How can Victorian Labor justify stonewalling improved lobbying laws?

The Andrews government has used its large majority in Parliament to block a proposal to reform Victorian laws, which would have banned lobbyists from serving on public boards relating to their areas of work, despite the bill being supported by the Coalition, Greens and crossbench MPs in the Legislative Council. 

The government blocked the proposal in the shadow of the PwC scandal, which has served as yet another reminder that in this country, well-connected lobbyists are greasing the wheels of access and influence to public officials for those who have the funds to pay them.

The secret to their access is their insider status: almost 40% of these lobbyists are former politicians, public servants and ministerial advisers. This has been described as the “revolving door”, where former public officials capitalise on and monetise their networks to gain access to powerful decision-makers and policy-makers — for profit.

The relatively straightforward reform was recommended by Victorian anti-corruption watchdog IBAC in its report on Operation Clara, released in February. IBAC found that former Labor minister turned lobbyist Theo Theophanous had allegedly misused his position in 2018 and 2019 to lobby for a $31 billion “super city” in the western suburbs of Melbourne for a Chinese-backed consortium, the Australian Education City consortium (AEC), while he was on the board of the Victorian Planning Authority.

Theophanous rejected IBAC’s findings, saying in a statement: “IBAC has once again demonstrated a complete disregard for the principles of democracy and its responsibilities within it.”

IBAC found Theophanous had failed to declare a conflict of interest when discussing matters relating to the AEC consortium at planning authority board meetings and that he failed to comply with Victorian lobbying rules that required him to register a lobbying client. As direct compensation for his lobbying efforts, the AEC consortium made political donations to Theophanous’ daughter’s campaign for election to Victorian Parliament.

Theophanous resigned from his position on the board of the State Trustees after these revelations. The IBAC report stated that Theophanous’ daughter, current member for Northcote Kat Theophanous, didn’t have knowledge of her father’s conduct.

Duty calls

Members of public sector boards, including those on the Victorian Planning Authority, have certain duties. These include not using their position to seek an advantage for themselves or another person, and not to use information obtained during their board duties to benefit themselves or another person. They are also obliged to comply with the board’s policy on managing conflicts of interest.

These duties are in place because public entity boards give advice and take actions that can influence government decisions. This means high standards of integrity are required. In this context, where we need board members to act with integrity, we cannot have the perception that influence can be “bought” through lobbyists sitting on these boards. 

Conflicts of interest

IBAC made four recommendations to the Andrews government, including preventing lobbyists from being appointed to public entity boards that relate to their line of work. This would bring Victoria into line with two other states: NSW bans lobbyists from being appointed to public sector boards in their area of work for 12 months, and Queensland bans them from sitting on public sector boards altogether.

There are two main reasons to impose this ban. The first is to prevent lobbyists from putting forward favourable positions for their private clients on these boards, which are supposed to be run in the public interest. There is a risk that a client may say to a lobbyist: “I will give you a lot of money if you use your board position to advocate for my company to get these approvals.” 

Where lobbyists are in a position of conflict of interest, they may act in a way that gives them personal financial benefit against the broader public interest. So there is a corruption risk there, which justifies the ban.

There is also the risk of the possession and use of confidential information. If the lobbyist has certain confidential information from a public sector board, such as that contracts would be awarded to a certain party, or certain government policies that would be implemented in the future, they may be able to capitalise on that information in their favour for their private clients. 

Consulting firm PwC has recently come under fire for similar behaviour, in misusing confidential government information for the benefit of its private tax clients: actions which a Senate committee has condemned as an “egregious breach of trust”. 

Our democracy relies on public sector boards acting in the public interest when making decisions and influencing government policy, rather than being swayed by narrow sectional interests for the financial benefit of lobbyists or their clients.

Imposing a ban on lobbyists sitting on public sector boards would reduce the risk of corruption and improve public sector governance. The question for the Victorian Labor government is: how it can justify blocking an attempt to enhance the democratic norms of political equality and fairness?