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ICAC has highlighted that unsavoury intersection where business, political donations/gifts, and lobbying meet

Barry O'Farrell brought on his own problems by his emphatic denial at the ICAC hearing. AAP/Dan Himbrechts

Barry O'Farrell had no option but to resign his premiership, given his emphatic denials of receiving a $3000 bottle of Grange from the chief of the company lobbying intensively for a water contract. Once his warm thank you letter surfaced, he was done for.

But how come he dug himself into this hole?

One school of thought is that O'Farrell, despite his clean reputation, deliberately sought to mislead the Independent Commission Against Corruption in his Tuesday evidence, trying to cover up the gift, which he had not declared on the appropriate registers.

To intentionally mislead ICAC, however, would hardly have been rational behaviour from a man previously regarded as having good political antennae.

O'Farrell would have known that if his story came unstuck, he’d be in an untenable position. He was giving evidence on oath.

Also, ICAC had already made it clear it didn’t believe he was involved in any corruption in relation to events surrounding Australian Water Holdings and its pursuit of the Sydney Water contract (a position re-asserted by counsel assisting the inquiry, Geoffrey Watson even after the wine debacle and O'Farrell’s resignation). O'Farrell did not give AWH CEO and Liberal fund raiser Nick Di Girolamo any favours for the 1959 Grange.

If O'Farrell remembered the wine and had said so at ICAC, he’d have suffered political pain, but could have weathered it. If he’d said he didn’t recall but might have received the bottle, he could have survived, even with his thank you note surfacing.

Instead he not only denied the gift when before ICAC but was repeatedly emphatic at a subsequent news conference and in a statement that insisted “the 1959 Grange was not received by me or my wife”.

In favour of his “massive memory fail” claim is that the alternative explanation – that he knowingly advanced a lie in, at it were, capital letters - seems even less credible.

That leaves the question of why he didn’t declare the wine at the time, when it obviously was in his mind. This makes no sense. He had just become premier – there was every reason to follow the rules. He told ICAC he’d have known a 1959 bottle should be declared.

A shocked Tony Abbott said of O'Farrell’s decision to resign: “We are seeing an act of integrity, an act of honour, the like of which we have rarely seen in Australian politics.”

AAP/Julian Smith

Despite this strong show of solidarity Abbott and O'Farrell were neither ideological soul mates nor close friends. Abbott was angered by O'Farrell’s signing up to Julia Gillard’s Gonski package before the election; the NSW government played hardball over Gonski later too. O'Farrell has been critical of the proposed changes to the Racial Discrimination Act.

Infrastructure was another matter. O'Farrell had been due to be with Abbott for Wednesday’s announcement of the federal package accompanying the proposed second Sydney airport.

A stunned NSW government now has to get itself a new premier, with the options Treasurer Mike Baird and Transport Minister Gladys Berejiklian.

The two - both in their 40s and with backgrounds in banking - are good friends, which makes a contest awkward. Both have been competent ministers. Baird is a mate of Abbott’s. His state electorate is within Abbott’s federal seat, and they sometimes surf together. Berejiklian is good mates with federal treasurer Joe Hockey – both are of Armenian extraction.

Berejiklian is from the party’s left. Baird – although son of former state and federal politician Bruce Baird, a prominent moderate - is more conservative, especially on social issues (an Anglican, he is very religious).

Abbott would prefer Baird to be the successor, given the political hue of Berejiklian. Baird was discussing his position on Wednesday night with his family, ahead of Thursday’s party meeting.

It will take a while to judge what federal implications there might be out of the O'Farrell resignation.

O'Farrell’s falling on his sword is likely to make things harder for Arthur Sinodinos - who has stood aside as federal assistant treasurer - to resume his position if there is criticism of him from ICAC. Sinodinos was a director and then chairman of AWH as well as state treasurer of the Liberals but denied knowing of the company’s donations to the party. His performance in the witness box was not impressive, although he is not accused of any wrongdoing.

The ICAC investigations, which had originally been focused on corruption in Labor, have now engulfed the Liberals, undermining the NSW government’s ability to fully exploit Labor’s record at next year’s election.

The spectacular hits scored by ICAC have produced a backlash from some commentators and politicians, with accusations that it is a ‘'star chamber’‘. (The critics don’t include O'Farrell, who specifically reaffirmed his support for ICAC.)

There is no doubt ICAC is more freewheeling than a court. But if we take the cases of O'Farrell and Sinodinos, is there any reason to blame ICAC? The demise of the well-regarded O'Farrell is most unfortunate, but he brought on his own destruction by his emphatic denials. As for Sinodinos, ICAC exposed that someone who should have had his eye on what was happening in a company that was acting improperly apparently, on his own account, did not.

What the ICAC inquiry into the AWH affair has highlighted is that unsavoury intersection where business, political donations/gifts, and lobbying meet. In this it has done a public service.

Abbott some time ago clamped down on party officials also being federal lobbyists. O'Farrell banned success fees. Clearly, further action is needed at the state level and that will be a challenge for the new premier.

More generally, the lobbying industry and the influence of big money in politics are becoming serious issues for the integrity of the Australian democratic process even when actual corruption is not involved.

O'Farrell legislated a ban on donations from corporations and associations. It was an obvious strike against Labor and the unions, but would have had a cleansing effect on the conservative side as well. The High Court struck down the legislation, in a case brought by the unions.

Listen to the latest Politics with Michelle Grattan podcast here.

Brian Harradine – a one-off who played the power of one to the max

Brian Harradine was a deeply polarising figure, who wouldn’t compromise on his values. AAP/Alan Porritt

Brian Harradine, who has died aged 79, was one of the most powerful independents in the Senate’s history. A tough and driven operator over a long career outside and inside parliament, he profoundly influenced the course of both Labor and Coalition politics.

In the 1960s Gough Whitlam put his leadership on the line over him. John Howard three decades later depended on him for the part-sale of Telstra and passage of the Wik native title legislation, only to be rebuffed over the GST.

Harradine was responsible for the ministerial veto on the importation of RU486 - removed by parliament soon after he retired from the Senate in 2005 - and for Australian foreign aid for many years being banned from funding family planning involving abortion advice.

He also ensured the Howard government gave gold-plated treatment to Tasmania.

A product of deep Catholicism, Labor roots and his adopted state, when Harradine had a pivotal balance-of-power position in the Senate he did not flinch from using it to promote his causes and his constituency (but not to pursue the trapping of public life).

His manner was usually mild but he could, mostly in his younger days, be a fiery orator, in the old Labor style.

He was a deeply polarising figure, whether arousing the fury of the industrial and ALP left in the 1960s and early 1970s, or the outrage of many women in the 1990s and beyond.

Harradine would never compromise on issues touching his fundamental religious values (such as the sanctity of the life of the unborn), or his enduring commitment to protection for working people. But where these weren’t at stake, he was a horse trader and a cross trader, understanding and playing the numbers, believing power was a commodity to be spent, hunting for bargains on the political sale table.

Born in Quorn, in northern South Australia, Harradine began his working life on the railways. “My grandfather was the water man at the Finke on he Ghan track,” he told an interviewer in 2004. “And my first job was on the east-west line to Kalgoorlie and back, and the Ghan up to Alice Springs and back.

“We parted company when I was a conductor on the train, when I let passengers off at Anna Creek instead of William Creek, at a siding, and they had to wait for the southbound in an inhospitable area.

“I went to the PMG department, which is ironic, because it was the engineering division thereof, which ended up as Telstra.”

Moving to Tasmania in 1959, he worked for unions, notably the Clerks Union. He climbed the ladders of Labor’s industrial and political wings, becoming secretary of the Tasmanian Trades and Labour Council, a vice-president of the ACTU and a member of the ALP’s federal executive.

In 1968, in the thick of the bitter Cold War, post-ALP split battles, he alleged “the friends of the Communists intend to try and silence me” because they knew he would support Whitlam on party reform. This triggered a crisis in which Whitlam threw open the leadership, holding his position in a ballot against left-winger Jim Cairns by only 38 votes to 32.

Controversy continued within the ALP around Harradine for years; in 1975 he was expelled and won a Senate place as an independent in that year’s “dismissal” election.

His faith gave him sustenance and a certainty that brooked no compromise on core beliefs. He said in 2004: “The greatest foul-up that’s happened to me over a period of time is when I’ve been confronted with challenges and thinking, ‘Well, how am I going to get out of this?’ Or, ‘Wow am I going to deal with this real problem?’ Instead of saying to Jesus, ‘How are we going to turn this into good?’”

Harradine’s vote was critical for a slab of the Howard years - from 1996 to 1999 he and Labor “rat” Mal Colston held the balance of power - and this was when he extracted many concessions, while also drawing his lines in the sand.

John Howard writes in Lazarus Rising that Harradine, while supportive of many of the government’s positions on social issues, “remained at heart a real Labor man when it came to industrial relations. It was in other areas that I was able to find [him] not only a genuine negotiator and helper of the government in office, but on particular issues a strong supporter.”

Howard’s agreement to the anti-abortion demands came early on.

Harradine would not let a full sale of Telstra through but agreed to partial sale, in return for loads of telecommunications, environmental and other benefits for his state. He gave in and dealt with the government on the Wik land title legislation, disillusioning Aborigines but saying he did not want a “race-based” election to be called.

The GST debate was his most electric moment in the Senate. The government did all it could to win him, with concessions relating to pensioners and his demand on a separate issue about the youth allowance.

Howard wrote that although Harradine had kept his counsel during the 1998 election, “I remained moderately optimistic, without there being anything on which to base that optimism.”

His hope was misplaced. Harradine rose in the chamber to declare “I cannot” support the GST, forcing the prime minister to negotiate with the Democrats - who were assuming the balance of power - on a cut-back package that has critics today lamenting the exclusions. Harradine saw it as a regressive tax discriminating against the poor.

Former Labor senator Chris Evans describes the Harradine style and skill. “He was wily - in negotiations you were never sure where he was going to settle.” And in the chamber, “he had a sense of the dramatic. He would start his speech and it would be five minutes in until you knew where he was going. We were sitting on the edge of our seats.

“A very capable operator - he was able to get the maximum benefit from his vote.”

And that was especially why his supporters and his detractors felt so strongly about him.

A real ‘discussion’ about pension and health costs would need details about the options

Treasurer Joe Hockey has talked about raising the pension age. AAP/Lukas Coch

Treasurer Joe Hockey says we need to have a “sensible discussion about the sustainability of our entire quality of life”. Hockey’s absolutely right, but what we are getting is actually something between a dance of the seven veils and a traditional pre-budget softening-up process.

To have a “sensible discussion” would require both a detailed spelling out of options or proposals and some time for them to be chewed over, before decisions are taken or confirmed.

This is not how budgets normally operate.

We have had put into the public domain by Hockey, Tony Abbott and the heads of Treasury and the Reserve Bank some nasty scenarios of how spending will balloon in various areas, especially health and pensions, if something is not done in the medium term.

There have been pointers to possible areas for attack.

Hockey said at the weekend, as he again talked up raising the pensions age: “It’s not just pensions and the sustainability of pensions, but it’s our health care, the quality of our education – it’s right across the board.”

But the community has not been given detailed information about what is being looked at.

This is not a conversation, and it is unlikely to be because the government is right now taking the decisions for a budget that is one month away.

If the government were serious about the discussion, it would have released the Commission of Audit’s report the day that it got it – before it took decisions.

Hockey says the West Australian Senate election didn’t have an impact on the timing of the release (which is hard to believe) but the government had to “carefully consider the details”.

The government would release it in good time before the budget and people would then understand “that in the budget we must start the process of responding to the great detail of the … report”.

With decisions taken or on the brink of being taken, this is nothing like a discussion process.

Hockey’s idea of such a discussion appears to be around the extent of the financial problem, rather than a full examination, before policies are finalised, of what the government thinks should be done.

There have been a few genuine national conversations about proposed policies over the years.

One was after the Liberals' release of Fightback in the early 1990s. That was a huge blueprint for reform by the then opposition, full of detail. Earlier there was the Labor government’s discussion of a consumption tax in the mid-1980s, which came with a tax summit. (Not that either of those conversations went that well for those who started them.)

Then there was John Howard’s proposal for a GST in the late 1990s, accompanied by an election. (That went better, though it was a close-run thing.)

Hockey is throwing out hints left, right and centre – but who knows whether it is a wish list or a real list? Surely he can’t do all of them.

It does seem that lifting the pension age to 70 is on a real list. “That’s certainly one of the issues that needs to be addressed,” Hockey said at the weekend. “It will affect my generation.” (He’s in his 40s.) Labor’s decision to lift the pension age to 67, which is being phased in, is implemented by July 1, 2023.

The assets test for the pension “is something we need to discuss, and we are discussing with the nation”, Hockey says. Well, not really, when there are no public details.

There is also a broad hint at changes to indexation – the pension is presently linked to male average earnings rather than the consumer price index.

Asked about this on Sunday Hockey was “not going to speculate on the budget”.

But he then went on to talk about “something interesting” he’d found out during his trip to the US.

“Over the last 40 years, 60% of male workers in the US have had a real cut to their incomes.

“In Australia we’ve been the beneficiaries of having real income increases. Now the pension is attached to male total average weekly earnings, which is a higher rate.

“But it is not always going to remain a higher rate. So we have to look at how sustainable pension increases are.”

This is clear as mud.

(Seniors representative Michael O'Neill speaks about another index – the basket of goods older people buy, which sounds worth exploring, but wasn’t mentioned by Hockey.)

No wonder Hockey quickly moved on to his familiar line that everyone will be asked to do their bit in the budget – this time he threw in the politicians too.

If the government really wanted a meaningful discussion it would, rather than announce firm decisions, put out a detailed paper about what could be done – or what it thought should be done – and then let the debate be fed by some solid meat.

There are good reasons why it would not want to go down this path – including the fact that putting off tough decisions would make them harder to take later.

That might be fair enough – although it is hard to see how Tony Abbott can square pensions squeezes with his promise of “no change to pensions” - unless he delays implementation of them all until after the election.

But just don’t try to kid us that we’re involved in a “discussion”. And let’s have that audit report ASAP please.