If the Australian Building and Construction Commission and the Registered Organisations Commission still existed, they’d be facing fundamental questions about why they allowed what looks to be significant corruption within the construction industry to flourish. And in the case of the ABCC, why it failed to deliver on its core goal of lifting productivity in the construction sector.
Further, if the Coalition is going to seek to link the CFMEU to inflation, it should be explaining why its bespoke regulator sat back — while the Coalition was in government — and did nothing about construction industry costs.
One answer might be that the ABCC and the ROC were more oriented around political point-scoring and attempts to destroy Labor politicians than actual regulation. In the last year of the Morrison government, the ABCC employed just 130 people, or around one person for every 9,000 construction workers (that’s without counting all the additional employment in construction companies, service providers and unions). But then again, the Coalition knows all about underresourcing regulators: in 2014, it slashed $44 million, or 9%, from the main corporate regulator, the Australian Securities and Investments Commission (ASIC), forcing job cuts of more than 200.
As we know, that worked out brilliantly, with the big banks and retail superfunds taking advantage of ASIC’s feeble efforts to accelerate their gouging and profiteering to the point where a royal commission was needed several years later.
Most of the pressure on Malcolm Turnbull and Scott Morrison to call that royal commission was driven by media coverage, led by Adele Ferguson, of the banks’ outrages. That would turn out to be a recurring theme. It was media coverage of Crown’s links with organised crime, along with the revelations of the Bergin inquiry in NSW, that forced a reluctant Andrews government — which had deep links to that company — to call a royal commission into Crown, the Victorian gaming regulator having been grossly underresourced and disempowered.
It was media coverage led by the Financial Review into PwC’s misconduct that led to parliamentary inquiries into the big four consulting firms and their links with government — and the obscure “regulation” by the Tax Practitioners Board and the Australian Tax Office. Now the CFMEU has been exposed neither by the bespoke regulators established by the previous government, nor by the Fair Work Ombudsman (staffing of around 950) that took over their roles, but by the media.
Call it the Nick McKenzie Commission. Maybe it should get some funding next budget.
The CFMEU revelations only came a couple of weeks after ASIC received yet another caning for its performance from politicians, with a Liberal-led committee stating baldly that “corporate law is underenforced in Australia”.
Ironically, given it’s the media doing the work that regulators are failing to do, the Australian Communications and Media Authority is another regulator with a poor track record of holding media companies even to their own weak self-determined standards. Often it’s the media — in the form of rival outlets — that does the job of holding media companies to account for poor journalism, sexual predation, misconduct or blatant partisanship.
Even our effective regulators are undermined. The Australian Competition and Consumer Commission has long been one of the country’s best-respected regulators, but its efforts to enforce our plainly inadequate competition laws often get derailed: its attempt to stop the anti-competitive merger of ANZ and Suncorp’s banking arm was blocked by the Australian Competition Tribunal (ACT). If a big corporation doesn’t like an ACCC decision, it can just refer it to the lawyers at the ACT or keep appealing it until they find a sympathetic court. Not even Treasury will back up the ACCC — the federal government waved through ANZ’s Suncorp purchase as well.
Only AUSTRAC, with the backing of anti-terrorism laws, has a strong record of going after the biggest companies and hitting them with massive fines — such as the $1.3 billion it took off Westpac, $700 million it fined the Commonwealth Bank of Australia, or the $450 million from Crown, all for industrial-scale money laundering breaches. (It currently has its sights trained on Star Casino.) AUSTRAC is also significantly expanding as the government prepares to extend anti-money laundering laws to new industries like real estate: its staff was around 500 last year but is funded to grow to more than 600 this year.
That example is instructive. It turns out that Australian governments can create a hardnosed regulator that scares even the biggest companies when they want to. What’s different? AUSTRAC is in effect policing the flow of money to criminals and terrorists. Politicians don’t wish to be seen as soft on either. Moreover, there’s international pressure for Australia to effectively regulate money laundering — and we’re way behind most other Western countries in doing so.
In that environment, the usual tools of state capture — political donations, revolving-door jobs, internal party influence, public relations campaigns, “independent” reports — have far less effect in watering down a regulator’s powers or resourcing. It’s the corporate equivalent of being made to queue up for scanning at the airport — special pleading won’t get you too far, unless you’re very, very special.
If governments can do it for money laundering, they can do it for competition, for corporate law, for gambling, for the media, for industrial relations. But they are strongly incentivised not to by the regulated industries. Ultimately we have poor regulators and poor regulation because governments find it in their interests to let it be like that.
Are our regulators poorly designed by intention? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
