Three states, three conflicts of interest

23 Jul 2008

Local government elections need to be transparent and fair, writes JOO-CHEONG THAM.

WITH council elections looming in New South Wales and, later in the year, Victoria, it’s a good time to reflect on three different tales played out in three local councils in three states. Each occurred in the same year and told the same story of voter misinformation and pervasive conflicts of interest.

The 2004 Gold Coast City Council election saw a group of candidates secretly bankrolled by development interests aiming to support pro-business candidates. The result, in the view of the Queensland Crime and Misconduct Commission, was a “barrage of secrecy, deceit and misinformation” and elected councillors being beholden to their financiers.

Gold Coast developers also played a pivotal role in the 2004 Tweed Shire council elections south of the border. Some of these companies formed a front group called Tweed Directions to lavishly fund selected candidates so that they could secure a “pro-development” council majority. According to the NSW Independent Commission Against Corruption, the veil of secrecy concealing these arrangements meant that the Tweed Directions candidates “effectively lied” to their constituents, risking “disenfranchisement of the electorate” and “a substantial and potentially improper material gain to developers supporting the candidates.”

The third instalment comes from Victoria. In the lead-up to the 2004 Greater Geelong City Council elections, David Saunderson, a sitting councillor, solicited funds from six Geelong businessmen, including Frank Costa and a property development company, Lascorp Development Group, with Costa contributing to support “higher quality candidates” and Lascorp a “productive Council.” Saunderson, who controlled the disbursement of these funds, channelled them to 17 candidates; six of them, including himself and the current mayor, Bruce Harwood, were elected to office. At no time during the election campaign was this financial support disclosed to the public and, indeed, there was even failure to disclose after the election. Some of these councillors, including Sauderson, initially denied receiving any such support. With the campaign funds of the six elected councillors largely sourced from the Costa-Lascorp coterie, their election came with acute conflicts of interest: each of the councillors were involved in deciding matters specifically affecting the commercial interests of their funders.

Although all three episodes have a common feature - business interests secretly supporting favoured candidates, creating systemic conflicts of interest - there is a remarkable contrast between the political responses to the Gold Coast and Tweed Shire debacles and the Geelong episode. In Gold Coast and Tweed Shire, broad-ranging inquiries into corruption were carried out and the councils were eventually sacked. In Geelong, on the other hand, a narrow investigation was confined to the question of whether minimal disclosure obligations had been breached. All the implicated Geelong councillors remain in office and no changes to the law were mooted. Only Saunderson was convicted for failing to disclose and fined a derisory $1000. Even this conviction does not even seem to have elicited much contrition. When declaring that he would stand for re-election in the November council elections, Saunderson quipped that the people of Geelong would not benefit if these elections became embroiled in questions surrounding the funding of candidates.

The Geelong events illustrate how local government - particularly in Victoria, it seems - remains ripe for corruption through voter deception and systemic conflicts of interest. As the Victorian Ombudsman ominously warned in a report he handed down earlier this year “many councils had practices that, at best, lead to a lack of transparency and, at worst, allow opportunities for corrupt conduct.”

The integrity of Victorian local government requires changes on several fronts, and local government in other states would benefit from similar reforms. Its ethos must be firmly grounded in transparency and avoidance of conflicts of interest. Local government candidates should take the cue from local government candidates representing the NSW Greens, who have committed to “real time disclosure” by publishing details of political donations within three days of receipt. Going even further, they should follow the lead of Labor mayor of Waverley in New South Wales, Ingrid Strew, who has refused to take any donations from developers and hotels on the basis that “we don’t want to be under any obligations from anyone.”

Virtuous self-regulation will not, however, emerge spontaneously. It will need the stick of regulation to break through the self-interest of some local government candidates and their corporate backers. Key changes to the law are necessary. Local government candidates should be required to disclose their funding details before elections are held so that local residents can cast informed votes rather than disclose post-election as is presently required. Such information should be widely accessible, for example, through the internet, and collected by the state electoral commission rather than, as currently occurs, by the chief executive officers of local councils who happen to be appointed by the councillors themselves. Conflicts of interest rules should be considerably toughened with councillors banned from deliberating or voting on any decision materially affecting their financiers.

In light of the unsavoury mix of aggressive business interests, complicit politicians and lax regulation at the level of local government, the statement by the Victorian premier, John Brumby, that corporate contributions were “a sign of a healthy democracy” takes on a sinister complexion. It depends on an Orwellian redefinition of democracy that omits its key tenets of transparency and the public interest. Only in Newspeak does Premier Brumby’s statement sound plausible.

Joo-Cheong Tham is a senior lecturer at the Melbourne Law School. His book on political funding in Australia will be published by UNSW Press next year.

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