Business and Pleasure

This is the fourth major scandal to hit the NSW Liberal government in less than twelve months. While Premier Gladys Berejiklian has previously managed to avoid most of the fallout, the evidence heard by the ICAC has shaken her leadership to the core.

Mainstream media outlets are lining up to condemn Berejiklian for her failure to report her colleague and former lover for his allegedly corrupt dealings and misuse of public office. Labor has moved a motion of no confidence in the NSW Parliament. Pressure is mounting on Berejiklian to resign, and the ICAC still has much more evidence to work through — according to one report, she may have misled the commission previously.

No one will be shocked to learn that Liberal MPs collude with developers and other “associates.” After all, three senior NSW ministers are currently facing allegations of malfeasance. State Treasurer Dominic Perrottet hired a US Republican political operative using the state’s workers’ compensation scheme. Minister John Sidoti is facing his own ICAC probe for having partly owned a development company while holding the planning portfolio.

For his part, the former deputy premier John Barilaro is in self-imposed exile after leading an abortive leadership coup aimed at overturning a koala protection policy. While Barilaro’s personal feelings about koalas are moot, he has been accused of taking a hard-line stance against the proposal on encouragement from property developers.

Notwithstanding the clear pattern of corruption, federal Coalition MPs — including Prime Minister Scott Morrison — have been quick to jump to Berejiklian’s defense. Their line is that the premier “stuffed up” by maintaining a private relationship with Maguire but that she had no knowledge of impropriety. They’re hoping that the personal nature of Berejiklian’s ICAC revelations will obscure the deep and long-running corruption of the NSW government.

You Gotta Love This City

NSW Parliament has long been a site of class struggle between property developers and working people. As a major global hub, Sydney performs a vital function for finance capital fleeing the economic turbulence of neighboring economies. Since 2008, Australia has consistently outperformed other OECD (Organization for Economic Co-operation and Development) economies in terms of GDP growth, monetary stability, and government debt.

One effect of this dynamic has been a surging demand for Australian real estate and infrastructure investments. Billions of dollars are pouring into the state to cash in on Sydney’s overheated housing market, encouraged by the Coalition’s pro-development platform. Over time, these factors have compounded the state’s fiscal dependence on value capture and stamp duty revenue.

The political alignment between the NSW government and construction and development firms is the logical corollary of these shifts. While the engines of capital accumulation were healthy, the Coalition’s narrative of stable government, low unemployment, and infrastructure spending was difficult for the NSW Labor Opposition to counter.

But the Coalition’s deal with the devil came at a cost. As the interests of developers and the government intertwined, corruption set in, laying the basis for increasingly volatile political scandals.

Indeed, NSW is infamous for its history of collusion between property magnates, underworld figures, and successive state governments. In the 1970s, the Builders Labourers Federation, led by Jack Mundey, pioneered the strategy of “green bans,” uniting construction workers with residents to defend buildings with ecological, working-class, or heritage value.

After a series of long and at times violent campaigns, the green ban movement was ultimately defeated by an alliance between the Conservative government of Robert Askin and developers. Following the disappearance and presumed 1975 murder of local community activist, Juanita Nielsen, and a savage campaign by the NSW Police, the bans were crushed in the Kings Cross area. The resultant high-rise cityscape, which is visible from the MPs’ Macquarie Street offices, has become a tragic symbol of the state’s political order.

Darlinghurst Confidential

For the last ten years, corruption and the ICAC have been the locus of NSW politics. In 2011, after sixteen years in power, the Labor government was brought down by an ICAC probe into corrupt land dealings. Labor politicians Eddie Obeid (from the Labor Right faction) and his ally Ian Macdonald (from Labor Left) were later jailed for corruption.

Likewise, former Liberal premier Barry O’Farrell was forced to resign in 2014 after an ICAC probe revealed that he had accepted a $3,000 bottle of wine from Australian Water Holdings. The gift — and O’Farrell’s handwritten thank-you note — were exchanged in the course of negotiating a lucrative public-private partnership. Seen in this context, Maguire and the premier’s alleged conduct is business as usual in NSW.

Much of what we would regard as corruption is perfectly legal due to glaring holes in the laws which regulate and monitor the behavior of MPs. For starters, it is not inherently illegal for elected officials to solicit donations from property developers. MPs are free to take commissions, provided they are appropriately declared.

And as the Maguire probe has demonstrated, MPs can circumvent the Ministerial Code of Conduct by holding unscheduled “drop-in” meetings or conducting their business using private email accounts. One of the phone intercepts tendered in ICAC records a conversation between Berejiklian and Maguire in which he refers to such a meeting taking place in her office.

Sydney, Sin City

However, the problem runs deeper. The contradiction between the interests of Sydney residents and those of developers is scarcely discussed in the halls of NSW Parliament. This is in part because the Coalition has placed the property industry at the heart of Sydney’s political economy which, over time, has undermined the political necessity of appearing to be independent and objective.

The government’s failure to adopt industrial manslaughter legislation, its refusal to ban deadly engineered stone products (despite a parliamentary inquiry finding that there was no safe level of exposure), and its reluctance to amend the Ministerial Code of Conduct are all a product of the pact with developers.

Indeed, the logic of Sydney’s political economy has become so visible that formal conspiracies between government and capital are increasingly unnecessary. Maguire is just the tip of a multibillion-dollar iceberg, most of which is legal and consistent with the government’s interest in spruiking the development industry.

The laws governing the behavior of MPs should be amended — but this won’t be enough to fight corruption on Macquarie Street. So long as capital accumulation in Sydney and Australia is underwritten by the real estate market and state-coordinated infrastructure projects, developers’ interests will always take pride of place. To overcome corruption, we need to tame the industry which is waging war against our democracy.