Howard cronies jobs boom

ScreenHunter_1004 Jan. 28 09.00

By Leith van Onselen

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.

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Leith van Onselen

Leith van Onselen is Chief Economist at the MB Fund and MB Super. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.

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Comments

    • No, no, no Myne.

      Abbot is helping Australia to ease her legs open for business like a scarlet after a bottle of vermouth, and it matters not which scoundrels come to take advantage of her.

      Decades of discredited ideology and economic fantasies of glorious free markets unhindered by government regulation have landed her in the whore-house, and unfortunately, she is not in a position to turn down her lobbyist pimps.

      Tony de Torquemada is gonna put us all though his economic water torture, so better be ready to eat second helpings of Thatcherite turds that might fall from his blessed table.

  1. Means testing politicians pensions!

    Now there is an idea whose time has come.

    After all the point of the pension was to support our public spirited show ponies after a life time of selfless public service had robbed them of an alternative career.

    If in fact they have a well paying alternate career they have no need for welfare – especially in this era of universal super.

    Looking forward to Minister Andrews campaign to stamp out this special breed of welfare grifters.

    • They should be on plain old superannuation like the rest of us.

      Even if you factor in the “show pony” aspect, they should get lumped in with Sportspeople and the special treatment they get – because their career is naturally short.

    • General Disarray

      +1

      I actually wasn’t aware they could claim a pension while working. Our ex-politicians are the ultimate welfare cheats.

  2. Leith the horse has bolted! This has been common practice for the past couple of decades – ex pollies with questionable real-world skills really only have value to others in terms of their networking relationships with the new lot in power. Very lucrative and most senior ex pollies do it, Lib and Labor.

    • It is now well established that the simplest way to buy political favour is to offer a plum job at the end of the political service.

      This is probably now the single biggest corrupting factor in our democratic model, closely followed by the paid to lobby corruption.

  3. I wonder how many of these Australian fascists have links to Government officials and their families and associates in China, Azerbaijan, Russia, Canada, Pakistan, the Philippines, Thailand, Mongolia and other countries that have embraced the use of covert companies and bank accounts such as in the British Virgin Islands.

    “A well-paid industry of accountants, middlemen and other operatives has helped offshore patrons shroud their identities and business interests, providing shelter in many cases to money laundering or other misconduct.”

    See those exposed from the International Consortium of Investigative Journalists (ICIJ). Fascinating stuff:

    http://www.icij.org/offshore

    I would then peruse:

    http://www.littlesys.org

    and ‘join the dots’…..

  4. Don’t forget the appointment of Sophie Mirabella to the Submarine Corporation Board over Christmas too!

    • That one I honestly don’t mind too much. I was worried she’d get a far more prominent and important sinecure.

      And have you ever heard any positive news about Australian submarines?

      • No. Which is why I would have thought an ‘adult’ government would put competent people on the Board so that further billions were not wasted.

        Silly me.

  5. Public policy is routinely corrupted by decision making that favours an industry a politician wants to curry favour with for a future career.

    I have yet to hear a viable way of addressing this other than greater voter scrutiny of the basis for policy which is difficult given the complexity. This is the weakest link in our democracy.

  6. Arguably, firms engaged in political lobbying should be banned outright. They are a blight on our democracy and should cease to exist. Failing that, all politicians should be banned from ever working for such organisations. No exceptions.

  7. The issue is that ‘crony capitalism’ now has such a strong hold on many economies. To the extent that plurality is declining rapidly and resources are being directed to those that lobby.

    Without politicians of conviction (there are few of those left) and the right checks and balances in place it will be hard to stop.

    I’d also be in favour of more open disclosure and public committees to ensure the ethical expenditure of public funds.