Cash for collusion?

Continuing revelations about the “cash for chat” controversy in Victoria raise many questions about the health of democracy throughout the quaintly-named “Commonwealth” of Australia. In a true Commonwealth, politicians of all parties would work tirelessly for the common good, and every stakeholder in our country would have equal access to decision-makers, regardless of the relative sizes of their bank-accounts.

Premier John Brumby continues to maintain that no one can buy access to government ministers in Victoria. This is hard to square with an incident earlier this year, in which The Age tells us that a coal company paid thousands of dollars to attend a Progressive Business event and meet with the Premier and his ministers. The company is putting forward a scheme to export 12 million tonnes of brown coal a year to India, and needs the State Government to allocate some of the brown coal reserves in Gippsland to them.

The Premier apparently maintains in general that specific contracts are not discussed at these types of events, only “broad policy directions”, but the coal company CEO told The Age that specific details of this particular project were discussed at this event. The government countered that it was moving to throw the whole process of gaining allocations of coal open to competitive tendering.

Does it matter? There are a number of possible defences for this type of activity. One is to argue that it is simply the way of the world. People in business will always seek out ways to influence governments, and if they have a legitimate case to put forward, why not? Perhaps chief executives of large businesses that employ thousands of people should have more weight in putting forward their positions as compared with lone individuals.

Or you can take a libertarian position. In this view, individuals and businesses should be free to advance their interests in any way they wish, free from unnecessary restrictions and red tape. It is a competitive system, and may the best man (or business) win! We don’t live in an old-fashioned Stalinist state in which everything is determined via central planning in a top-down fashion by the government. The best outcomes are produced, in this view, by a bottom-up process, in which governments are the final arbiters of competing ideas that push up from below.

But while it is true that we need stakeholders vying against each other to present their ideas to governments, they should do so on a level playing field. As with any sport, the rules of the game must be carefully calculated to make sure that whoever wins does so because they are the best players on the day, not because they have the deepest pockets.

For example, there are many examples of projects that have potentially severe impacts on the local environment and communities, and that don’t necessarily get taken up by national environmental organisations. Local communities and environmental groups rarely have the resources to buy access to high-level lobbying events. They also represent significant numbers of stakeholders, not just single individuals. This creates an imbalance in the system, in which powerful stakeholders with lots of cash are able to get through and put their case directly to governments in ways that ordinary citizens are not able to match.

Even where the process is subsequently conducted by open tender, there is the potential for special influence to distort the process. We all favour people or organisations we know over those we have never dealt with before. That is unavoidable. But if we are beholden to an organisation for financial support, that may make it even more difficult to evaluate bids on an impartial basis.

No doubt governments will claim that the tender process is constructed in such a way that it is independent from political influence, but the firewall may not be impregnable. Back in 1999, Labor (then in Opposition) fought a big legal battle all the way to the Supreme Court against the Kennett government to gain access to the tender documents for the contract to build Crown Casino. The ABC reported that financial information about the tenders had been revealed to the government, significant because Ron Walker was the Federal Treasurer of the Liberal Party as well as part-owner of the successful bidder, Hudson Conway.

The practice of buying access is simply bad governance because it mixes up public and private interests. The business buys access to government ministers, and the money goes to a political party. The public interest should be paramount, but two private interests (the political party and the business) conspire with each other to affect the outcome.

Another problem is that these activities inevitably favour the incumbent party. Lobbyists want access to decision-makers, not critics.

It is disingenuous to argue that decision-makers are not affected by lobbying. If lobbying had no effect on the outcome, nobody would do it, and in particular, no-one would spend hard-earned money on it.

There will always be lobbying. But an important line is crossed when money changes hands between private interests and public decision-makers.

Along this line we should erect a Chinese wall.