By Dr George Venturini*

Testing the thesis (continued)

13

(Rampant cronyism and corruption)

Cronyism and corruption have lived so long amongst humans that it is fair to say they preceded The Bible, where many precedents are recorded.

This is not to say that in Australia cronyism and corruption are all around. Transparency International provides every year a ‘corruption perception index’. The Index generally defines corruption as “the misuse of public power for private benefit.”

The C.P.I. currently ranks 168 countries “on a scale from 100 m- very clean, to 0 – highly corrupt.”

It is sad to see that, in the latest Index which is for 2015, Australia figures thirteen in a decreasing scale, after Denmark, Finland, Sweden, New Zealand, the Netherlands, Norway, Switzerland, Singapore, Canada, Germany, Luxembourg and the United Kingdom.

Opportunity for cronyism and corruption in Australia is greater when the Coalition parties are in power – if for no other reason than at least at the federal level they have been in government for some seventy years since Federation.

Sometimes excessive publicity is given to episodes of squalor by the media, which are by and large in the hands of Grand Corruptors. Thus much evidence was given to the case of a couple of ‘lifters’ involved in an episode of bullying at a coastal night club – he a powerful state minister and she a federal representative. So, would ‘Labor’ people content themselves with something less than cronyism – nepotism, perhaps? Then there is the case of a state minister who made the beau jeste of resigning her position to tend to her son, soon thereafter to return to parliament as deputy premier – no less, and always with her shoulders well guarded by the husband, a powerful federal minister. But these are modest, if glaring examples of cronyism.

Of course, a populace so conditioned by intellectually corrupt media would be expected to wonder what qualifications ‘union hacks’ hold. No question is ever asked about corporate honchoes, perhaps because having money, or a flexible conscience – and preferably both, is regarded as a sufficient title. Nothing news about that; the Medici proceeded on the motto: “Money to get power, power to protect money”. Only notice the final result!

The ‘Liberals’, in particular, have always had more opportunities, not only for the length of their holding power but also because they come from a social milieu which flourishes in ‘private enterprise’ and can afford to enlist the best-paid ‘turf-accountants’ to minimise their taxes, or retain the ablest – or if not the best connected – lawyers, who in turn speak the language most welcome by a classist judicial system. And all that takes place under the patronage of the monarchy which, naturally, personifies cronyism and is the source of corruption – not exclusively of the financial kind. ‘Labor’ – whatever that has come to mean nowadays – must content itself of the crumbs. Anyway, nobody could – without blushing – accuse ‘Labor’ of running a meritocracy.

Then there are cases rendered less obvious to the naked eye by the application of the Axminster System – which is the classical, subtropical corruption of the Westminster type, and good for a carpet – under which matters ‘too delicate’ can be swept. Example: early in 2009 the Victorian Transport Minister, Ms. Lynne Janice Kosky ‘locked away’ all the documents of the disputed construction of Melbourne’s $700 million Southern Cross Station. Transparency and accountability were postponed – until 2058. The decision was hardly unusual. It has become standard practice for Australian governments – at all levels – to ‘spare’ the public the ‘boring’, detailed information which would allow any assessment to be made of large infrastructure contracts.

Nowhere is the trend more pronounced than with respect to so-called public-private partnerships, projects in which private parties take responsibility for financing, constructing and operating public-use infrastructure, in exchange for the right to receive user fees and charges. And here another value, so dear to the Westminster System, comes into play: ‘tradition’. It should be remembered that one of the very first public buildings in the colony of New South Wales, the Sydney Hospital, was erected by an extremely corrupt PPP.

While concession arrangements for toll roads and other infrastructure assets have existed since time immemorial, they were ‘rediscovered’ and renamed PPPs in the late 1980s and have since become a primary means of financing mega-projects, with applications ranging from tunnels and desalination plants to hospitals and prisons. The change in branding from concessions to PPPs is hardly innocent. A concession by a government to a private party of the right to undertake and charge for a monopoly asset has a clear negative connotation: taxpayers are giving up something which would otherwise rightly be theirs. Who, on the other hand, could object to a partnership, with all the sense of shared obligation that word implies? As with nation building, here words are being used not to assist understanding but to mislead. Eternal Orwell! For whether the contracts are indeed a partnership, and one which delivers net benefits to the community, is a question of fact, not of form. The crucial issues are whether the projects are worth doing and whether the concession contract provides the project outcomes at least cost to the community.

Regardless of the final result, and its real utility, everyone’s a winner. The firms undertaking the projects cash the rents. Governments gain more ribbon-cutting opportunities, vocal support from PPP firms, lucrative jobs for their ‘mates’ and welcome donations to campaign coffers. Only taxpayers and users suffer, but then again, ignorance is bliss. Little wonder that PPPs have proved increasingly popular with incompetent state governments and were being vigorously promoted by the Rudd/Gillard/Rudd Governments. Full disclosure of all PPP contracts, and of the cost-benefit analyses underpinning PPP projects, is indispensable if these costs are to be averted. And no suggestion is proffered here of illegitimate personal gain by public persons. It is just the ‘new way’ of doing things.

On the other hand, political corruption is the use of legislated powers by government officials for illegitimate private gain. Forms of corruption vary, but include bribery, extortion, cronyism – to some extent, nepotism, patronage, graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and human trafficking, it is not restricted to these activities.

In some cases, government officials have broad or poorly defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide, in 2014 the cost of corruption involved more than more than US$2.6 trillion, with corruption increasing the cost of doing business up to 10 per cent globally, according to the World Economic Forum and the World Bank, respectively.

When a government confers a benefit onto some companies and not others it is playing favourites. Sometimes it is called ‘picking winners’. Sometimes it is called ‘targeted assistance’. The result is the same. But the opportunities for influence, peddling and calling in favours, take off when a government starts being selective. There is no problem with individuals or companies trying to influence government. This is what representative government is all about. Every voter who casts a ballot is trying to influence government – and sometimes a voter benefits, albeit indirectly, from particular policies. It is quite different when a broad policy applies equally to people of like circumstances – a tax cut for those on certain income or childcare assistance for those with children in like circumstances. But it becomes a problem when the practice is narrowed down to particular companies in particular industries – where special benefits go to people who seek special access to obtain them. Special influence looking for special benefits is a recipe for cronyism.

Outside public funding, there are no guaranteed sources of financial support for political parties apart from the union movement’s donations to Labor. Business support is contested. Some businesses support both sides of politics. Some support neither. Many skew their support to the party which happens to be in government – after all, the decisions which affect their business are made by the government not opposition.

Tomorrow: Testing the thesis . . . Rampant cronyism and corruption (continued)

* In memory of my friends, Professor Bertram Gross and Justice Lionel Murphy.

Dr. Venturino Giorgio Venturini devoted some sixty years to study, practice, teach, write and administer law at different places in four continents. In 1975 he left a law chair in Chicago to join the Trade Practices Commission in Canberra. He may be reached at George.Venturini@bigpond.com.au.