The claim that the Abbott Government is “open for business” appears to have been a red-rag-to-a-bull for Australia’s largest companies, which are reportedly scurrying to employ former Howard Government ministers and other Coalition operatives as lobbyists:
The torrent of activity in the increasingly partisan lobbying industry has in turn sparked a mini jobs boom for former Howard government ministers, retired Coalition MPs and Liberal operatives.
Nick Minchin, the Howard-era finance minister, has joined Alexander Downer at Bespoke Approach whose client list includes Wesfarmers, coal seam gas miner Santos and Chinese-owned coal miner Yancoal.
Former treasurer Peter Costello co-owns Melbourne-based ECG Advisory Solutions with his one time political adviser David Gazard. ECG has Westpac, Transurban and detention centre operators Serco on its books…
While it’s nothing new, the growth of lobbying activities by former Coalition interests could pose a number of potential issues for public policy.
First, it is likely to lead to increased rent-seeking activity, whereby firms seek to use their growing political influence to game rules to their advantage (to the dis-advantage of the economy as a whole).
Vested interests worked together successfully to undermine climate policy and mining taxation during the former Rudd/Gillard Government’s reign, and there is every reason to believe that such efforts will continue under this Coalition Government. In this regard, it is interesting that heavy hitters – Alexander Downer and Nick Minchin – have been employed by the coal and CSG industries, suggesting that these industries could receive favour over, say, renewables.
There is also the issue of politician entitlements. It seems “the age of entitlement” proffered last year by Joe Hockey, does not extend to ex-Members of Parliament (MPs). Why should ex-MPs be allowed to receive generous pensions while, at the same time, work as lobbyists? Surely their perks should be reduced in line with the remuneration they receive, as is the case for recipients of welfare and the aged pension? This way, they can choose to have their pensions or become lobbyists, but not both.
More broadly, it would be a shame if Australia was to follow the US system, whereby lobbying activities have become so intense that counties in and around Washington DC have become among the most prosperous in the US simply because they are populated with lawyers, lobbyists, contractors and others who derive their income from doing deals with politicians. Moreover, the highest earners are often ex-Congressmen or ex-political staffers who have switched into lobbying, milking their connections rather than any inherent ability to satisfy consumers in a real free-market.
As noted in Allister Heath’s call to reject crony capitalism in last week’s UK Telegraph:
Real business people, who make their money in open, competitive markets, are entitled to their vast wealth but crony capitalists, who rely on state privileges, don’t deserve our support…
…businesses and investors can [also] make money… by getting the government to rig markets in their favour – by erecting barriers to entry to restrict competition, by providing them with cheap credit or by allowing them to use their political connections to grab contracts and other privileges. These gains are not the fruit of value-adding economic activity. Rather than helping to grow the economy, they often merely redistribute wealth…
Australia needs more of the former and less of the latter. We also need a Government that recognises that being “open for business” means open, competitive markets, not oligopolist structures brought about via political favours.