Business lobby is full of false bravado

Business leaders may like to feel all-powerful by pressuring the Government for reform, but if there isn’t public support or political capital to back it up then they’re just shouting into the wind.

The Canberra lobbying world has a dirty little secret: business just doesn’t get politics, and the industry is built on that ignorance.

More often than not, the disconnect between business and political reality isn’t much of an issue. Lobbyists wheel their naïve clients through politicians’ offices and are paid handsomely for what is little more than glorified door-opening. In return, the business figures feel influential even though they’ve done little more than whinge to a marginally relevant MP.

Meanwhile the real lobbying work goes on elsewhere in Canberra, not in the shiny marble halls of Parliament House but in far less glamorous surrounds, where myriad departmental officials actually develop and implement policy for their political masters. Lobbyists who want to deliver real policy outcomes, rather than simply act as political matchmakers, focus their efforts at this level.

But because door-opening is a relatively easy and considerably lucrative business, lobbyists often do very little to dissuade their business clients from the delusion that a few words in a politician’s ear is all that’s needed to get a favourable policy.

This can lead to the business sector – particularly the big end of town – believing it can muscle in on a government’s agenda regardless of the political issues at stake.

A good example is the recent call by senior businessman Roger Corbett for a double dissolution electionto overcome the “obstructionist” Senate. One would think that as a member of the Reserve Bank board and chairman of Fairfax Media Corbett would have a workable grasp of our political system.

However, if he did, Corbett would know that a DD election would likely increase the fractured nature of the Senate. The reduced quota for election to the upper house could result in even more independent, micro and minor party candidates being elected. Not to mention, of course, that on current opinion poll ratings, an election at this time would also see the defeat of the Abbott Government altogether.

Even if we set aside Corbett’s politically impractical call as the wishful thinking of an overly enthusiastic Liberal Party member, there are significant other examples of the business community simply not coming to grips with political imperatives.

Take the blink-and-you-might-miss-it declaration from the “group of nine” business groups earlier this month, which essentially accused current political leaders of cowardice for backing off on economic reform, saying: “Past giants of economic reform did what was right for the long-term benefit of Australia and not because it was politically expedient – it rarely ever was.”

Like Corbett, the business leaders that put their names to the statement have either deliberately ignored or simply missed the point. It was at least partly at the business community’s behest that the Abbott Government’s first budget went in so hard on economic reform. But only the Government has had to shoulder the community’s opprobrium since for doing so.

Even now, as the Government continues to struggle in the opinion polls after delivering the most unpopular budget in recent history, business continues to push it for policy changes that would amount to nothing short of electoral suicide if adopted in the current political environment.

Top of their wish list is workplace relations reform, yet only a government comprised of madmen or fools would propose this at a time when the unions’ successful WorkChoices campaign is still relatively fresh in the minds of Australian voters.

The other key reform being sought by business is tax reform, namely a cut in the corporate tax rate. This is behind the business push for an increase or broadening of the GST, which would improve the Government’s budget bottom line and consequently make a corporate tax cut more palatable to the broader community.

One of the principal business lobby groups, the Business Council of Australia, has even gone so far as to commission market research from Liberal Party pollster Crosby Textor, suggesting that the 94 per cent of respondents who agree the nation needs a “better plan” for its long-term future means voters “accept the need for change”.

Even if that were true, the same research found 62 per cent “do not trust government to manage tax reform well enough to create a better system overall”.

This is the political reality that business must face: there is no point pressuring the Government to prosecute difficult reforms when the community either fears, distrusts or holds the Government in contempt.

As Crosby Textor co-founder Mark Textor explained in an interview over the weekend, political leaders like NSW Premier Mike Baird and NZ prime minister John Key are successful because they pass three threshold tests of trust with voters: Do I trust this person at his word? Can he do what he says in this political system? And, if this thing he wants to do goes wrong, is this person of a character that would care if someone slips through the cracks?

And in the absence of that trust? Textor says it needs to be co-opted from an unexpected but credible third party, such as when the Australian Council of Social Services backed the Howard Government’s campaign for the GST.

Reform-minded business leaders need to accept that it is pointless – if not counterproductive – to pressure a government to implement change that will result in electoral defeat. Even if such a government chose unpopular policy purity over political expediency, it’s likely a new incoming government would simply overturn the change to garner public support.

Calling Government MPs cowards for backing away from reform is not telling them anything they didn’t already know, but it’s still as useless as shouting into the wind. Business must accept that reform needs a level of trust in government that is currently missing, and that new coalitions of interest, involving sections of the community outside of business, must be formed to re-establish that trust.

It may make business leaders feel important and influential to berate the Government and grandstand for the media. But like lobbyists opening politicians’ doors for a living, doing so is nothing more than a pointless and hollow charade.

Shine a light on shady lobbying

The risk of corruption will remain unless the very nature of lobbying evolves from being about access and influence to being about an open and informed government.

In contrast with Labor’s calls for reforms to prevent future political corruption, and the Liberals’ quiet acceptance of the same, the other main protagonists in NSW’s shady political practices have remained steadfastly silent.

The lobbyists – be they door-openers, influence-wielders or policy-shapers – are employing a small-target strategy in the hope of surviving the rout.

By staying low and keeping quiet, lobbyists are hoping the latest political storm will pass over without their practices being placed under similar scrutiny. For the lobbyists know that any such exposure could lead to other reforms that could seriously curtail their business and livelihoods.

There are essentially three types of lobbyists: consultants, corporates and lobby groups. The consultants work for lobbying firms, charging healthy retainers to keep clients informed about relevant issues and get meetings with politicians when the clients feel the need to be “influential”.

With door-opening and intelligence-gathering being their main concerns, the consultants tend to be former political staffers and retired politicians. Their currency is who they know, which is usually based on who they used to be.

Corporate lobbyists are an in-house version of the consultant, dedicated to providing their company with political information and access. They’re usually former political staffers too, sometimes even poached from the relevant minister’s office to ensure they have the most up-to-date policy knowledge and political contacts. Both consultant and corporate lobbyists tend to rely on political networks and influence to get their desired results.

And then there are the lobby groups, who can be advocates for anything from environmental and social concerns to industry and business interests. These lobbyists spend the bulk of their time trying to influence legislation that impacts on their members’ issues, but their success comes from understanding the interaction of politics and policy.

Lobby groups spend a great deal of time working with government departments with the aim of shaping legislation while it is being developed. They tend only to knock on a politician’s door when there is a need to create political momentum or reinforcement for what they’re trying to achieve at the policy level within departments.

Because of this focus on policy as well as politics, lobby group advocates come from a broader range of backgrounds; some are indeed former political staffers (and there is even a former chief minister running one business lobby group), but there are also ex-journalists and people with business and departmental backgrounds.

By and large all three types of lobbyists are ethical operators. But they ply their trade in a murky world of politics that is governed by power plays, allegiances, and the inevitability of numbers in cabinet, the party room or the electorate.

The challenge for any lobbyist is to be aware of, and use, these elements without actually becoming involved in them. This risk is exacerbated when political and party operatives take on lobbying roles. And it exponentially grows when lucrative government contracts and lobbyist success fees are involved.

Which brings us to ICAC and the unfortunate case of Barry O’Farrell’s misplaced wine.

The government contractor-on-the-make who gifted the Grange to O’Farrell was not only a lobbyist and Liberal Party donor but CEO of a company that depended on government patronage to survive. Nick Di Girolamo lobbied for Liberal government contracts to be granted to AWH, and employed a party official and former senior political staffer (Arthur Sinodinos) as well as another party official and former state MP (Michael Photios) to do the same.

It’s one thing to lobby for preferred policy settings and laws, which is what most lobbyists do. It may be tricky sometimes to get the balance right between good politics and sound policy, but at least the public interest test can be applied in Parliament and the media.

The granting of government contracts is far less transparent, and when there’s no official tender process the transaction can be completely opaque. It’s therefore no surprise that this avenue for using influence and extracting favours, protected as it is from public scrutiny, has been exploited by lobbyists (and politicians) who stand to gain from transactions made under such cover.

It’s commendable that Tony AbbottJohn Robertson and the Greens are putting in place reforms in an attempt to inoculate their parties against shady lobbying practices. It’s a good start to insist that party officials cannot also be lobbyists, and that a broader range of relevant pecuniary interests be declared.

But political patronage and the risk of corruption will remain unless the very nature of lobbying evolves from being about access and influence to being about an open and informed government.

To achieve this, lobbying for government contracts should be banned. Former parliamentarians and staffers should be barred from taking on any lobbying roles for at least 12 months, which is a broader proscription than currently set out in the federal government’s Lobbying Code of Conduct. All lobbyists, and not just the consultants, should be required to place their interests on the lobbyists register. And all ministers should keep open diaries so that any member of the public could see which lobbyists had darkened their doorways and on what issues.

Finally, political parties should stop selling access to politicians at exclusive fund-raising dinners and through the business observer programs at their political conferences. Such a hit to the parties’ bottom lines may prove the hardest reform of all but would be necessary to change a political culture that is currently based on access and influence for those who have the capacity to pay.

John Robertson, although breathtakingly hypocritical in light of his own party’s track record, is right to point out the insidious nature of paid influence in today’s political and government processes. But he and all other political leaders need to broaden their scopes.

Political parties may be intent on calling each other out over undue influence and favours, and the media transfixed by every thrust and parry, but unless the actual practice of lobbying is cleaned up, the rest is mere rhetoric.

Ad campaigns are the last resort of failed lobbyists

It’s quite astounding that in the 21st century political lobbying is still considered an arcane practice. Those unfamiliar with its workings appear to include even members of the Federal Parliamentary Press Gallery.

This has been evident in recent times with media depictions of lobbying limited to large-scale advertising campaigns such as that conducted by the mining industry against the resources super profit tax.

In reality, advertising is a lobbying tactic of last resort, and in only a few cases does it ever deliver the desired outcome. For every successful advertising blitz like the miners’, there are many more that have failed. The retailers’ GST campaign, fronted by Gerry Harvey, is perhaps the most recent example.

Advertising is the lobbyist’s last resort because it’s effectively an admission of defeat by those running the campaign. Having to pour millions of dollars into the pockets of advertisers and media outlets is a clear concession that lobbyists have dropped the ball.

Why? Because real political lobbying is a strategic long-term activity, not a tactical short-term one. If all it took to influence government was a carpet-bomb advertising campaign then there would be no need for the hundreds of lobby groups that exist in Australia. Instead, each advertising agency would have their own in-house lobbying specialists and the Australian public would be constantly bombarded with advertising campaigns based on a myriad of political issues, not just consumer products as is the case now.

Perhaps the issue at the heart of this misperception is that lobbyists exist to stop governments from taking certain actions.

This is in fact only half the story; lobbying can also be about getting governments to do something. Many lobbyists, particularly those who represent the interests of business and industry, devote most of their efforts to securing policies and regulations that balance the government’s rightful protection of people and the environment with business’ right to make a profit.

So, how exactly is effective lobbying different from an advertising campaign?

Lobbying is strategic, which means it involves big-picture objectives and strategies to achieve them over long-term timeframes. Ask any effective lobbyist what they are doing for their members and they will speak in these terms. They will explain that some of their strategic goals may take 2-3 years or 5-7 years to realise. And most will admit that the last place they want to be arguing their case is in the media.

Effective lobbying is based on an exceptionally good working knowledge of three things: politics, policy and business. That’s why most lobby groups have experts in each of these areas.

Even more important for effective lobbying is an understanding of how these three elements can align, interact or conflict.

Lobbyists use knowledge of this dynamic to ply their trade. In an ideal world, the policy they are lobbying for should satisfy the Minister’s need for smart politics, the department’s need for sound policy, and their own members’ need for a continued license to operate.

Effective lobbying takes place behind the scenes, mostly at the departmental level. It focuses on the development, implementation or reform of policies, which ultimately become the laws that govern us.

Some of the contact that lobbyists have with departments is in the form of “stakeholder consultation”, where the department seeks feedback from affected groups on the details of policies that are being developed. This feedback is then taken into consideration as the policy is further refined.

However, the more astute lobbyist takes a proactive role and seeks to initiate new policies at either the political or the departmental level. This is no easy task and requires the lobbyist to know how to concurrently meet the needs of the Minister, the department and his/her own members.

This again, is why lobbying is best played as a long game and not a short one.

Effective lobbyists develop networks of contacts in politics, the public service, the business community, non-government organisations and the media. These networks serve as a grapevine to keep the lobbyist abreast of all relevant information and to ideally keep them ahead of the game.

This intelligence helps the lobbyist understand the political implications of his/her member’s strategic goals, whether they are part of the policies being developed by the department, and the expectations and concerns of any opponents.

Only having considered all these factors and developed a solution that best fits all needs will the lobbyist have the basis upon which to pitch a proposal to the department or perhaps even the Minister. Quite often market research or economic modeling is also required to demonstrate that both political and public benefits can be delivered.

Having first engaged on the issue at the departmental level, the lobbyist would then provide complementary briefings to MPs, ministerial advisers and relevant journalists (usually on a background basis). This pincer-movement strategy has the best chance of securing the attention of decision makers and creating the necessary momentum to get a favourable policy decision.

The long game is imperative because sometimes one must wait through several budgetary or legislative cycles before the right opportunity presents itself to pitch such a proposal.

Admittedly, despite having a sound strategy and the patience of a saint, there are still times when a lobbyist will realise that the time, effort and resources they’ve invested in working through departmental and ministerial channels has been in vain.

Sometimes the situation is retrievable, such as when a policy is released for public discussion, either through the green paper process or a regulatory impact statement.

It may then be appropriate to start an advertising campaign, but this will be done in the knowledge that it is the final resort and will be seen as a very public last-gasp attempt to shanghai the Minister into a favourable decision.

More often than not, this tactic will fail because it’s seen by both politicians and public servants as unnecessarily aggressive, overtly disruptive and ultimately self-centred. None of these perceptions serve well when one is trying to influence government.

For completeness, it must also be stressed that there are other times when there is little or no opportunity to influence the outcome.

This is particularly the case with the Budget night shock announcement, when a new tax or funding cut has been concocted in the Minister’s office or kept under wraps in the department, leaving the affected stakeholders none the wiser until it’s too late to do anything than add their bleats to the cacophony of others disaffected by the same Budget.

So, there you have it. The profession of lobbying is certainly not rocket science, but it’s a nuanced practice nonetheless. It’s an activity that admittedly occurs under the radar, but which bears little resemblance to the media depictions of shiny suits trailing into ministers’ offices threatening ad campaigns if they don’t get their wicked way.

A final important point to remember is that lobbyists represent a much broader range of interests than just big business. Equally large and influential lobby groups also represent pharmacists, teachers, independent shop owners, superannuants, and the environment movement for example.

Lobbyists have a legitimate part to play in a vibrant democracy such as ours. This would be better accepted if the media made a greater effort to understand it.

This post also appeared at Crikey.com

Gerry Harvey: How did it all go so wrong?

How did it all go so wrong? Perhaps that’s what Gerry Harvey is thinking right now. And so he should. In the space of a day, the canny retailer has succeeded in turning his own reputation from a positive to a negative.

Earlier this week Harvey was the home-grown success story, the eccentric billionaire with a canny ability to predict and tap into the psyche of everyday Australians.

Today he is the public face of a badly crafted campaign to force and shame Australians into curbing their online shopping behaviour. Harvey is now perceived as an arrogant capitalist, interested only in lining his own pockets with the limited cash earned by hard-working Australians.

How did it all go so wrong? To an interested observer it is quite clear. The campaign by the Australian retail industry is flawed no matter which way you look at it.

Politically, there are no votes in it. It pays to remember that it took three politicians to attempt bringing in a GST (Keating, Hewson, Howard) before it was successfully introduced by Howard in 1998. Even then it was a high-risk strategy and it would take a brave politician to extend the GST’s scope even now.

At a policy level, the imposition of GST on online purchases increases rather than lightens the regulatory load, with no discernable public benefit delivered as a result. No modern government would interfere in a market by increasing regulation without being able to point to a considerable public benefit.

From a behavioural perspective it would take more than a 10% tax to dissuade online shoppers, particularly when the price differential is often more than that and online shoppers still don’t have to contend with carparks, checkout queues or limited choices on the shelves.

And perhaps most importantly, the campaign is flawed from a communications perspective. Its key messages have no resonance with the people whose behaviour it is trying to influence, namely the politicians and the shoppers.

It appears the retailers’ campaign was neither strategically planned nor deployed.

No organisation should try to influence or change public policy without covering all these bases. The retailers should have been armed with market research and economic modeling to demonstrate that their case was legitimate and that it could deliver both political and public benefits as well as the behavioural change they sought.

They should have engaged on this issue at the departmental level first, with complementary briefings provided to MPs, key ministerial advisers and relevant journalists. This “pincer movement” strategy has the best chance of securing the attention of decision makers and creating the necessary momentum to get a favourable policy decision.

If these avenues have been tried and failed, it may have then been appropriate to take out ads in the newspapers.

But there is an old saying in the world of lobbying and advocacy: if you have to run to the media, then you are admitting that your other lobbying strategies have failed.

Going to the media is the final resort, a very public last-gasp attempt to shanghai a minister into a favourable decision. More often than not, this tactic will fail too because it is seen by both politicians and public servants as unnecessarily aggressive, overtly disruptive and ultimately self-centred. None of these perceptions serve well when one is trying to influence government.

And finally, perhaps the greatest weakness in the retailers’ campaign is its demonstrated misunderstanding of shopper motivations and behaviour.

Instead of spending mega-dollars on newspaper ads, the retailers should have taken steps to understand why customers shop online and how they might be enticed back.

The GST campaign suggests they have not done this even this basis homework, because it is clear that people shop online for more reasons than price alone.