‘State capture’ by fossil fuel, defence and other powerful industries is more systematic and entrenched than corruption but falls short of the definition of oligarchy, or corporate dictatorship. It exists in a distinct place in the middle, where private sector actors get hold of democratic levers to shape policy in their interest, no matter the outcome of elections.
The World Bank coined the ‘state capture’ phrase when observing private sector actors in former eastern bloc states shaping policies to serve their narrow interests. The power comes through control over resources, the threat of state violence, or other forms of influence on the judiciary, bureaucracies and government.
In Australia, state capture explains why no matter which major party forms government, powerful industries always seem to win.
Fighting state capture at election time means voting for people who don’t bank cheques from the huge companies, and who are not part of the revolving door between industry and politics.
Opinion polling and the surge in volunteers working to elect independents and Greens indicate that more Australians understand that a big, uncaptured and raucous crossbench can restore some integrity to parliament and fight corporations undermining democracy.
Early in 2022, the Australian Democracy Network published a report titled ‘Confronting State Capture’ which outlined six channels of state capture: financial, lobbying, revolving doors, institutional repurposing, research and policymaking, and public influence campaigns.
The foundation of state capture is money: using it to fund political parties, buy access to decision makers and wage third party attack campaigns. Lobbying is then used to build relationships, either through consultancies, direct CEO-Minister contact, or peak bodies.
Revolving doors, the great merry-go-round or golden escalator, sees people working as Ministers or advisers one day and company directors or lobbyists the next, providing familiarity with process and people in decision making roles.
The mostly observable work of policy and research involves the think tanks, the ‘Big 4’ professional services consultancies, and industry peak bodies. They allow these companies to cover every Senate inquiry, every piece of legislation, and infiltrate every regulatory body – unlike affected populations, community groups or social movements.
Institutional repurposing occurs when public authorities like the CSIRO or Bureau of Meteorology, or environmental protection authorities or universities are hollowed out through placing industry people on the board, changing underpinning legislation, gradually diverting them from the public interest to serving private industry. Finally, there are the public influence campaigns that are run on traditional media platforms and social media.
Revolving doors and golden escalators
When senior public officials and politicians ‘retire’ from public service and move into lobbyist roles in industry, they take with them an extensive contact network, deep institutional knowledge, and rare and privileged personal access to people at the highest levels of government.
Their presence in the private sector entrenches the influence of industry over policymaking and government procurement decisions – decisions that should be entirely unmoved by commercial imperatives.
The ministerial code supposedly requires ministers to not lobby government for industries connected to their portfolio for a period of 18 months, and yet some politicians don’t even wait before they have left office.
In defence of the realm
- Former Liberal Trade and Investment Minister Andrew Robb on the day before his resignation, took up a job with Chinese-owned developer Landbridge, the leaseholder of the strategically important Port of Darwin.
- Upon leaving parliament, former Liberal party Defence Minister Christopher Pyne was immediately employed with corporate consultants EY Defence (Ernst & Young) to help them grow their defence business, and Adelaide-based arms industry lobbyists GC Advisory.
- Former Liberal Foreign Affairs Minister Julie Bishop overseeing the Australian Aid agency, became a director with private aid contractor Palladium.
- Labor MP Mike Kelly went in 2020 directly from the powerful Parliamentary Joint Committee on Intelligence and Security into the arms of Palantir, a creepy US global surveillance consultancy.
- Brendan Nelson, former Liberal Party leader, Defence Minister, and director of the Australian War Memorial, is now president of Boeing Australia, New Zealand and South Pacific, a top five contractor to Defence. Nelson is also on the board of defence advisory and weapons lobbyist Australian Strategic Policy Institute (ASPI).
- The former Labor defence minister Stephen Smith, chairs the Perth-based cybersecurity company Sapien Cyber.
- Former Labor senator and chair of the Joint Standing Committee on Foreign Affairs, Defence and Trade, Stephen Loosley joined the board of French arms multinational Thales Australia.
- Former Liberal defence minister Robert Hill is on the board of German weapons-maker Rheinmetall’s Australian subsidiary, which is supplying Defence’s $5 billion of Boxer combat reconnaissance vehicles.
- Former Labor defence minister and Labor leader Kim ‘Bomber’ Beazley joined the board of Lockheed Martin Australia and was the chair of EY Defence lobby group.
- Former Foreign Minister Alexander Downer had been closely involved in negotiations on the Timor Sea boundary, to the ultimate advantage of Woodside Petroleum. As an ex-MP, he established a political advisory consultancy, Bespoke Approach, which was contracted by Woodside to lobby the East Timorese government to accept the basing of Timor’s LNG processing in Darwin rather than in Timor. Downer’s former DFAT departmental head, Ashton Calvert, also retired and joined the board of Woodside.
It’s not just ministers who seem to struggle on the Commonwealth pension, but also senior military and intelligence heads who pick up work with their former clients.
- Former Chief of the Defence Force Mark Binskin, exactly a year after he retired as Defence Force Chief, was appointed as ‘non-executive director, defence and national security policy’ at BAE Systems Australia, one of Australia’s top three defence contractors. BAE Systems is in the running to provide Australia’s planned nuclear-powered submarines under the AUKUS military pact.
- Five months after leaving his post as ASIO chief, Duncan Lewis joined the Australian board of Thales, a French arms and security multinational and a top three Australian defence contractor.
- Former defence secretary, head of the Office of National Intelligence (ONI) and director general of the Australian Secret Intelligence Service (ASIS), Nick Warner, joined the board of defence lobbying firm Dragoman Global, whose clients include French submarine company, Naval Group Australia.
- Former defence secretary and ASIO boss, Dennis Richardson, joined the board of Vault Cloud, which provides high-security cloud infrastructure for government and critical industries.
- Former chief of army, Lt Gen Ken Gillespie, chairperson of ASPI’s council, has joined the boards of Naval Group Australia and cybersecurity firm Senetas Corporation.
- Retired Air Vice-Marshal Margaret Staib joined the board of QinetiQ, a British defence multinational that is deeply embedded with Defence’s weapons arm, Defence Science and Technology.
- Former defence secretary Allan Hawke joined the Lockheed Martin Australia board as well as the military advisory and lobbyist group, ASPI.
- Chief of Army Peter Leahy soon joined the boards of Codan, manufacturer of military communications equipment, and Electro Optic Systems, manufacturer of machine guns exported to UAE and Saudi Arabia, both at war against Yemen.
Fossil fuelled influence
A key weakness in the Lobbying Code is that it only applies to ministers, and has no application to senior public servants, nor to MPs who have spent years on relevant committees.
While the defence and intelligence industries are renowned for making astute appointments of former ministers and senior bureaucrats, the fossil-fuel industries are also keen to exchange personnel with governments to share the knowledge and contacts that secure their deep influence.
- Former ALP WA Treasurer and Aboriginal Affairs Minister Ben Wyatt retired from politics in 2021 and immediately joined the boards of fossil-fuel exploiting companies Rio Tinto and Woodside.
- John Kunkel, former Deputy CEO of the Minerals Council of Australia, became Prime Minister Morrison’s Chief of Staff.
- Brendan Pearson, former CEO of the Minerals Council became an advisor to Prime Minister Scott Morrison and Finance Minister Mattias Cormann.
- Former ALP Resources Minister Martin Ferguson almost immediately took up a role as Chairman of the APPEA Advisory Council, non-executive director at British Gas, and a non-executive directorship and head of natural resources of Seven Group Holdings, owner of Seven West media and major shareholder in Beach Energy.
- Mark Vaile, former Deputy Prime Minister and leader of the National Party left parliament in 2008 and was the Chairman of Whitehaven Coal by 2012.
- Ian Macfarlane, immediately after his resignation as Liberal-National party Resources and Industry minister in 2016, was hired as the CEO of the Queensland Resources Council and occupies a board position with Woodside Petroleum.
The use of ‘institutional repurposing’
One of the most threatening aspects of state capture is the manipulation or ‘repurposing’ of government agencies set up to serve the public interest, through a process of board appointments, legislative amendments or cultural drift.
The Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) have been persistent targets for repurposing by fossil industries. Set up as a key component of the carbon price negotiations in 2012, the two agencies were spared from abolition under Prime Minister Abbott along with the rest of the Clean Energy Act in 2014. Having failed at multiple attempts to abolish the agencies, the Government attempted repurposing instead.
In 2015, Prime Minister Abbott was unsuccessful in attempts to stop the CEFC from funding wind power. In 2020 the Morrison Government proposed the CEFC be permitted to fund loss-making investments in fossil gas power, handing energy minister Angus Taylor much greater discretion over fund allocation.
Angus Taylor has also issued regulations to force the Australian Renewable Energy Agency to fund technologies that are not renewable, like carbon capture and storage (CCS). In early 2021 the National Party proposed rewriting the CEFC’s mandate to include investments in nuclear, “high intensity” coal plants and carbon capture projects.
At CSIRO, the Gas Industry Social and Environmental Research Alliance (GISERA) initiative was launched in July 2011. Despite its CSIRO label, its research committees are heavily populated with gas industry nominees.
Researchers work with data provided by the gas industry, study it using funds provided by the gas industry, and publish findings under the prestigious banner of the CSIRO, using commercial-in-confidence source material that makes peer review impossible.
In July 2019 GISERA published the findings of one such closed study into fugitive methane emissions from the CSG industry, announcing that “Results of this latest research underline the potential climate benefits of using gas in place of coal to generate electricity…” APPEA and its member companies regularly cite this study, wielding the CSIRO brand against local communities and industry critics.
The Bureau Of Meteorology (BOM) was by 2019 taking $4.6 million in annual payments for services to the oil and gas industry, Shell, Santos, Chevron, and Woodside. Freedom of Information disclosures revealed that climate change was being routinely deleted from presentations on extreme weather events, “to even more fully meet customer needs”.
The Bureau’s chief executive was quoted expressing a view that ‘the Bureau should not be proactively discussing climate context’. This information was included in confidential discussions about an information video being produced titled ‘Bushfires and Exceptional Heat: What is driving our weather right now’.
In mid-2019 activists with Extinction Rebellion, began a series of high-profile actions using lock-on pipes to block roads and railway lines, drawing significant media attention. The Queensland Resources Council (QRC) was quick to condemn the tactic, demanding the state Government introduce new laws to ban the devices.
Premier Palaszczuk had them fast-tracked and passed by October of that year: “The laws passed the Parliament with an overwhelming majority, including both the Government and the LNP,” the QRC noted approvingly the day after the bill’s passage.
Frustration with the string of failings and corruption of Australian democracy is widespread, but rarely described or understood as a systemic threat posed by corporations.
Australia will benefit by an understanding that what is needed are systemic solutions to deliver a healthy Australian democracy which works for all of us, not just for the powerful few.
According to the ‘Confronting State Capture’ report, there are practical steps that can be taken to reclaim our democracy. Firstly there is a need to recognise state capture as a systemic threat to Australian democracy. Secondly, all political parties and candidates should commit to legislating reforms under the Framework for a Fair Democracy.
Then there needs to be created political, economic and social consequences for the corporate powers and the political decision makers who participate in the tactics of state capture. And finally, diverse civil participation at the heart of a healthy democracy must be protected.
The threat can be tackled by the Australian community because, despite all the malign forces acting against them, Australian voters can elect people who will not be ‘bought’ by corporate entities.
The threat has been recognised – and it is named ‘state capture’. Now it has to be fought: at the ballot box, in the boardrooms, and on the streets.
Both writers contributed to ‘Confronting State Capture‘, a report released by the Australian Democracy Network earlier this year, that sets out the framework for recognising ‘state capture’ and the steps required to help Australians better understand how state capture works, and making clearer the options for fighting it.