Integrity in politics is an economic issue because it is about equity

Amid the heavy traffic in barrow-pushing at last week’s summit, one tiny set of wheels did not make the squeak it should have.

It was an issue called out in the scene-setting and comprehensive state-of-play summary by Grattan Institute CEO Danielle Wood when she rightly highlighted the undue influence big corporations seem able to achieve from political donations and lobbying.

Right now it’s an alive issue in most states and her argument illuminates why dealing with integrity is much more than a second string matter for the federal Parliament.

“Institutional reforms to reduce disproportionate access and influence are economic reforms as well as integrity reforms,” she said in a presentation full of pearls, including the observation that if the economic potential of an underused female workforce was an ore body, it would already have attracted squillions in government subsidies to activate.

Her logic, based on Grattan’s research, is that there is real concern that firms in major industries see more upside in lobbying to extract a better deal from policymakers than from investing in better products and services to improve their competitiveness.

“Heavily regulated sectors such as mining, property and construction, and gambling are characterised by remarkably high levels of political donations and lobbying compared to their relative economic contribution,” she said.

She illustrates it with a table showing the proportion of business donations across different industry sectors (in order, they are: mining, property and construction, gambling, manufacturing and financial services) and then comparing that with an estimate of their share of gross value added to the economy.

Gross value, as measured by the ABS, is the market value of goods and services produced by an industry minus the cost of goods and services used to produce them.

The institute estimates that mining contributes about 22% of all political donations but adds 8% of gross value. Property and construction about 18% of gross value and 12% of donations.

And then there’s gambling: 2% of gross value to fund 10% of donations!

What do these industries have in common? They’ve all been significant beneficiaries of government decision-making. Mining has been spared the impost of a carbon tax thanks to its lobbying power (underpinned by political donations). Property and construction benefits from the investment gains it achieves through tax concessions such as negative gearing and capital gains tax discounts.

Where do we start with gambling? The five largest casinos (Crown in Melbourne and Perth, and Star in Sydney, Gold Coast and Brisbane) have been able to operate money-laundering businesses with what is now clearly seen as inadequate regulation. Online gaming operators have been able to spread their powers of addiction into every living room and sporting match courtesy of soft advertising regulation.

Influence is the currency of democracy. The best influence is that exercised through the ballot box but it is skewed by the power of donations which gives the wealthy more access to political decision-makers.

Part of Labor’s election treatise is to legislate for an integrity commission which will oversee the conduct of federal politicians and officials. But a commission alone won’t do it unless it is supported by rigorous disclosure of donations and the activity of lobbyists. This is being played out in Queensland where it is now accepted that a small group of lobbyists have had disproportionate access to government decision-makers.

The scepticism about a federal integrity commission is often coated in concern that it is a second-order issue behind other significant social and economic challenges — access to housing, debt reduction, the threat from China, climate change just to name a few.

But the point Wood makes is important: integrity is an economic issue because it goes to the heart of achieving equity.

It’s not alone on this front. We used to think gender equity was a social issue but it’s now clear it’s an issue of economic efficiency. We used to think improving disability access in the workforce was a social issue but it too is an issue of economic efficiency.

Climate change was allowed to languish behind economic concerns because of its ranking as the moral issue of our time. A decade later, we see that dealing with it is at the heart of most economic and business decisions.

So let’s not slow down on integrity reform. Prime Minister Anthony Albanese needs to progress with urgency and there’s no time like the first year of a government to make haste.