Political parties cash in on gambling largesse

Published in the Saturday Paper on 10th August 2019 by Mike Seccombe

If ever there were a perfect visual representation of the political power of the gambling lobby, this was it.

Just five members of the house of representatives, lined up in a row on one side of the chamber last week, voting for the establishment of a powerful joint parliamentary committee to investigate the detailed and many allegations of corruption and criminality by Crown Casino.

They were a disparate group from disparate electorates – the Greens’ Adam Bandt, from inner Melbourne; rural independent Helen Haines; the Abbott-toppling small-l liberal Zali Steggall from Sydney’s affluent northern beaches; Tasmanian anti-corruption campaigner Andrew Wilkie; South Australian Centre Alliance representative Rebekha Sharkie.

The motion they were advocating was detailed, setting out matters to be investigated including Crown’s links to “organised crime, money laundering, tampering with poker machines, and domestic violence and drug trafficking on Crown property”, as well as alleged improper activity by consular officials and other federal and state officials and agencies.

They were proposing a multipartisan super committee, comprising 16 members – three MPs from each of Labor and the Coalition, three senators from each of Labor and the Coalition, and four members drawn from the minor parties and independents.

The votes were taken and the motion was lost: 127 to 5.

A clue as to why might be found in the terms of reference, specifically number 1(c), which called for the committee to investigate “the relationship between Crown Casino and governments, including the role of former members of state and federal parliaments”.

Among the members voting, there were only five who could claim no relationship with Crown Casino: Bandt, Haines, Steggall, Wilkie and Sharkie.

And so, instead, by rapid agreement of the major parties, the job of investigating the allegations was flicked to a small body most Australians would have never heard of: the Australian Commission for Law Enforcement Integrity (ACLEI).

ACLEI, as the name suggests, was set up to counter corruption in law enforcement agencies, not gambling companies and certainly not politicians, their staff or bureaucrats. Its job is to oversee the Australian Criminal Intelligence Commission, the Australian Federal Police, the money-laundering agency AUSTRAC, the Home Affairs Department and some parts of the Department of Agriculture and Water. According to a swingeing report released by the Australian National Audit Office last August though, it is not even particularly effective at that.

Former Canberra Times editor Jack Waterford, in a tart piece on the Pearls and Irritations website this week, noted ACLEI does have “enormous powers of bugging, surveillance, compulsory questioning, and various forms of legal blackmail on people in durance vile”.

But, he wrote, it has never held a public hearing, and its reports were “sanitised and devoid of detail. Most of its catches are small fry, and well below the quality and quantity picked up by anti-corruption bodies in other jurisdictions throughout the world.”

Waterford said ACLEI appears to have a very specific view of corruption, limited to breaches of criminal law. This does not extend to “poor stewardship of public resources, the exercise of power for improper purposes, the failure to do one’s duty, or reckless, incompetent or improvident management of resources”.

He also pointed to the auditor-general’s report on ACLEI, noting it was “scathing about its management, sense of purpose, efficiency and effectiveness. That there is official pretence otherwise is testament either to complacency, or to the actual desire that any integrity measures are weak and ineffective.”

Which is to say, it was the perfect vehicle for this investigation, as far as the major parties were concerned. For they have many strong reasons to favour only a limited inquiry. Millions of reasons. Billions of them.

For a start, there’s the $2,708,754 donated directly to the parties by Crown during the period from 1998 to 2018, recorded in Australian Electoral Commission returns. This largesse was split fairly evenly between the major parties over the longer term but has significantly favoured the conservatives in recent years.

But that is just the tip of a very large iceberg. “It’s not criminal conduct. But it is conduct that, I have always argued, should be under the umbrella of corrupt conduct.”

An unpublished analysis from Monash University’s School of Public Health and Preventive Medicine, authored by associate professor Dr Charles Livingstone and PhD student Maggie Johnson, details the extent and intricacies of political largesse from gambling interests.

On top of the direct donations, there are the large amounts of money that are funnelled into political parties via their “associated entities” from people and entities associated with Crown.

According to the researchers, Publishing and Broadcasting Limited, an entity associated with Crown, also made significant political donations. In the period tracked by the researchers, 75 per cent of its declared donations – a total of $211,875 – were directed to the Millennium Forum, an entity associated with the New South Wales Liberal Party.

“Roslyn Packer [mother of Crown Resorts’ then majority shareholder James Packer] is a significant donor to the federal Liberal Party,” Livingstone and Johnson write. “She declared the largest donation received by any political party for the period 2012-13, $580,000 to the Federal office of the Liberal Party, more than triple the amount given by the next largest donor.”

That last example is particularly interesting. At the time Roslyn Packer gave that donation, her son, James Packer, was seeking approval from the NSW government for his unsolicited proposal to develop a casino and hotel complex at Barangaroo in Sydney.

Under NSW electoral law, developers are prohibited from donating to state divisions of the parties. The prohibition can be circumvented, though, by giving the money to other divisions.

In an interview, Dr Livingstone elaborates: “Ros Packer’s donation was delivered, I recall, within a couple of weeks of the government’s agreement [to the Barangaroo proposal].”

As the Barangaroo project has evolved and grown, more money has been given to the Liberals. As the researchers note: “More recently, Ms Packer declared a further $500,000 to the Liberal Party for the period 2016-17.”

It is all completely legal.

While Crown’s political donations are split between the major parties, Livingstone and Johnson identified that they tend to favour the party in government, with one “notable exception”. That was the period 2011-13, when Labor was in power federally.

The 2010 election produced a hung parliament, and in order to gain the numbers to govern, Julia Gillard negotiated a deal with Andrew Wilkie, under which he would support Labor in return for gambling reforms. Gillard pledged to introduce federal legislation requiring a mandatory pre-commitment scheme and $1 maximum bet for all electronic gaming machines or EGMs – pokies, in popular parlance.

“During this time Crown donated $90,735 to the ALP and $161,013 to the Coalition,” write Livingstone and Johnson.

And it wasn’t just Crown. As the academics note, the gambling industry generally, spearheaded by ClubsNSW, spent big to stop these reforms, not only on donations but also a public propaganda campaign.

“For 2010-2011 and 2011-2012 ClubsNSW filed returns detailing political expenditure totalling $948,701 and $3,478,581 respectively. This represents amounts spent on direct political campaigning and is additional to donations,” they write.

But, as Livingstone elaborates: “Even at the height of their anti-Gillard campaigning in 2010-11, they [ClubsNSW] still had a bunch of people on the Labor side, including Joel Fitzgibbon, Chris Bowen and others, kept on the donations drip feed.”

The researchers have been able to identify particular politicians who received donations because, unlike many political donors, the gambling lobby identifies specific individuals, rather than just giving to a party as a single entity. Not that the individual politicians get to keep the money – it flows back to the party – but it conveys a message.

“It’s a very NRA tactic,” says Livingstone, referring to the National Rifle Association of the United States, which has provided training to ClubsNSW officials.

Bottom line, Labor betrayed Wilkie and watered down its reforms, and later voted with the new Abbott government to kill them off.

In the case of the Gillard–Wilkie proposals, the lobby played successful defence. About the same time, in NSW, they were playing bold offence with the conservatives, led by Barry O’Farrell.

In 2010, O’Farrell signed a memorandum of understanding with the clubs that promised a range of benefits, itemised by Livingstone and Johnson: “… a $300 million tax reduction, abolishing forfeiture of gambling machine entitlements following club amalgamations, and a commitment to a voluntary pre-commitment system”. The MoU also allowed for “the removal of limitations on installing electronic casino games (multi terminal gaming machines, or MTGMs) with $100 maximum bets, compared to maximum $10 bets on EGMs”, as well as other concessions.

They add: “Between 2009-2011, Barry O’Farrell was the beneficiary of a total of $247,500 from the gambling industry, reported as either donations or ‘function costs’.”

But the extraordinary political influence of the gambling lobby is not limited to NSW.

The Tasmanian Labor Party went to last year’s state election with a policy of removing pokies from hotels and clubs at the expiry of existing licensing arrangements in 2022.

Gambling interests mounted a huge campaign against the reform. According to federal electoral commission data – Tasmania has no separate disclosure regime – they gave “at least” $514,000 to the Liberals and nothing to Labor. We say “at least” because donations less than $13,800 do not have to be disclosed.

In total, the Tasmanian conservatives received a total of $4.2 million in donations; Labor just $1.5 million. The Liberals won the election.

Not that Labor is clean either. It also serves the interests of the gambling lobby. Indeed, to some extent it is part of the industry. As the researchers note, pokies revenue is a major funding source for the Labor Party in the ACT. According to Livingstone and Johnson, in the territory, Labor “owns and operates 489 EGMs, netting an average $50,599 per machine in 2017-18”.

There are other examples, such as the extraordinarily liberal regulatory regime that applies to Melbourne’s Crown Casino, and the academics’ paper describes this and other case studies in forensic detail. But the point is made – Australia’s major political parties are deep in the thrall of the gambling lobby.

They are dependent not only on the donations as political parties, but also dependent on the revenue they get as governments from gambling. Some $6 billion a year, in total, is harvested by state and territory governments, most of it coming indirectly to them from the pockets of those struggling with gambling addiction.

The symbiotic relationship between politics and the industry has turned Australians into the biggest, and losing-est, gamblers in the world. According to the most recent Australian Gambling Statistics data, in 2016-17 total turnover from all forms of gambling was $208 billion. Two-thirds of that – $144 billion – went through pokies. Total losses, framed as “expenditure” by gamblers, was $23.7 billion, or $1250 per capita.

That’s just the average. In 2015, a Productivity Commission report reckoned 80 per cent of losses were incurred by just 20 per cent of gamblers, in particular from some 115,000 problem gamblers.

And both sides of what Wilkie calls the “political establishment” are culpable.

“The major parties are peas in the pod,” he says.

“You saw it in NSW with those pre-election deals; you saw it here in Tasmania with the support of the Liberals at the state election. You see it in the fact that Labor owns and runs poker machine venues – the ACT, the Randwick Labor Club in Sydney. And you see it in the fact that both major parties opposed my push last week for the inquiry.

“These are all examples of the remarkably cosy relationship between the gambling industry and the political establishment.”

And while the recent allegations against Crown are particularly serious – given they relate to potentially criminal conduct – Wilkie says they are just “symptomatic of all the problems in the gambling industry” and its influence on politics.

“It raised eyebrows when I said last week that there are corrupt politicians in this place [parliament] currently. Now, I don’t know if there’s any guilty of criminal offences but, I tell you what, there’s a lot who are guilty of being morally corrupt.”

It’s an important distinction to make, the same distinction as Waterford made regarding ACLEI and its narrow focus on criminality rather than corruption.

A distinction that’s also made by Anthony Whealy, QC, former judge and previously chairman of Transparency International in Australia. He is now chair of the Centre for Public Integrity, a group of eminent former judges and lawyers pushing for a strong federal anti-corruption commission.

Behaviour does not have to be illegal to be corrupt, he says.

“The lobbying and benefits that flow from making generous donations are fundamental to the way the gambling industry operates,” he says.

“And on the face of it, they act in accordance with the law. It’s not criminal conduct. But it is conduct that, I have always argued, should be under the umbrella of corrupt conduct.”

Both sides of the political establishment went to the 2019 election promising a national integrity commission, and Attorney-General Christian Porter now is working on one, apparently along the lines of ACLEI. We have yet to see the legislation but, on what we know, it would not take referrals from the public or whistleblowers, would not hold public hearings, and would deal with matters of actual law-breaking.

It is not good enough, Whealy says, to have a system “where it says only crimes can be investigated, and you have to have reasonable suspicion of a crime”.

All signs suggest that to break Australia’s gambling addiction, we need not only a much more robust anti-corruption body but also reform to the regime of political donations.

“Donations reform is the essence of it, because money is power. It opens the doors, and there’s no doubt we see generous benefits flowing to the gaming industry as a result of their donations,” says Whealy.

“We ought to be thinking of banning donations from gambling companies, as we have done in NSW with property developers.”

Wilkie could not agree more, yet he holds little hope of either a strong anti-corruption body or effective donations reform. On the former, he says, “I have zero confidence they want anything strong. Neither major party wants effective scrutiny, especially of politicians.”

And on the latter: “Our current donation laws enable legalised corruption. No one hands over a sack of money without expecting return on the investment.”

This week another eminent legal figure, former High Court justice Kenneth Hayne, of banking royal commission fame, joined the chorus of people lamenting the decline of public trust in our national institutions.

In a speech made in July, but only reported on Wednesday, he complained that government decision-making processes had become “skewed, if not captured” by powerful vested interests.

And there is no better evidence of that than the 127-5 vote in the house of representatives last week.