Why aren’t political beneficiaries declared?

Over the last few days, the SMH has run a good series of stories on the dodgy deals that have enriched taxi licence holders like Reg Kermode.

The taxi industry is based on an anti-competitive licence system that restricts the number of cabs on the road, and delivers windfall profits to people who bought licences in the past. This is all well-known (I have complained about it before, as have several people associated with the CIS and many others.) The SMH scoop – or at least I never knew about it before – is that Kermode was given about $20 million worth of licence plates for free. It also reports that:

[The Rees government] has continued to keep secret the list of taxi plate owners who trade their licences on a market worth as much as $2.2 billion.

The SMH quite appropriately points out that Kermode is a generous donor to the NSW ALP.

But the secret licence system shows the real hole in the political disclosure system. The problem is not that $1,000 donors pose a threat to the integrity of the policymaking system, as the federal government believes. It is that information about who benefits from special government deals is often very hard to get. Unlike political donors, there is no central registry of political beneficiaries. Though their identities can – with exceptions like the taxi licence holders – generally be discovered, it often takes a lot of digging around, and in this case investigative journalism.

Knowing who the political beneficiaries are is far more important than knowing who the donors are. If our objective is good, clean policymaking special deals are worth examining regardless of whether any donations have been made. As I have observed before, restricting donations won’t eliminate improper influence. It will just hand more influence to the people who already have too much of it, the political insiders who don’t need to buy corporate tables at party fundraisers or declare anything to get access to decision-makers.

Donor information is of much less value than beneficiary information. Indeed, donor information is of gossip value only unless it can be linked to a government decision. Yet our political leaders are intent on revealing more and more donor information, which is at best a proxy for what we are really after – government decisions made for the wrong reasons. NSW taxi regulation stinks, and would do so regardless of whether or not Reg Kermode was a political donor.

4 Responses to “Why aren’t political beneficiaries declared?

  • 1
    Dave Bath
    September 21st, 2009 22:51

    “Donor information is of much less value than beneficiary information.” Agreed.

    But unfortunately benefits are darned hard to quantify, and are easily fudged – by the administrations that make the executive decisions. How would you quantify the beneficiaries of a regulatory change such as changing security deposits for government tenders so that only the bigger companies can lodge tenders? How do you quantify zoning changes (such as that by the Brumby government recently that provided a windfall to residential developers who had previously got control of land that was then zoned for farming or green wedges)?

    And who would do the costings in a trustworthy way?

    I suppose the only hope for getting reasonable valuations is by making more public service information easier to get at (in the ways the Government 2.0 taskforce is investigating), but the “Commercial In Confidence” magic wand is pretty good at making things invisible.

    Personally I reckon BOTH donor and beneficiary data are required if you are to draw a correlation that points a fairly unambiguous finger at something that smells.

  • 2
    Andrew Norton
    September 22nd, 2009 07:06

    Dave – I agree there are methodological problems, though at an industry level the Productivity Commission already quantifies some indirect assistance.

    But nothing turns on getting the $ number exactly right. I am interesting in listing cases where government decisions have substantially benefited a company, individual or industry group.

  • 3
    Bruce
    September 22nd, 2009 15:53

    I think it is certainly helpful to identify beneficiaries where possible, but I agree with Dave that it is very difficult to quantify.

    If a government department excluded land from opal mining to save the endangered spotted koala, it is difficult to see how there could be financial beneficiaries. However if you found that ABC Opal Corp donated money and lobbied to have their competitors’ land restricted, it becomes much more clear.

    It would be a breach of fiduciary duty for a company to donate money to a government without receiving financial benefits (unlike charitable donations, they are unlikely to receive good PR from political donations). On the other hand, there are countless winners and losers from the thousands of decisions that governments make every day. Therefore it seems more targeted to start with the donations and look for benefits that fall to the donors.

  • 4
    Andrew Norton
    September 22nd, 2009 18:12

    Bruce – Though I want to remove trivial benefits from the list, to save on bureaucratic effort and make it easier to find the most relevant information, I don’t believe quantification is critical to the idea. Where commercial licences, permissions etc are involved only rough financial estimates can ever be made – even with government monopolies, profits are not certain. Guidelines could be established as to what was a ‘disclosable benefit’, excluding things like personal welfare payments, public servant salaries and routine commercial contracts with government.

    What I want to focus on are circumstances in which political-bureaucratic discretion strongly influences which individuals and organisations receive benefits.