, the Napthine government announced it had extended Crown’s gambling licence by 17 years to 2050. It later emerged the government was also guaranteeing Crown millions in compensation if state legislation were to crimp its profits at any time in the next 30 years.
Even though it was just weeks until the government entered caretaker mode, the then ALP opposition – which accepted three donations from Crown over just four weeks in July-August 2014 – allowed the bill to pass rather than attempting to delay it until after the election.
Other donors with interests in live policy debates were companies with interests in energy and mining – including Origin, Santos and Beach Energy – to whom legislation regarding fracking, emissions caps and renewables targets were material. They kicked in about $226,000.
Big consulting and finance interests – including Macquarie Group, KPMG and PWC – contributed about $480,000, heavily skewed towards the Liberal Party. Infrastructure, public-private-partnership and construction sectors contributed about $267,000, favouring the ALP. As well as interests in government contracts, PPPs and planning reforms potentially worth billions, policy decision relevant to the sectors taken during the period include the Napthine government’s backing away from building reforms designed to better protect home owners.
What the eye can’t see: the known unknowns
For companies keen to keep their names off the AEC register, the use of lobbyists is being increasingly used as a way to hold their interests at one remove. One of Victoria’s biggest donors in 2014-15 was The Civic Group, owned and run by former ALP assistant state secretary Andres Puig, former aspiring Liberal candidate and ex-Crosby Textor strategist Jason Aldworth, and property developer Marco Gattino.
In 2014-15, it contributed $125,050 to the state ALP and $35,296 to the Liberals – a considerable increase from its previous disclosure of $23,685 to the state Liberals in 2010-11. But as the Victorian Government Register of Lobbyists only requires a current list of clients, there is no ready public record of whom it represented in 2014-15.
At least 14 of the Civic Group’s 31 current clients have are developer-related including the Mount Atkinson development, a 555-hectare site for a proposed new suburb in Melbourne’s West. The site is adjacent to a large proposed landfill expansion and Fairfax Media revealed recently that local tip protests were being run and funded by Civic.
Other current clients include Moonee Valley Racing Club, whose controversial plans for thousands of new apartments on part of its site were approved in September 2014 by Matthew Guy and modestly scaled back by Richard Wynne in March 2015. Civic also represents Point Leisure Group, owned by Myer scion Richard Shelmerdine, which was granted a 99-year lease to develop Point Nepean Quarantine Station into a $100 million tourism centre of tourism centre by the Napthine government. Labor went into the election opposing the deal and later paid PLG $1 million compensation for dismantling the contract.
It’s impossible to tell if these clients of the Civic Group were political donors.
Critics say the lack of transparency in real time and across data sets of donors, lobbyists, government contracts and tenders and MPs’ register of pecuniary interests is deliberate. National reform – stalled at COAG – would be straightforward in the digital age and long overdue.
These are not the only “known unknowns”.
Disclosure rules and compliance are so lax that only about half the money raised by the major parties in Victoria – the ALP’s $10 million and the Liberals’ $22 million – was disclosed in 2014-15. Loopholes, such as allowing donations to be split into multiple payments that come in below the disclosure threshold, or donations that are timed to fall over two financial years, are notorious.
Better laws, and better enforcement are essential. A single independent authority should be in charge of compliance, rather than a variety of government departments effectively charged with monitoring their masters, says Joo-Cheong Tham, an expert in Australia’s political donations regimes and associate professor at the Melbourne Law School. He points out the NSW electoral commission – which recently stood up to the state Liberals in the Free Enterprise Foundation affair – is responsible for the lobbyist register as well political donations compliance.
The unknown unknowns: Money always finds a way
A number of current and former corporate insiders – none of whom would agree to be named – say there are myriad ways of contributing to political parties that are almost impossible to trace. One estimates the donations recorded through the AEC represent less than half of the financial support candidates receive during an election campaign.
“It’s a whole different side of the moon,” says another.
It’s not hard to hide significant levels of contribution towards political parties,” says “Tom”, who has inside knowledge of the liquor retailing industry. One tactic is paying for a poll for a political party.
“I’m running a company and I want influence, and I’m concerned about the policies of candidates, why wouldn’t I get some polling done in that electorate as part of my normal monitoring of the environment in which I’ve got to operate? Why wouldn’t I make that polling available to the people who are supportive of my position?”.
Underwriting printing costs or accommodation and hospitality is another, Tom says.
Then there are arrangements between business and politicians, such as ensuring skilled staff who are needed to run a political campaign, but on modest salaries, will be rewarded with lucrative roles afterwards.
“Peter”, a former government relations executive for ASX Top 20 companies, says paying for dinner, breakfasts and “business observer” status at party conferences is where most corporate largesse occurs. It doesn’t always show up on the AEC register because it can be classified as fees for a service rather than a gift.
The networks are deeply private.
“But all the big Australian companies have significant regulation issues where government decisions can impact on their day to day operations. So you raise issues, you say ‘we must catch up about this issue next time I’m in Canberra’.”
Peter estimates that combining the states and major parties, there would be 20-30 annual conferences, generating tens of millions a year.
The most recent ALP federal conference raised at least $1 million from business observers, about 100 of whom paid $10,000 for access, according to the party. Assistant state secretary Kosmos Samaras says the Victorian branch has a strict policy of no observer or similar program at its state conference.
The Liberal Party refused to reveal the cost or number of attendees at its most recent state or federal events.
Another way of buying influence is through the corporate practice of recruiting ex-political heavyweights. Former premier Steve Bracks and ALP powerbroker Paul Howes both joined KPMG soon after quitting politics.
“It creates a very strong nexus between the corporate class and the political class – almost like a revolving door,” Peter says. “The result is an environment for a lot of soft lobbying … of discussions between good acquaintances and friends.”
But not all of corporate Australia is happy with the country’s lax disclosure regime.
Mark Triffitt, a former lobbyist for Wesfarmers and the Business Council of Australia, argues the real cost to the public interest of such a dysfunctional system is the development of bad policy.
The intertwined interests of big business and politicians becomes an “echo chamber”, he argues. “You don’t get good policy because the same people are trying the same old solutions over and over again.
“And you don’t have legitimacy around the decision-making process because the vast majority of people don’t get a say. Unless they can buy into it.
Originally published in The Age 22 May 2016