Endemic Corruption

Although NSW Liberal Party politicians have been careful to avoid criticizing the commission’s powers, it’s clear they regard ICAC as a threat and are accordingly attempting to undermine it. After forcefully asserting her innocence, Berejiklian implied that the timing of ICAC’s media release was political and that the commission’s potentially lengthy reporting timeline had made her position untenable.

What the premier failed to mention, however, was that her government refused to provide ICAC with $7.3 million in critical funding earlier this year to clear its investigative backlog. The problem is not limited to NSW, either. It is telling that Scott Morrison’s Coalition government has resisted calls for a federal equivalent of the NSW ICAC. Deputy PM Barnaby Joyce has gone as far as to condemn it as a “Spanish Inquisition.”

Something Rotten in the Heart of NSW

We don’t yet know the full extent of “Operation Keppel,” the ICAC probe in which Berejiklian is implicated. Initially, commission hearings focused on the former Liberal member for Wagga Wagga, Daryl Maguire, who was having an illicit affair with Berejiklian at the time. ICAC revealed that Maguire used his office to “grease the wheels” on a land sale to property developers worth $330 million. In return, they paid him a $700,000 commission.

In October of last year, ICAC produced intercepts of phone conversations between Maguire and Berejiklian in which they discussed the deal. Maguire boasted that “I’ll make enough money to pay off my debts, which will be good.” “Can you believe it, in one sale?” he asked Berejiklian. She replied: “I can believe it.”

Although ICAC summoned Berejiklian to account for her knowledge of the deal, she narrowly escaped significant political consequences. Berejiklian played up the romantic dimension of her relationship with Maguire and managed to avoid blame. Her party backed this up with a public relations campaign portraying the premier as a fallible human being who had simply “stuffed up” in her personal life. For almost twelve months, Berejiklian sidestepped allegations of serious misconduct. Meanwhile, ICAC’s investigators built their case.

Unfortunately for Berejiklian, her post-ICAC honeymoon period did not even last a year. Now, Operation Keppel’s inquiry has turned its attention to Daryl Maguire’s alleged manipulation of grant funding for a clay target association and a convention center in his local constituency. The commission has stated its renewed interest in the potential conflict between Berejiklian’s public duties “and her private interest as a person who was in a personal relationship with [Maguire].” This confirms that ICAC’s October 2020 hearing was the first challenge of many for the former premier and the NSW government.

Indeed, the NSW Coalition government still faces a concurrent ICAC investigation into former Liberal member for Drummoyne John Sidoti. Police have also launched their own investigation into accusations that former Liberal minister Gareth Ward perpetrated sexual violence “against two men, aged 17 and 25.” While Sidoti and Ward have remained in Parliament, they have resigned from the Liberal Party and moved to the crossbench, turning the Coalition into a minority government in the process.

Who’s Next?

Initially, four Liberal MPs were tipped to vie for the state’s top job, including treasurer Dominic Perrottet, planning minister Rob Stokes, transport minister Andrew Constance, and minister for jobs, investment, and tourism Stuart Ayres. Of these four men, commentators initially argued that Perrottet and Stokes were obvious front runners, given their support from the Liberal Party’s Hard Right and Moderate factions respectively. Subsequent revelations that Constance will resign from NSW Parliament and that Ayres has struck a deal to run as Perrottet’s deputy have since cemented the Treasurer’s lead.

The challenge for Perrottet and Stokes will be to clinch a caucus room leadership ballot by forming a cross-factional majority of Liberal MPs. While Berejiklian was adept at balancing the interests of competing groups, her hasty exit from Macquarie Street has left her party room in disarray. As the dominant group in NSW, the Liberal’s moderate faction will hold significant sway over the outcome of the leadership ballot. However, this is where it gets complicated.

Both Perrottet and Stokes have voting records on social issues that are plainly inconsistent with the Moderate faction’s advocacy for internal gender quotas, legalizing abortion, and allowing a conscience vote on voluntary assisted dying legislation (VAD). Perrottet in particular has positioned himself as a crusader for the minority Hard Right faction he leads. In 2016, the treasurer publicly celebrated Donald Trump’s win as “a victory for people who have been taken for granted by the elites in the political establishment for too long.” He went on to remark that “if you question man-made climate change, you are not a sceptic.”

Stokes, however, remains factionally “unaligned,” despite his socially conservative voting record. While the former education minister was responsible for the government’s decision to abandon the LGBT “Safe Schools” program, he has refrained from echoing Perrottet’s calls for a “conservative spring” to counter “Labor’s cultural Marxism.” Instead, the planning minister has cultivated a mundane “surfer dad” meets “tree Tory” persona, befitting his Northern Beaches electorate.

Stokes has also avoided the scandals and allegations of maladministration that have plagued Perrottet. In November 2020, a joint investigation revealed that icare — the NSW’s workers’ compensation scheme, overseen by Perrottet — had “underpaid thousands of sick and injured workers, up to $80m.” Following this revelation, Perrottet’s chief of staff and the insurer’s chief executive resigned, and icare referred two former employees to ICAC. Despite this, Perrottet has not been able to evade responsibility. The revelation that he used $700,000 of icare money to hire a US Republican Party operative in his ministerial office has proved especially damaging.

Nonetheless, Perrottet’s ministerial experience, his organic Hard Right support base, and a recent endorsement from former PM John Howard tip the odds in his favor. If the treasurer can use his joint ticket with Ayres and an earlier agreement with moderate MP Matt Kean to win broad support from the party’s moderate wing, then his victory will be all but assured.

Growing Divisions

Discontent with the federal Coalition’s climate policy is growing in Sydney’s liberal heartland, as is support for progressive social reform, like VAD legislation. Given this, if the Liberal Party’s Moderate faction supports Perrottet, it could lead to further instability, not to mention a lurch to the right. The Hard Right are unlikely to back calls for a conscience vote on VAD legislation, despite support from key independents and national MPs. A Perrottet victory will also favor the passage of One Nation’s anti-trans “Parental Rights” bill. Unless these issues can be negotiated prior to a caucus ballot, the moderates risk fomenting further conflict between Liberal MPs and their coalition partners.

If Perrottet wins with Moderate support, it will also confirm the hegemony of machine politics in NSW’s parliament. Factional horse-trading and backroom deals are an intrinsic part of the corruption and instability that afflict both major political parties.

Whatever the outcome, the Liberal Party is set to continue its pro-business privatization agenda, which is a key driver of corruption. As treasurer, Perrottet’s economic “secret sauce” has been an asset recycling program. This involves selling state-owned assets in order to fund infrastructure projects, which the government then also privatizes. This sordid political economy has given rise to many of the corruption cases that ICAC has probed, including those of Daryl Maguire.

It is difficult to predict how the NSW Coalition will manage the loss of Berejiklian and the factional bloodshed her resignation has provoked. We can only look on in stunned horror at the shameful state of NSW Parliament and the “bunyip aristocracy” it houses. So long as the NSW government remains in the hands of a small group of Liberal Party apparatchiks, big business will remain in charge in Australia’s most populous state.