Waiting for another scandal

25 Sep 2007

In this extract from his new book, JOHN WARHURST looks at the rise and fall of the Hawke government's Lobbyists Registration Scheme. Professor Warhurst's book, Behind Closed Doors: Politics, Scandals and the Lobbying Industry, describes the growing importance of the lobbying industry and looks at proposals for reform.

THE scandal that prompted Australia’s first and only national registration scheme for lobbyists came to be known as the Combe-Ivanov affair. The principal Australian participant was a long-serving Labor Party employee, David Combe, who had served as its national secretary from 1973 to 1981. When Combe left the Labor Party he set himself up in Canberra as a lobbying firm, David Combe and Associates. Following the election of the Hawke government in 1983, Combe, who was regarded as a pre-eminent Labor insider with very good contacts in the new government, found that his clientele grew to such an extent that he was overwhelmed with business. He began to share some of his clients with an established Canberra lobbying firm, Australian Public Affairs Consultants, whose principals included David Barnett, former press secretary to the Liberal prime minister, Malcolm Fraser. So, with cross-party connections, Combe was a mainstream, uncontroversial figure in Australian public affairs.

In the course of business life in the national capital, Combe had established a relationship with Valeri Ivanov, first secretary at the Soviet embassy. Ivanov was being closely watched by the security service, ASIO, which suspected he was a KGB spy. Shortly after coming to office following a campaign in which Hawke had lightheartedly debunked Fraser’s “reds under the beds” campaign, the Hawke government accepted ASIO’s case and Ivanov was expelled from Australia. For Labor, the case was an unwelcome return of the cold war security issues that usually operated to the electoral advantage of the Coalition parties. The issue widened into a royal commission into the Australian security agencies by Justice Robert Hope, and eventually led to the resignation of the special minister of state, Mick Young, who was accused of leaking confidential cabinet information about the affair to another lobbyist with Labor connections, Eric Walsh (once press secretary to Gough Whitlam), in a motel carpark.

The government accepted that Combe, an intimate acquaintance of most of its front bench and one of Hawke’s close friends, was a security risk and denied him any further access to its ministers. His career as a lobbyist was destroyed in an instant. But there was considerable sympathy for him in the labour movement, with many people considering that he had been treated unfairly or at least harshly. Sometime later Combe was partially restored to grace and to his livelihood when the government offered him the position of Australian trade commissioner to Vancouver. A government career in several senior postings in the trade service followed.

The major government response to the issues surrounding the Combe affair was its move to regulate the lobbying industry, which was made suddenly in the middle of an unaccustomed glare of publicity. The government’s general intentions were announced when the special minister of state’s department published a discussion paper, Lobbyists and the Australian Government and Parliament, in September 1983. The paper canvassed various options, including regulation by legislation, maintenance of a register of lobbyists and self-regulation by means of a code of conduct. Consultation about how best to proceed took place with an informal group of Canberra lobbyists.

In December 1983 the government chose to establish the Lobbyists Registration Scheme by executive decision rather than by legislation. In introducing the scheme, which the Coalition parties opposed, the responsible acting minister, Kim Beazley, argued that it was a major step forward. “These lobbyists would be given the importance and significance that they are assuming in the democratic process in this country,” he told parliament, “something which is entirely appropriate at this stage.” But the government really had no intention of making this scheme either important or significant. It was driven by public relations concerns.

The key question for the government was who should be considered a lobbyist. The options included commercial lobbyists, professionals such as lawyers and accountants whose activities were often indistinguishable from lobbyists’, associations and pressure groups, and corporations whose staff lobbied on their own behalf. The commercial lobbyists themselves favoured a broad, inclusive definition of lobbyist like the one used in the US Regulation of Lobbying Act 1946, in order to avoid being the centre of attention. But they eventually opted, for pragmatic reasons or under pressure from the government, for the narrowest of definitions that exactly described their part of the industry: “a person (or company) who, for financial or other advantage, represents a client in dealings with Commonwealth Government ministers and officials.” This definition excluded the majority of lobbying and lobbyists (as broadly defined), including owners, directors and employees of corporations and directors and staff of national associations and pressure groups. It also excluded some potential targets, including backbenchers, who were certainly on the receiving end of the political lobbying of the day, and remain so. Because the government did not control the Senate, members of the upper house also became important targets.

Equally importantly, the definition of “dealings” was also very narrow. Mainstream lobbying activities that did not need to be registered included “inquiries about publicly available information; requests for clarification of current legislation, guidelines or policies; requests for rulings pursuant to existing legislation, guidelines or policies; applications for decisions within existing legislation, guidelines or policies other than those applying to the award of contracts and tenders.” Yet such dealings were part of the normal business of commercial lobbyists, perhaps the main part in many instances. The “registrable” activities were those representations undertaken for financial or other advantage which involved efforts “to make or amend legislation of the Commonwealth or territories other than the Northern Territory; to make or change Government guidelines or policies; to influence Government decisions on awarding contracts and tenders, or appointments to public office; and on other significant matters determined from time to time by the minister.” The registers created by the scheme would not be on public display. Instead the government set up two confidential registers: a special one for lobbyists representing foreign clients and a general one for lobbyists representing domestic clients. The whole scheme began operating in March 1984. Applications from lobbyists for their activities to be placed on the special register were to be “checked to see if they adversely affect the national interest or national security.” Access to the information contained in the two registers was to be made available only to “ministers and government officials who have a need to know.” Later, a responsible minister found that this was interpreted strictly and that he was expected to visit the department personally to inspect the register; only after pressure was applied to the department was the register brought to his office. One shadow minister was refused access under any conditions.

Lobbyists had to apply to register each time they accepted a brief or a new client. The application form required a brief description of the activity to be undertaken. Once registered, lobbyists were expected to produce the letter of acceptance from the registrar whenever contacting ministers or officials about this activity. Lobbyists were quite content to comply with the requirements because they were not onerous. Indeed, it has been argued that the “legitimacy conferred” by the registration scheme was “the most important factor improving the standing of the lobbyist” in the years following.

At the same time that the registration scheme was introduced a complementary extension of the ministerial code of conduct for dealing with lobbyists was also introduced. Ministers were advised to avoid granting special access or privileges to any lobbyist because of his or her background. This was a clear warning to ministers to be wary of advantaging lobbyists who, like Combe, had Labor Party connections. They were also asked to insist that, where possible, lobbyists were accompanied by the clients they were representing when they visited their offices.

The only sanction for lobbyists who broke these rules was that ministers and officials were advised not to deal with unregistered lobbyists and to report any who came to their notice. Experience would show that this was not enough. Compliance depended on registration becoming an accepted part of the culture of the lobbying relationship, taken seriously by ministers, officials and lobbyists. This did not occur.

The Liberal-National Coalition, in opposition from 1983 to 1996, was never enamoured of the scheme. It did not support registration when it was first introduced because it saw the scheme as an unconvincing attempt to distract attention from relations between government ministers and certain lobbyists. The Coalition opportunistically called for “a register of trustworthy ministers” rather than a register of lobbyists. If there was to be a register, it wanted a broader scheme that encompassed national associations and other lobbyists, but its preference was for self-regulation. Later, during the 1987 election campaign, the Liberal Party earmarked the scheme for abolition.

For their part, the responsible ministers encouraged their ministerial colleagues and departmental officers to adhere to the scheme. But a 1985 review, which led to minor changes to the paperwork, alerted the government to the fact that the scheme was already honoured more in the breach than in the observance. In particular, it appeared that lobbyists were only rarely asked to show their letters of registration when dealing with ministers and their offices. Few enquiries were directed to the registrar. Subsequently the responsible minister, usually a junior member of the front bench, regularly and formally requested all ministers to alert their staff and their departments to the requirements of the scheme.

One minister went further than this. Senator Nick Bolkus, Labor’s minister for administrative services, 1990-93, was attracted to the idea of strengthening the scheme after learning of US and Canadian regulations during a trip to Washington. He was particularly impressed by the thinking behind the 1989 Canadian scheme, which had been introduced after the Australian scheme was created. He was also sensitive to media criticism that Canberra’s scheme was a sham. He judged that, despite his best efforts (and those of his predecessors), the scheme was often ignored.

Bolkus took a submission to cabinet in mid 1991 for a new legislative scheme to be introduced during the August 1991 budget sittings of parliament. This legislation would have made the registration scheme more comprehensive, established the register as a public document and introduced penalties for non-compliance. The coverage of lobbyists would have been extended to employees of organisations such as associations and corporations. MPs would also have been included among those targets to be registered. The initiative was justified on the grounds of public interest and public accountability. There was some increased expenditure, but within the departmental budget allocation.

The submission was unsuccessful and the idea died. It had few strong supporters anywhere in cabinet, the bureaucracy or the parliamentary party. The economic departments were opposed. It appears that the government saw few obvious benefits and feared criticism from the lobbying industry.

Six months after the Howard government took office in March 1996, lobbyists with an active entry on the register received a letter from the registrar. Following a review of the operation of the registration scheme, he wrote, the government had decided to abolish it. The decision had been made, according to the registrar, after the government had taken into account “both changes which have taken place in the lobbying industry since 1984 and the general changes which have evolved in government processes and the role of parliament to ensure that relevant community and business interests are consulted in the decision making process” - hardly an informative explanation.

The responsible minister, David Jull, was more candid on 21 November when he gave a brief answer to a friendly question from a government backbencher in the House of Representatives. “[F]rankly,” he said, “it was a toothless tiger and its provisions were really unenforceable.” He gave three reasons for abolition in addition to the general rationale given by the registrar. First, “the requirements of the scheme were just not being adhered to.” This certainly appeared to be true of one aspect of the scheme: in the three years prior to the government’s coming to office only eight enquiries had been made to the registrar. Second, there had been “quite a bit of criticism that the register was not available for public scrutiny.” This could easily have been rectified. Third, “the scheme was an unnecessary hindrance to the business sector.” The first two reasons go to the heart of the matter. In its existing form the scheme was a dead letter. Given that reality, then Jull’s third reason was nonsense, as an unenforceable scheme puts no strain on anyone, though as an explanation it was perhaps superficially appealing to the government’s business clientele.

The scheme either had to be strengthened, perhaps along the lines proposed earlier by Senator Bolkus, or dropped. The Liberal Party had never supported it. The incoming government was seeking public sector cuts and aiming to remove “red tape.” The Department of Administrative Services had little enthusiasm for the scheme which was administered, ironically, from within its awards and national symbols division. Public reporting was confined to the annual reports of the relevant departments: the Department of the Special Minister of State until 1987, then the lowly ranked Department of Administrative Services. Only a few lines in the annual report of the relevant department were devoted to the scheme each year, and over the decade the trickle of information virtually dried up. Until 1987 the department provided the number of lobbyists and clients registered each year; after 1987 it provided only the number of lobbyists; and after 1991 it ceased to provide any figures at all. This apparently suited the government, the opposition, the department and the lobbyists themselves. Advocates of open government seem not to have been concerned to pressure the government for more information.

The number of registered lobbyists on the general register grew from 151 at 30 June 1985 to 238 in July 1991, while the number on the special register of lobbyists representing foreign clients grew from 22 to 33 over the same period. We do not know the extent of overlap, but it was possibly extensive. The number of clients for about the same period, 1985-91, increased on the general register from 601 to 917 and on the special register from 31 to 49. This indicates an independent commercial lobbying industry of a size in keeping with public knowledge and expectations. Most of these lobbyists were consultants, with a small number of lawyers, accountants and customs agents. The special register included 27 individual foreign countries represented by lobbyists.

The only other figures available were those for the number of enquiries to the registrar, which the minister, David Jull, provided in November 1996. The eight enquiries made by ministers, ministerial staff or departmental officers over three years from 1993 to 1995 were tabled as evidence that the “requirements of the scheme were just not being adhered to.” Yet they can also be seen as evidence of a limited scheme operating according to expectations. Officeholders would only contact the register if they were taking the scheme seriously or if something was amiss. Given the purpose of the scheme, this was unlikely. The registrar himself, in 1995, argued that the idea of registration was to “erect a watch-tower but for the time being to leave it open.” There is no evidence that the national interest provisions of the special register were ever acted on.

Since the scheme was abandoned there has been little expressed interest in the regulation of lobbying. In March 2004, however, the new Labor opposition leader, Mark Latham, did propose a new transparent scheme involving a register of lobbyists and their clients and a code of conduct for lobbyists, with all of the information available to the public on the internet. In this case, there had been no scandal to focus attention on the growing industry. The government’s problems had centred instead on the conduct of its ministers and parliamentary secretaries, several of whom had been dismissed over conflicts of interest and the misuse of travel entitlements. Attention was focused on ministers themselves rather than on those who lobbied them, so Latham’s proposal excited little public interest and no response from the Howard government. The public interest would have to wait for another scandal. •

John Warhurst is professor of political science at the Australian National University. This is an edited extract from Behind Closed Doors: Politics, Scandals and the Lobbying Industry, published in APO’s Briefings series by UNSW Press ($16.95).

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