The finance industry royal commission is still ticking away, even if it has moved off the front pages. Superannuation is the focus this month, and a final round of hearings on policy implications isn’t due until November. Thus far it has been a costly exercise for the nation’s bankers and wealth managers — through April and May this year the hearings produced a scandal seemingly every day, inflicting damage both reputational and financial on major institutions.
But perhaps the biggest surprise about the royal commission is that it got started at all. The big banks and investment funds know they’re on a pretty good wicket in Australia, with muted competition, a relatively stable, unobtrusive regulatory environment, and some of the biggest profits, proportionally, in the world. From their perspective, it’s a state of affairs worth defending, and that means keeping pesky reformers at bay. To that end, the big players poured tremendous resources into heading off exactly this kind of rolling inquiry.
Indeed, their regulation-hedging has been a long-term project. New research coming out of the Dollars & Democracy project at the University of Melbourne reveals that the nation’s financiers have been making a disproportionate contribution to Australian political parties over the past two decades. Between 1998–99 and 2015–16, according to the project’s calculations, the finance industry donated over $120 million (in 2015 dollars) to the parties.
That may not sound like all that much nowadays. And it’s certainly a drop in the ocean when you consider the fact that the big four banks alone have made a minimum of $10 billion in pre-tax profits every year since the late 1990s. But for the party apparatchiks opening the envelopes, these are significant sums indeed. In fact, finance industry contributions have made up a bigger share than any other industry (yes, including mining and developers) and come in just shy of the contribution made by all the country’s unions combined. If we just look at corporate donations going directly to parties, finance industry dollars make up more than a quarter.
This $120 million captures only one sliver of the industry’s charm offensive. In all sorts of other ways, its members donate to or otherwise seek to shape the agenda for Australia’s parties of government and to steer them away from new regulations. Indeed, the channels of influence are so numerous and tangled that it can be hard to keep track of it all. We really need to focus on an example to have any hope of understanding the breadth and depth of these activities. As it happens, the biggest single finance industry donor over this eighteen-year period was Westpac, so it is as good as any to track. And what holds for Westpac is broadly true of most of the other banks, be it CBA, ANZ or NAB (though NAB has quit making direct political donations as of 2016).
For starters, Westpac donates directly to the major parties. Since 1999 it has donated $33,789,963 to Labor and $21,606,599 to the Coalition parties. Last election it was $2 million for Labor and $2.5 million for the government. Considering Labor’s bank bashing throughout 2016, it might be rather surprising that Westpac would give it almost as much as the other side. Certainly the bank’s strategy differs from the good old days: in the 1949 election, for instance, the banks pumped Robert Menzies’s Liberals full of campaign dollars in order to head off looming bank nationalisation by sweeping the Chifley government from power. They even had tellers handing out anti-Labor flyers to depositors. These days, Westpac opts not to pick a side — rather, it seeks to “support the democratic process” with a bet each way.
This “support” goes beyond direct donations to parties. Westpac funds also make their way more indirectly to the parties via its subsidiaries — Westpac’s BT Financial, for instance, is also a donor — and via industry associations. The Australian Bankers’ Association donated $10,000 to the NSW branch of the Labor Party in 2016–17; the Financial Services Council, of which BT Financial is a member, donated over $100,000 to the major parties last election. On top of this, Westpac also plays banker for, and makes out loans to, an array of party fundraising groups, investment vehicles, unions and associated entities, including the notorious Cormack Foundation, Labor Holdings Ltd, the Canberra Labor Club, the Australian Workers’ Union, the CFMEU and more, so it is intimately involved in many other political money trails.
But it’s not just polymer notes doing the talking. Westpac is also showing up in the halls of power, attending fundraisers and luncheons (sometimes party fundraisers are even held on the banks’ own premises), sending “business observers” to party conferences, and meeting with ministers. The banks send their own people to converse with political decision-makers, as well as their representatives in the Bankers’ Association and other groups.
It also hires corporate lobbyists to do this work for them. The Australian Register of Lobbyists shows that the Australian Finance Industry Association, of which Westpac is a member, retains the services of an outfit called Premier National to represent its interests in Canberra. This is the lobby firm owned by Michael Photios, moderate faction supremo in the NSW Liberal Party and key ally of Malcom Turnbull. Why hire Premier National? According to the firm’s website, one might do this because it helps its clients to “anticipate and influence complex legislative and regulatory changes, keeping them connected with key influencers and mitigating risks to their operations.”
The flow of people is not one way, either. We are familiar with the case of Anna Bligh, Queensland-premier-turned-Bankers’-Association-CEO, but the banks’ in-house government relations units are filled with former politicos too. Westpac’s head of government relations right up until the start of the royal commission, Brett Gale, worked in the Hawke, Keating and Carr governments, and most recently was chief of staff to Chris Bowen while he was assistant treasurer. Marcus James, also part of the unit, worked for Bowen’s successor, Nick Sherry.
These people don’t exactly put up a Chinese wall between themselves and their former comrades — rather, they are valued for their connections, remaining on Capital Hill to lobby their up-until-yesterday bosses and colleagues. And they sometimes return to the fold: Gale has now left Westpac to become executive director of a Labor think tank, the Chifley Research Centre (named after the Labor PM who wanted to nationalise the banks). So there is a revolving door between high-level politicos and the banks’ government relations units.
Taken in isolation, we might think that each of these measures is a little pushy, but basically ad hoc and not especially sinister. But these well-resourced, staffer-stuffed government relations units aren’t paid big bucks for ad hoc. And the notion that their activities extend only to innocent support for the democratic process seems a little less plausible when we put the full picture together: millions of dollars given directly and indirectly to the parties of government, so regularly that they come to depend on it, and all followed up by direct and indirect lobbying by carefully recruited party insiders.
This is less about supporting the democratic process than about inserting eyes and ears inside the parties of government, and indeed, about getting close to the ears of the agenda-setters in those parties. It is about protecting profits and hedging risk, about steering government away from reform or, failing that, getting ahead of the curve. Who knows how many reform pushes they’ve managed to squash over the years?
And yet, here we are, in the middle of a year-long royal commission into the finance industry. The moral seems to be that, even with all the resources in the world, the best one can do is hedge the risk of scrutiny and profit-eating reform. Money talks, but the fact that Labor pushed for the royal commission despite millions in donations from the banks, and despite party insiders-turned-bank-lobbyists urging against it, suggests something else is talking too.
Parties are responding to things other than dollars — public outrage, opportunities for political wedging, scapegoating, that sort of thing. We are not living in a dystopian corporatocracy just yet. Moneyed interests have influence, that’s for sure, but they remain part of a bigger political game in which other players, with other resources, can and do compete. The playing field may not be level, but the game is not totally rigged either — those seeking scrutiny, regulation and reform can and do, from time to time, come out on top. ●
Thanks to Joo-Cheong Tham and Malcolm Anderson at the Dollars & Democracy Project for providing donations data.