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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

Victoria is heading down NSW's path of corruption

Tuesday, April 28, 2015

The current attacks against the NSW Independent Commission Against Corruption for overreaching its authority are a comparative diversion from a larger systemic problem.

New South Wales has a long history of ingrained corruption. It’s a bigger issue than just corrupt individuals.

Rather, individual corrupt behaviour is the end result of a political, governance and business system that masks, almost legalises and certainly facilitates corruption.

The problem goes back a long way.

The Rum Rebellion of 1808 established a pattern. The colonial army, in cohorts with the pastoralist John Macarthur, deposed the government. Since then there has been a centuries-long pattern in NSW where interests external to the elected government have run the show to their personal benefit. The players and beneficiaries might change, but the system remains in place.

ICAC is the anti-corruption watchdog. Established in 1988 following the exposure of the government’s ministerial, judiciary and senior police force corruption, it has identified and stopped many instances of proven individual corruption.

Currently, ICAC is itself under pressure following a High Court declaration that it has been operating beyond its powers. But for all this ICAC controversy, its successes and sometimes errors in identifying individual corruption, I can’t see any evidence that NSW’s system of corruption facilitation is being addressed.

I first studied the NSW ‘corruption’ system over a five-year period from 2004. I was investigating and campaigning against bad NSW OHS laws (of 2000), which declared ‘employers’ automatically guilty simply because a safety incident had occurred. The laws were effectively declared invalid by the High Court in 2010 and subsequently repealed.

Part of my investigation process involved two days sitting in the basement of the NSW Parliament reading through boxes of Parliamentary Freedom of Information documents relating to key OHS prosecutions. I discovered (and the NSW opposition reported on) correspondence between various government authorities over whether a particular department should be prosecuted. The 2000 OHS Act required that the department be prosecuted. The department had provided faulty information that lead to several deaths. But the bureaucrats decided that there would be ‘no useful public purpose in prosecuting…”  

Yet prosecution occurred against a company that was legally required to rely on the department’s information. Further, the employer of several of the deceased men was a labour hire company that was not prosecuted. Under the strict wording of the OHS Act, the labour hire company was again required to be prosecuted. It transpired that the company was owned by the construction and mining union, the CFMEU.

The 2000 laws were specifically introduced to cause prosecution of legally defined ‘employers’. My investigations revealed that the laws application was highly selective. The government department, in part responsible for several deaths, was secretly protected from prosecution. Because one of the employers (CFMEU) had strong political connections, it also was seemingly protected from prosecution. The other employer, which did not have political connections, was prosecuted.

This one example gives some understanding of the system of NSW corruption facilitation. Applying the idea of ‘corruption’ in a broad sense, a ‘corrupt’ law was created (to prosecute only employers regardless of facts). Yet in its application, the politically or institutionally connected privileged were protected from prosecution.

This NSW system of ‘insider’ protection and privilege is a creature of and dependent on the NSW political culture. Under its most current form, it’s principally a product of the dynamic within the NSW Labor movement. It’s most entrenched in the construction and property development sectors of the economy.          

Development and construction privilege is delivered to companies with ‘cosy’ relationships with NSW unions -- the ‘Sussex Street’ factor. The process and system has legal cover. But such cover always leads to direct corruption of bribes and the like.

ICAC’s legislative brief, according to the High Court, targets this more usual understanding of ‘corruption’. ICAC has uncovered many instances of ‘normal’ corruption, individuals receiving bribes and so on, but hasn’t cracked open the NSW system that facilitates corruption.

At the 2011 election NSW voters punished NSW Labor principally because of its overpowering stench of corruption. The elected Coalition government then suffered from ICAC’s exposure of corrupt behaviour within its ranks. Mike Baird appears to be arguably the cleanest and most politically intelligent premier NSW has had for many generations, but as yet he shows little sign of understanding the extent of the NSW institutionalised corruption facilitation system.

Last week I identified a worrying development in Victoria. This is Victoria now copying and heading down the NSW path.

[First published in Business Spectator, April 2015]

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