Watergate scandal isn’t corruption — it’s how Australian capitalism works

The “watergate” scandal, centred on Eastern Australia Agriculture, is ultimately about levees. In particular, levees designed to trap overland water flows — floodwaters — that previously had made their way via the Condamine-Balonne rivers catchment into the Murray-Darling system, but which Queensland cotton farmers siphoned off for themselves.

The removal of levees on two EAA properties, Kia Ora and Clyde near St George, was central to the purchase — for a bizarrely high price and without a public tender — of overland water by the Department of Agriculture in 2017. The profit made by EAA from the deal made its way to the Cayman Islands.

Those levees had made life hell for neighbouring properties, because they made local flooding events much worse. When Crikey first reported on the scandal of the Kia Ora levees in 2010 and 2011, we explained how a nearby farming family had been forced off their farm because of persistent and worsening floods, and with zero legal recourse because levee construction was essentially unregulated in Queensland under governments National and Labor alike. Years later, EAA was rewarded for the havoc its levees inflicted, to the tune of tens of millions of dollars of taxpayer money.

The role of Barnaby Joyce — who will be Deputy Prime Minister if Scott Morrison is re-elected, after he takes Michael McCormack’s job — in the purchases remains unclear after a rambling radio interview last night. Joyce lived in St George at the time and was a strong supporter of irrigators and the neighbouring Cubbie Station, chaired by former Queensland Labor treasurer Keith De Lacy. Angus Taylor, founder and former director of EAA, denies any knowledge. EAA is a Liberal Party donor.

A sweet deal with taxpayers’ money. An industry with poor regulation. Political connections. Political donations. Deals behind closed doors. Tax dodging. There’s nothing unusual or illegal about this. It’s certainly not corruption in any legal sense. In fact, this is the way much of Australian capitalism works. That’s why we have:

• the big banks paying generous donations to the Liberals to oppose and repeal financial advice reforms and attack the industry superannuation sector while they ripped off customers left and right, in the face of a useless, timid regulator;

• electricity companies exploiting the Byzantine structures of the artificial “National Electricity Market” to secure market dominance, game the system and rip off customers;

• Australia’s media industry using its political power to entrench the dominance of an oligopoly dedicated to its own interests, not those of consumers;

• the Big Four accounting firms — now another major source of political donations — becoming powerful consulting services providers to the federal government while remaining the architects of multinational tax dodging and retaining huge and unregulated conflicts of interest between their consulting and audit services.

These are only examples from core or major industries. Examples from other industries abound:

• corruption in Australia’s local government system is almost invariably driven by property developers attempting to game planning outcomes, while outsourced state building certification systems have been exposed as deeply flawed;

• Australia’s gambling industry preventing regulatory action against it courtesy of millions of dollars in donations to both sides of politics, making it one of the largest sources of donations;

• competition in the retail pharmaceutical space is permanently stymied by the power of the Pharmacy Guild;

• Village Roadshow has enjoyed bipartisan support for its internet censorship scheme in recent years in exchange for donations running into the millions to both sides of politics.

• routine breaches of animal welfare rules on the live sheep export trade, including by a Coalition donor, after the rules were weakened by Barnaby Joyce.

This is the business model of Australian capitalism: rigging the rules of the game in your favour and against those of your customers or against the public interest. And it applies to securing taxpayer funding as well, despite ostensible protections against waste, mismanagement and rorting.

Wherever there is some sort of government funding scandal — as with the Business Council-aligned Great Barrier Reef Foundation being handed $440 million, or long-term political donor Transfield securing billion-dollar offshore processing contracts by sending emails to the Immigration Secretary, or Paladin Group somehow winning another massive contract for offshore processing, you can be sure public servants will have found a way to overlook existing rules in order to accommodate politicians.

And in case you think this is a Coalition-only problem, Labor has some weak spots, too. It is the biggest recipient of gambling industry donations. It benefits from Village Roadshow’s largesse. Bluescope Steel has delivered hundreds of thousands of dollars in donations over the years to both Labor and the Coalition, in exchange for bipartisan protectionism via the Anti-Dumping Commission, which inflicts billions of dollars of additional costs on Australians every year. 

There is considerable evidence that Australian business leaders are, overall, poor quality. The banking royal commission exposed the reality that the cream of Australian corporate talent were at best inept, and in many cases wilfully blind to or complicit in the misconduct of their underlings. Part of the reason for this is that so much of Australian business is focused not on innovating or reducing costs for customers but in manipulating the apparatus of government to achieve regulatory and financial outcomes. Indeed, it is mainly in manipulating government that we see Australian business display innovation and productivity enhancement.

Legislators are shmoozed; former staffers and politicians pressed into service to lobby in the corridors of power; regulators are the target of diligent efforts to capture them, or are litigated against relentlessly, or lied to. Ironically, one of the few areas of actual innovation in Australian business, the local tech sector, is derided for its lack of political clout and inability to head off regulation.

This is the Australian way of doing business for so many companies — the way of the fundraiser cheque, the way of the gutted regulator, the way of the sole-source tender to a political mate. And while Labor might not be as bad as the Coalition, it won’t end until the processes of government are subjected to radical transparency to expose the inner workings of a system designed to look after mates, not the public interest.

What do you make of the “watergate” scandal? Write to boss@crikey.com.au with your full name and let us know.