The Hon. Rob Lucas MLC

The Hon

Rob Lucas MLC

Treasurer

Speeches

Development (Political Donations) Amendment Bill

Tuesday, 29 July 2008

Adjourned debate on second reading (continued from 9 April 2008, page 2347).

The Hon. R.I. LUCAS (23:38): In speaking to this particular bill I will start with two quotes. The first quote is from the Labor Party policy of 2002, the plan for honesty in government, which quotes the now Premier, Mr Rann, as follows:

"We will lift standards of honesty, accountability and transparency in government. Secrecy can provide the cover behind which waste, wrong priorities, dishonesty and serious abuse of public office may occur. A good government does not fear scrutiny or openness."

The second quote I turn to, appertaining to the substance of this bill, is from 2 May 2007 in an interview with Mr John Blunt on the Bevan and Abraham show on ABC Radio. Mr Blunt was either general manager or CEO of the Makris Group. The context of this debate was revelations made in this parliament that the Makris Group, through four or five different companies, had donated $182,000 to the Australian Labor Party prior to the 2006 election. Bevan and Abraham were interviewing Mr Blunt, who was disarmingly honest in his reply. The record of the interview is as follows:

In responding to a question from David Bevan about why the Makris Group chose to donate to Labor, John Blunt replied: 'I mean, we have got business interests, as well, so we want good governance. We want to see things happen in this state.'

Matthew Abraham interjected, 'You want to be looked after, too?'

John Blunt: 'Yeah, we want to make our projects happen, that's for sure, but, you know, that's a part of the way the system—you know, politics—works here...'

I think those quotes summarise the issues that are being addressed by the Hon. Mr Parnell in this legislation. Here we have the chief executive officer of a major developer who, in the period leading up to the 2006 election, had donated $182,000 not just in the name of the Makris Group but through groups called the Gawler North Market Group, and Acanan, and a number of others.

It was only through work done by the opposition in tracing back through company searches that the associated interests of these companies with the Makris Group were revealed. As a result, there were these interviews from Bevan and Abraham, and I quote Mr Blunt again, 'Yeah, we want to make our projects happen, that's for sure, but, you know, that's a part of the way the system—you know, politics—works here.' That is a damning criticism of this government and of this minister, who has been the minister associated with a number of the developments of interest to the Makris Group, to which I will refer in a moment.

In addressing the issues of this legislation, and other related matters, I seek leave to incorporate in Hansard a purely statistical table that analyses the donations made not just by developers but also by other major interest groups to the Australian Labor Party between the period 2002 and 2007, all from Australian Electoral Commission returns.

Leave granted.

Donor for period 2002-2007
Total Amount

ALP Holdings Pty Ltd
$1,568,000.00

Shop Distributive Association
$778,648.61

Construction, Forestry, Mining and Energy Union
$753,130.95

Liquor Hospitality and Miscellaneous Workers Union
$548,865.48

Australian Manufacturing Workers Union
$405,736.51

Australian Workers Union
$267,673.36

Companies associated with Makris Group, including: Makris Group Pty Ltd, Balgara Shopping Centre Management, Acanan Pty Ltd, Gawler North Market
$261,150.00

Australian Hotels Association
$221,650.00

Transport Workers Union
$186,338.66

Companies associated with Mr Pickard, including: Fairmont Homes Group Pty Ltd, Pickard Retirement Pty Ltd, Land SA
$119,450.00

Companies associated with Mr Gandel including: Lewiac Pty Ltd, Northgan Pty Ltd
$71,100.00

Westfield Shopping Centres
$64,100.00

Urban Construct
$48,250.00

Strategic Contacts Pty Ltd
$33,000.00

Caversham Property Development
$30,000.00

Companies associated with Bilfinger Berger Australia, including: Bilfinger Berger, Baulderstone Hornibrook Pty Ltd
$29,850.00

Walker Corporation
$25,000.00

Companies associated with Mr Sadri, including: MDS Australia Pty Ltd
$24,400.00

Babcock and Brown
$24,400.00

ABN Amro Pty Ltd
$17,700.00

Westpac Banking Corporation
$4,000.00

Total
$5,482,443.57

The Hon. R.I. LUCAS: This table refers to donations to the Australian Labor Party between 2002 and 2007. Unsurprisingly, the secretive, mysterious, and some might say sinister, ALP Holdings Pty Ltd is the biggest donor to the Australian Labor Party—approximately $1.6 million donated through that particular entity. Where that money has come from, or how the money has been accumulated, no-one in this parliament, other than the minister—

The Hon. P. Holloway interjecting:

The Hon. R.I. LUCAS: No; no-one other than the minister or members of the Labor Party would know that.

The Hon. P. Holloway interjecting:

The Hon. R.I. LUCAS: The Australian Electoral Commission returns, to which the minister refers, saying 'Everything is transparent, everything is disclosed,' indicate nothing more than that—that is, three different donations totalling some $1.6 million to the Australian Labor Party.

As I go through and refer to some of the individual aspects list, one of the points I would like to make is that, in my view, we are talking about a danger to democracy in terms of the direction we are heading with contributions to all parties, including both the major parties. However, I can assure you, from looking at the returns, in South Australia recently it has been to a much greater extent than ever existed with the former Liberal government in the eight years leading up to 2002.

In the financial year 2005-06, receipts for the Australian Labor Party in South Australia alone were $4.9 million, while I note that the national Australian Labor Party returns for that same year were just $3.7 million. So, the national office of the Australian Labor Party had receipts of $3.7 million in 2005-06 while the South Australian branch of the Labor Party, a mere 7 per cent of the national total, had receipts of $4.9 million in that period.

We are not talking about small beer here, we are not talking about small bickies. For the first time ever we are talking about significant lumps of money being dumped into one political party. Contrary to what the minister is saying, there is some transparency in terms of many of the aspects of the public disclosure requirements.

I am not going to go through all the list. It is now incorporated in Hansard, but unsurprisingly, Mr Acting President, you will not be surprised to know that an association that you have very close affiliations with, the Shop Distributive Association, is the next biggest donor at $778,000, and then a number of other unions. Going down the list, as I indicated before, the companies associated with the Makris Group during that period made total donations of $261,000, through various entities called Acanan, Gawler North Market, Balgara Shopping Centre Management and the Makris Group Pty Ltd itself.

The Australian Hotels Association, which is a very big donor to the Labor Party and to be fair, is also a donor to the Liberal Party, made donations of $221,000. Companies associated with Mr Pickard, again who has been a donor to both the Labor Party and the Liberal Party, through entities such as Fairmont Homes, Pickard Retirement Pty Ltd, and Land SA, donated $119,000. Companies associated with the developer by Mr Gandel, which included the Lewiac Group and Northgan, donated $71,000. Westfield Shopping Centre, $64,000; Urban Construct $48,000; Strategic Contracts Pty Ltd $33,000; and Caversham Property Development $30,000.

Companies associated with Bilfinger Berger Australia donated nearly $30,000; and Walker Corporation $25,000. Companies associated with Mr Roostam Sadri, which also includes MDS Australia Pty Ltd, donated just over $24,000; Babcock & Brown just over $24,000; ABN Amro $17,000; and Westpac Banking Corporation $4,000.

The point of doing that analysis is to indicate that it is not just the development industry—although that is a healthy source—from which the Australian Labor Party has garnered much of its donations, but in looking at those one can clearly see that. I hasten to say, as I said in an earlier speech on this issue, that the speech that I am making tonight will make no allegations of impropriety against any company. I am just outlining the facts in relation to who has given what and an analysis of what they are also involved with.

The Makris Group is clearly involved with at least a couple of controversial developments in relation to Le Cornu and a major shopping centre down at Encounter Bay, about which I have asked questions of the minister already. Walker Corporation is associated with a controversial development at Buckland Park. Urban Construct is involved with a controversial development at Newport Quays and a number of other developments as well. Bilfinger Berger Australia, which includes Baulderstone Hornibrook, is involved in a number of developments in South Australia as well.

Babcock & Brown is associated with a number of the bidding groups for the PPP projects in South Australia. For example, Babcock & Brown is in one consortium bidding for the $0.5 billion PPP prisons project. I think Bilfinger Berger is also part of a consortium bidding for the $200 million plus PPP project in education. Caversham, or the Aspen Group, is tied up with the City Central project, and also I understand with the SA Water building project as well. Hansen Yuncken was tied up with the PPP for police stations, regional police stations and court houses, and it has been tied up with a number of other major developments, such as the Lyell McEwen Hospital redevelopment.

So, if you go through the PPP projects in terms of the bidding groups—Bilfinger Berger, ABN Amro, Babcock & Brown, Hansen Yuncken, Built Environs—all of them are part of bidding groups for major PPP projects in South Australia. One can only imagine that when the bidding comes for the nearly $2 billion Marjorie Jackson-Nelson project, a number of those particular groups (the development groups and also the financial groups and other groups associated with those consortia) potentially also will be part of the consortia that will be bidding.

That analysis indicates that the development industry is a significant part of the donor group, but so are many other groups as well. I share the views of my colleague the Hon. Miss Lensink and the Leader of the Government, in part, and that is, if this issue is to be tackled (as, indeed, I agree, it should be), I do not believe it can be tackled through the mechanism the Hon. Mr Parnell is advocating, that is, isolating the development industry in this way.

As I said, when you look at this analysis of donations to the Australian Labor Party, it shows groups such as ALP Holdings and Progressive Business (the organisation about which a number of questions have been raised). For the first time last year a return was lodged with the Australian Electoral Commission. It has been my view for some time that, as an associated entity of the Labor Party, it should have been submitting returns for a number of years, as indeed its sister organisation in Victoria has been lodging annual returns with the Australian Electoral Commission. Nevertheless, it started to lodge returns, and I am currently undertaking an analysis of that, and associated entity returns also.

Of course, add to this area of interest the Hon. Mr Parnell has raised in relation to development projects, etc., the work of Progressive Business, which is headed by former Senator Nick Bolkus, and look at the fact that Mr Bolkus has also acknowledged he is a lobbyist in his own right on a number of interests. Look at his work as chair of Progressive Business, raising hundreds of thousands of dollars for the Rann government. It is an unpaid job, but then you look at the other part of the equation, that Mr Bolkus and Mrs Bolkus (Mary Patetsos, as she is known) have a significant number of appointments from the Rann government. For example, Mr Bolkus is the chair of the Stormwater Management Authority and, I understand, a member of the healthy living committee. His wife, Mary Patetsos, is a board member of the Housing Trust (which pays just under $30,000 a year), and is on the Local Government Grants Commission and the Social Inclusion Board.

So, there is a web in terms of Mr Bolkus undertaking a significant amount of work (he says, unpaid) for this fundraising arm of the Rann government and raising hundreds of thousands of dollars. He is also a lobbyist in his own right. On the other hand, the Rann government rewards him and his wife with what looks like at least five appointments of a paid nature out of the taxpayers' purse. As I said, one of those appointments is up to almost $30,000 a year in the Housing Trust.

It is not surprising that the Hon. Mr Parnell, and others I am sure, raise questions about transparency, particularly when one sees comments of the nature of Mr Blunt's. As I said, blunt by name, blunt by nature and blunt in this interview—disarmingly honest. But I can assure members that many similar statements are made off the record and in private by people in relation to the development industry. That is, they believe that to ensure that they are in the hunt, rightly or wrongly, they need to be participants in Progressive Business and making donations of a significant nature to the Rann government.

This current free-for-all we have is a danger to democracy. There is the perception amongst many commentators and observers for potential corruption or impropriety in relation to all these things. My speech tonight is not alleging impropriety against any particular donor I have mentioned in my contribution, but it will be particularly highlighted when a government makes a significant change in a long-standing policy. I have addressed this issue in a number of other areas, but if a government has a particular view in an area, a policy position, and makes a significant change in that policy, and if at the same time one sees significant donations being made to the Australian Labor Party, then it is not surprising people will say, 'Hey, what's going on here?' in relation to what is occurring.

Given the time, I will not go through what I believe all the changes ought to be, other than to speak briefly and highlight a number of my personal views on these issues—I certainly do not profess to speak on behalf of my party. There is no doubt that there now has to be a significant change in relation to electoral disclosure laws. I do not support, for the reasons I have outlined, this particular endeavour from the Hon. Mr Parnell because, if you are to make change, it cannot just be for the developers but ought to cover the gaming industry, hotels and the other donors as well.

I am not the only one raising these issues: Mr Parnell has his model; the federal Labor Party through Senator Faulkner is raising the possibility amongst a number of options (I do not think they will eventually go down this path of banning political donations); the former federal president of the Liberal Party (Shane Stone) is canvassing the potential banning of donations; and Malcolm Turnbull and Christopher Pyne in the federal Liberal Party have talked about significant restrictions or inhibitions in terms of the current practices of donations to all parties. My personal view is that there needs to be a massive overhaul of the current disclosure laws. I have changed my views on these issues as a result of what I have seen over the past five or six years. I am now a supporter of public funding being introduced in South Australia. I do not believe that is the solution in and of itself to the problem, but it can be part of it.

I certainly now support at the very least some limit on the level of political donations that can be made by any individual or associated group to political parties, and I see that being at a modest level. I have looked at some of the disclosure regimes in the United States—given the hour I will not go through them now, but when the parliament returns I intend to speak on some of the options I have looked at in the United States and Canada. I certainly now support much tougher disclosure of all donations and, with the benefit of hindsight, the change my own party made to go from $1,500 to $10,000 is now not something I support. At the federal level members on both sides now support a reduction in that figure, maybe even a reduction to below the old level of $1,500, although I think the Labor Party is looking at $1,500 as well.

I refer also to the issues of aggregation under current disclosure, where companies are meant to aggregate and go over the disclosure level and disclose. In many cases, in relation to both the Liberal and Labor Party, where companies do not know because the regime is not being policed strongly enough or because they are deliberately not disclosing as they should, the issue of being able to donate to a party in a number of different states up to the threshold level needs to be tackled as well. There are a number of areas in relation to disclosure, but time does not permit me to go through them all this evening. However, I will address my views on them when the parliament resumes.

From looking at what is occurring in the United States, one of the lessons is that, if you do introduce a tougher regime in terms of disclosure and/or including limits on the level of donations, then again the clever operators in the United States have got around that. They have done that through what is known as the independent expenditures. I refer members to the report from the Fair Political Practices Commission in California of June of this year, which is a report on 'Independent Expenditures: The Giant Gorilla in Campaign Finance'. That demonstrates that, with their very tough limits on donations and very tough disclosure (probably second only to Washington), the clever operators have got around that through independent expenditures through independent expenditure committees.

That particular report and a number of others at which I have looked from the Fair Political Practices Commission demonstrate the cleverness of those who wish to donate, and if you think you have closed the loopholes, then you will need to think again. It is not easy, even if you are determined to crack down on it. If we do move to a tougher disclosure which, as I said, I personally support, then, at the same time, you have to tackle the issue of independent expenditures. If you do not, then the American experience demonstrates that you are almost wasting your time—$100 million in the Sacramento case. I think it was almost an increase of 6,000 per cent in the space of four years. Once the tougher disclosures came in, all the money went back in through independent expenditure committees.

With that, I indicate my inability to support this particular model for reform but, as I said, I am not speaking on behalf of the party, I speak as an individual. I do personally support a comprehensive overhaul of this whole area and I think there do need to be much tougher disclosure regimes in the future to try to guarantee that there is not to be corruption or, indeed, as raised by a number of members, to reduce the perception of potential corruption or impropriety in this whole area.
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